Season 1 · Episode 390
Economic growth without more money?
The growth in an economy is constrained by the money supply. Something that needs to be understood by politicians who are promising growth whilst removing money from circulation.
Debunking Economics - the podcast · Steve Keen & Phil Dobbie
February 14, 202444m 13s
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Show Notes
Rishi Sunak, like most politicians, is adamant that he can grow the economy by getting businesses to be more productive. But can businesses really grow the economy by themselves, if the government just gets out the way? You might think that by employing more people, or creating more widgets, you are helping the economy. But there’s one big constraint, which is how much money you have to spend. Without taking out a loan you can’t spend more money than you have in your own personal bank account. So, businesses that produce more will find there’s no market for any extra products, unless the supply of money increases. There are caveats, which are basically covered in the formula for GDP – but, by and large, Rishi Sunak is trying to encourage more spending by limiting the amount of cash we have by reducing government borrowing.
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