Bilge Part 2: Worse Than Nothing

clipped from mises.org Second, the actual activities promoted by new government spending would have to be of positive value, especially in the aggregate. This problem will be exacerbated by the political reality that areas in which misallocations are already greatest will experience the greatest pain, thus attracting compensatory spending. Third, the debt created to finance this spending will require either higher taxes in the future or it will generate inflation. In either case, future wealth will be lost as productive activities will be penalized. Will the wealth created today, if any, be worth the cost of future losses in wealth? 4. What should be done? The first thing to keep in mind is that activities that prevent or inhibit the re-allocation of resources out of their bubble-induced misdirected uses will only prolong the current recession. This kind of stimulus is not better than nothing. It is worse than nothing.