Ep. 280 The Theory and History Needed to Refute Keynesianism and MMT
Bob Murphy Show
The Effect of Interest Rates on the Economy
If every government around the world simultaneously eliminated its government deficit spending and balanced their budgets without raising taxes through spending cuts it's not that all the currencies would depreciate against each other. If central banks held pat and didn't engage in expansion you know didn't pump in more money what would probably happen is interest rates would still drop. Domestic prices around the world would drop and that's how you would get households to increase their consumption spending and businesses because the fall interest rates would increase their investment and that's what would fill the gap so yeah if all the countries did it simultaneously it wouldn't be that the fall in one government spending was that that vacuum was filled by increases in spending or
