Column: Biden's $1.9-trillion big spend is a big bet on modern economic theory

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Column: Biden's $1.9-trillion big spend is a big bet on modern economic theory (via latimesopinion)

President Biden’s plan to flood Americans with nearly $2 trillion in coronavirus aid could come to a House vote early next week. Odds are decent it will also pass in the Senate.“Now is the time we should be spending,” Biden said Tuesday at a CNN town hall in Milwaukee. “Now is the time to go big.”

The old approach has a history that begins — as so much economic theory does — in trauma. In the 1970s, just after the gold standard was ended for good, architects of monetary policy grew concerned that inflation would afflict our untethered currency. They proposed reducing deficits and government spending to keep money in shorter supply. Inflation surged anyway. Then the energy crisis hit.

So now economists — and Biden — are trying something new. They’re working on the premise that it’s neither government deficits nor a failure of thrift that causes economic problems. Rather, it’s governmentthat leads to unemployment, which in turn deprives people the money they need to cover taxes, which in turn pay for the common good.

 

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