John Maynard Keynes was an economist who broke with traditional economic theory. Traditional economic theory said that the government should stay out of the economy. Traditional economic theory said that balanced budgets were necessary for economic growth. Keynes did not agree with these ideas.
Keynes said that the government should not try to have a balanced budget during bad economic times. He said that a balanced budget would actually prevent economic growth in such times. ...
John Maynard Keynes was an economist who broke with traditional economic theory. Traditional economic theory said that the government should stay out of the economy. Traditional economic theory said that balanced budgets were necessary for economic growth. Keynes did not agree with these ideas.
Keynes said that the government should not try to have a balanced budget during bad economic times. He said that a balanced budget would actually prevent economic growth in such times. Instead, the government needed to do things to make sure that the people had more money that they could spend. When the people spent their money, the economy would grow.
This means that Keynes wanted the government to lower taxes and to spend more during a recession. This would, of course, result in a budget that was not balanced. Keynes, then, thought that a balanced budget was not essential to economic growth. He thought that lower taxes and more government spending (which would create deficits) would cause economic growth and get the country out of a recession or depression.
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