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What is understood about national debt today?

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Today we understand that the federal government has the ability to expand its own income through borrowing money, printing money, and tax increases. Since the 1930s, however, the economic theories of John Maynard Keynes (1883Ð1946) brought the realization that retiring the debt should not be an automatic reflex. That is because the debt can help in the fight against depression. If, during a depression, the government borrowed money and invested it in government projects that created jobs and produced a ripple effect and stimulating secondary investment and employment (such as a restaurant near a factory), the economy might regenerate itself and pay off the debt.

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Similar questions: How can the federal government expand its own income? Why is retiring the national debt not an automatic reflex? [ Hide these questions ]

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