> Your post seems orthogonal to mine.
I didn't mean to ignore your main point. Yes, the part about how
transfer payments are not government spending is very good, and my post
ignored that main point Galbraith was making.
In your post, not clipped, his testimony did have the odd sentence
that I was responding to.
> The only way to reduce a deficit caused by unemployment is to reduce
> unemployment.
The confusion of transfers with spending is a brother of the
confusion about spending being the main cause of g. debt, as if revenue
has nothing (only) to do with it. It smacks of the dominant agenda to
starve out poverty justified by social Darwinism using austerity.
> Your idea that tax rises on the rich have zero deflationary impact is
> novel. I don't know of any economist who takes that position, but
> if
I didn't even imply that tax rises on the rich have zero deflationary
impact. rather taxing idle money to put it back into the loop would tend
to be inflationary. I did say that tax cuts that lead to borrowing and
increased government debt are not necessarily inflationary. The borrowed
money will go into demand of some kind, but the bonds sold to the
lenders, representing about the same amount of money that was returned
to demand, may not be spent. That may double the quantity of the
surplus, but just holding bonds is not inflationary.
I think whether borrowing has a limit or not is important, and money not
being spent can't cause inflation.
Galbraith:
> But if there is no dumping of money, the inflation will not generally
> occur.
Barry