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The Fallacy of the Government Multiplier

March 15, 2009

As we dump billions of taxpayer money into government coffers to be sent back to us in stimulus spending the fundamental questions has to be who is most efficient at spending money-government or individuals?

For those who say we must prime the pump now with government intervention do you believe the money the government spends is not taken from someone else?

There is no “multiplier” effect in government spending or a centrally directed economy. When the government borrows huge amounts of money taxpayers have to pay that money back-it is a zero sum game.

In other words if you go one side of a lake and dip your bucket into the stream and remove water to be dumped further downstream did you increase the water supply?

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