"But for a confidence-building public-works program to be effective in arresting an economic collapse, the government must be able to finance its increased spending by means that do not reduce private spending commensurately. If it finances the program by taxation, it will be draining cash from the economy at the same time that it is injecting cash into it. But if it borrows to finance the program (deficit spending), or finances it with new money created by the Federal Reserve, the costs may be deferred until the economy is well on the way to recovery and can afford to pay them without endangering economic stability."
Doesn't new money creation have the same effect as directly taking cash from the economy? After all, it does cheapen all available money. How, then, can he say that these costs are deferred?
Doesn't new money creation have the same effect as directly taking cash from the economy? After all, it does cheapen all available money. How, then, can he say that these costs are deferred?