Okay, I finally finished parsing that stupid Wray article. His "error" is obvious really. He completely ignores the effects of macroeconomic policy during recessions.
During the postwar era it has been standard policy to increase Federal deficit spending during recessions ("Keynesian economics"). So obviously recessions are going to follow periods of reduced deficits. Because as soon as we know we are in a recession, we immediately increase deficit spending until we are out of it. Then we reduce our deficits------- until the next recession.
So reduced deficits did not cause recessions. Instead the recessions caused increased deficits. Which subsequently had to be reduced. The recessions only "follow" the reduced deficits because time moves forward.
Stupid really, but if you read Wray's conclusions he is very careful to never make any policy recomendations. His conclusions hinge on purely semantic arguments. Weasel.
During the postwar era it has been standard policy to increase Federal deficit spending during recessions ("Keynesian economics"). So obviously recessions are going to follow periods of reduced deficits. Because as soon as we know we are in a recession, we immediately increase deficit spending until we are out of it. Then we reduce our deficits------- until the next recession.
So reduced deficits did not cause recessions. Instead the recessions caused increased deficits. Which subsequently had to be reduced. The recessions only "follow" the reduced deficits because time moves forward.
Stupid really, but if you read Wray's conclusions he is very careful to never make any policy recomendations. His conclusions hinge on purely semantic arguments. Weasel.
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