It’s a directionally correct way of thinking about it, but there is more complexity to it than that.
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When the US government runs a 6% deficit and we have 3% gdp growth, does that mean if the US gvt had a balanced budget we would have had -3% gdp growth? Or is that too simplistic?
Discussion
Hey Lyn, is there any credence to the idea about the treasury spending currency directly into the economy without using the Fed to borrow the deficit into existence first? IOW for this experiment assume the same budget and the same Fiat currency, removing the initial transaction of the Fed lending to treasury.