Deficit Spending Good or Bad?

What is it? Basically, Spending more money than you bring in Has it’s roots in Keynesian economics (john Maynard Keynes) Keynes felt it was key during economic downturns to stimulate the economy and stabilize things Government had a responsibility to deficit spend to encourage growth

How Does It Work (Ideally)? Government pumps money (through Borrowing, typically) into the economy in various ways This spurs new job growth and new tax revenue from workers Workers spend their money and further grow the economy Eventually, A budget surplus emerges and the government can repay any debt they may have

An Abrupt Change Deficit Spending was seen as dangerous prior to the New Deal Deficit Spending greatly increases the national debt This can make it difficult to borrow money in the future Laissez-faire (hands off) economics dominated for a long time The New deal was instituted to try and jump start the economy