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Going into debt or balancing the budget?
Two main schools of thought in economics
Going into debt or balancing the
budget? That is the eternal question. The economy needs No, the economy
There are two main more money, even if needs less debt,
economic schools it means more debt! even if it means
of thought in polit- less money!
ical and academic
circles today: the
vision of the Brit- Source: www.positivemoney.org
ish economist John
Maynard
J.M. Keynes (1883-1946), Keynes
who
essentially said that the government Stimulus Austerity
should intervene in times of crisis
to stimulate the
economy, even if
it meant going into says that we should avoid deficits and
debt, and what cut spending instead, we can cite the
appears to be its new president of Argentina, Javier Milei,
counterpart, the vi- who openly claims to follow this school
sion of the econo- of thought, and has campaigned with a
mist Ludwig von chainsaw in hand, promising to make dras-
Mises (1881-1973), L. von Mises tic cuts in state spending (up to 40%), in-
founder of what is known as the cluding in aid to the most disadvantaged,
“Austrian school of economics,” who blaming previous governments for hav-
preached instead that the state should ing driven the country into debt. In every
not intervene, that debts should be country in the world, it’s one or the other
repaid even if it meant making cuts of these situations.
in the services provided by the state Javier Milei
and helping those in need—in other Going into debt simply means addi-
words, austerity. tional taxes for the future, but as you can see from the cartoon
Two current ex- above, even if the two discourses (debt and austerity) seem to
be opposed, both are based on the same system of money cre-
amples of these two ated in the form of debt. If you don’t go into debt, there’s simply
policies: in terms of no money in circulation. It’s a dead-end system: either you go
Keynes’s school of into debt forever, or you starve to death trying to pay it off. For
thought, we can cite example, when Pierre Poilièvre, the Canadian leader of the Op-
Canadian Prime Min- position, accuses Prime Minister Justin Trudeau of overspend-
ister Justin Trudeau Justin Trudeau ing and running huge deficits, Trudeau replies: “And you, Mr
who, since coming to power in 2015, Poilièvre, if you become Prime Minister, what spending cuts will
has not stopped increasing spending you make?”
(an 8% increase for the year 2024)
and increasing deficits year after year, The solution of Economic Democracy (also known as Social
with a $40 billion deficit for the year Credit), taught by the Scottish engineer Clifford Hugh Doug-
2024. In fact, Trudeau has almost las (1879-1952), and taken up by Louis Even (1885-1974), stands
doubled the country’s debt since above these two solutions, and is far superior to them, since it
coming to power, with the Canadian allows both the development of the country without going into
government’s debt now standing at debt, and also allows consumers to choose from the production
$1255 billion, with $54 billion in inter- offered what they need, thanks to sufficient purchasing power.
est to be paid on the debt for 2024. More money and less debt: that’s what the current financial
And as for the other school of system can’t achieve, but what Economic Democracy could (see
article on next page). v
thought, that of von Mises, which Alain Pilote
www.michaeljournal.org MICHAEL May/June/July 2024 25
