Don Boudreaux writes,

Government cannot create genuine spending power; the most it can do is to transfer it from Smith to Jones. If the Treasury sends a stimulus check to Jones, the money comes from taxes, from borrowing, or is newly created.

If it comes from taxes, the value of Jones’s stimulus check is offset by the greater taxes paid by Smith, who will then have fewer dollars to spend or invest. If Uncle Sam borrows to pay for the stimulus checks, this borrowing takes money out of the private sector. Any dollars borrowed – whether from foreigners or fellow Americans – for purposes of stimulus would have been spent or invested in other ways were they not loaned to the government.

Don is tossing out every macroeconomics textbook written since 1950. Which may be the right thing to do. Macroeconomics is something like the evil twin of classical economics.

Classically, we say that work is bad and leisure is good. Resources are limited and wants are unlimited. Macro says that we need to “create jobs.” The entire edifice of macro is a monument to what Bryan Caplan scorns as “make-work bias.”

Classically, we say that saving is good, or at least an acceptable option for consumers. Macro says that if consumers don’t spend like drunken sailors, terrible things will happen.

Classically, we have nothing good to say about government deficits. Macro says that government deficits provide “stimulus.”

I am not sure that classical economics is entirely right and that modern Keynesian macro is entirely wrong. I think that if we had double-digit unemployment, I would try something Keynesian. Right now, though, the big emergency is that this is an election year. As I said here, I am not favorable toward fiscal stimulus at present.