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The Ludwig von Mises Institute  Advancing Austrian Economics,
Liberty, and Peace  Advancing the scholarship of liberty in the
tradition of the Austrian School  Search Mises.org  DeLong on
Deficits  Mises Daily: Monday, July 19, 2010 by   In a recent
blog post, UC Berkeley economist Brad DeLong made an arithmetic
case that, "We need bigger deficits now!" As an Austrian
economist I naturally find his conclusion horribly mistaken, but
it will still be useful to go through DeLong's argument and
identify exactly where he goes astray.  "Normal" Economic
Arithmetic  To his credit, DeLong has always been careful to
restrict the case for deficit "stimulus" to cases of economic
depression. In other words, DeLong agrees with non-Keynesians
that under normal circumstances, government budget deficits per
se do not boost economic growth and in fact are generally
counterproductive unless the specific items being purchased are
socially valuable. DeLong writes,