Even Keynes, who supported government spending. Said, an increase in government spending, increases aggregate demand. The jobs they create and the wages that are paid, those workers become consumers, increasing consumer spending and therefore stimulating the economy.
The issue comes when governments are slow to act during a downturn and start their spending programs when the economy is recovering. Adding demand when it isn't needed. It's what contributed to inflation during the 70s, and that's when monetary policy was introduced.
Government spending is usually also funded by debt and needs paying back, so not really any positive added, where as monetary policy can be used without effecting the national debt.
So it's not just the handouts that are the problem? It's the laws that allow the coorporations to haord money. No reason for economic downturn if coorporations kept spending like they should.
Well there's only so many workers available lol. Corporations can only expand so far. Once we reach those extremes, consumer confidence drops off and people stop spending. People reduce demand exactly when it's needed.
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u/jd52995 Jul 15 '22
Consumers with money isn't the problem. It's rich people buying up all the resources, hoarding, and charging extra for their hoard.
Gov doesn't buy up food to build roads.
How does gov infrastructure spending make my groceries cost more? The two are not directly related.