Freedom Discussions

New video debunks Keynesian consumer spending fallacy…and more

by Dan Mitchell, CATO (via email)

Here’s a new video explaining why Keynesians are wrong.

It shows that consumer spending is a consequence of growth, not a cause of growth. Looking at the difference between gross domestic product and gross domestic income, the 5-minute mini-documentary exposes the flaw inherent in Keynesian stimulus schemes.

Also, the Chairmen of President Obama’s Fiscal Commission have put together a report that purports to be a serious combination of spending cuts and tax increases.

Yet government spending, according to the Commission’s numbers, would climb from about $3.5 trillion in 2010 to more than $5 trillion in 2020 – meaning government spending would increase about twice as fast as inflation.

The video in this blog post explains that the budget can be balanced without tax increases through spending restraint:

And the video in this blog post looks at the bigger issue, explaining that America’s long-run fiscal problem is too much spending and that debt and deficits are merely symptoms of that underlying problem:

I hope you find this information useful. Please don’t hestitate to contact me if you have any questions or comments. And feel free to share the videos with interested parties.