Economic Views
Mainstream economics mainly advocates a cyclically balanced budget, arguing from the perspective Keynesian economics that budget deficits provide fiscal stimulus in lean times, while budget surpluses provide restraint in boom times.
Alternative currents in the mainstream and branches of heterodox economics argue differently, with some arguing that budget deficits are always harmful, and others arguing that budget deficits are both beneficial and in fact necessary.
Schools which often argue against the effectiveness of budget deficits as cyclical tools include the freshwater school of mainstream economics and neoclassical economics more generally, and the Austrian school of economics. Budget deficits are argued to be necessary by some within Post-Keynesian economics, notably the Chartalist school.
- Larger deficits, sufficient to recycle savings out of a growing gross domestic product (GDP) in excess of what can be recycled by profit-seeking private investment, are not an economic sin but an economic necessity.
Read more about this topic: Balanced Budget
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“We have heard all of our lives how, after the Civil War was over, the South went back to straighten itself out and make a living again. It was for many years a voiceless part of the government. The balance of power moved away from it—to the north and the east. The problems of the north and the east became the big problem of the country and nobody paid much attention to the economic unbalance the South had left as its only choice.”
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