From EJ Antoni June 2023 argument that the US was in recession:
Every dollar the government spends must first be taken from the private sector. Whether the government pays for its spending through explicit taxation, or the hidden tax of inflation, or through borrowing, public activity crowds out private activity.
In short, government spending takes away as much or more as it adds to the economy.
This is a variant of Brian Riedl’s 2010 statement:
Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another.
I get the feeling the Heritage folks just recycle text. This argument is also sometimes termed “The [UK] Treasury View” of the Exchequer in 1929.
This interpretation is consistent with either a Classical model (with perfect foresight), or a New Classical Model (with equilibrium rational expectations).
I might mention that even in real business cycle models, characterized by Neo-Ricardian Equivalence, increases in government spending will increase output (although this is welfare decreasing). I would’ve expected that Dr. Antoni would know better, since he should’ve taken Econ 661 and Econ 761 (Macroeconomic Analysis I, II, respectively).
The assertion Dr. Antoni makes is not valid if prices are sticky, and/or there is slack in the economy. For more, see here.
Little Antoni’s view, though he probably doesn’t realize it, is that finance is at best neutral, at worst a drag on production. Government “merely” redistributes money from one group to another. That’s what the financial sector does. Carried to its logical extreme, “merely” means finance isn’t useful, which is more or less the position little Antoni is taking toward government spending and taxation.
Let’s compare Antoni’s creaky old claim to another antique notion: “Finance is the handmaiden of industry.”
The point of the “handmaiden” wisdom is that real-side activity is promoted by distributing money from less productive to more productive uses. How? Money allows command of resources. Finance indirectly distributes real resources from less productive to more productive uses.
Clearly, government taxation and spending can do the same. Absent some dogma to the contrary, there is no room for disagreement on this point. Government fiscal operations and the financial industry do the same thing. If government and finance both “merely” redistribute money, then its goose and gander.
If mere redistribution isn’t beneficial, there’s no need for government to do cryptocurrencies any favors. Regulate the hell out of every aspect of finance, because there can be no harm in doing so. Let the Fed run whatever monetary policy it wants, because interest rates are just the rate charged for “merely redistributing” money. Yax Tax finance like crazy, because finance has no social value.
If, however, finance really is the handmaiden of industry, then rebistribution can be beneficial. And thus government can be beneficial. Good goverance can be a damned sight better than bad governance. Felons and demagogues probably shouldn’t be in charge.
Paging James Hamilton.
2017 video about O&G economics.* See in particular, the discussion from minute 6:30 to 7:30.
Essentially says that people figured 4 years of 100 dollars oil meant it was “the new index”. (Reminds me of your “hundred dollars here to stay”.) But Fesharaki says why should $100 be the new index?
https://www.youtube.com/watch?v=ig_QM0ZIEfk
And here, we are 10+ years from your “hundred here to stay”…which probably crashed the market. You were like the taxi drivers investing in stocks in 1929. The signal for the bubble to pop. 😉 Oil bulls can blame you. It was like the “Sports Illustrated cover” curse. Or like the Malcom Baldridge Quality award correlating to companies going BK. (Teasing, teasing.)
*Oh…and I bet you have a higher cite count than this guy. But he does have a “union card” in economics. And if you are going to study an industry, it’s not just about having a log scale on your y axis for the macro time series and being voted into AAAS. Getting a little info on how things work can be useful also, to support industry analysis. Maybe even a little micro to go along with the macro, too.
Sad little Anonymous, nothing in his own life, so he does this.
Take your axe and grind it somewhere else. Those comments sound like a poor loser.
Off topic – what an idiot:
https://www.washingtonpost.com/national-security/2025/09/25/hegseth-generals-quantico-meeting/
The highest ranking military officials tasked with naintaining our national security have all been called away from their posts, and haven’t been told why. All at the pleasure of one loudmouth drunk.
I think I figured out why. Today Trump issued a new order placing 50% tariffs on kitchen cabinets and bathroom vanities. Trump: “We must protect, for National Security and other reasons, our Manufacturing process.”
Hegseth has called in the generals and admirals to get them all on the same page regarding bathroom vanity national security. The Swedes are a particular threat.