Spending cuts and taxes are bad for the economy

  Spending cuts weaken the economy the same way taxes weaken the economy. Its about the pool of money or the money supply. Government spending helps inject money into this so called money pool. And taxation helps take that money back out. Thus if the purpose is to increase our supply of money, neither spending cuts or taxation should be encouraged.

  If government spending is equal to taxation, then there is no change all other things being equal. All we are doing is redistributing wealth, neither creating more or less. Government spending should be regulated the same way interest rates are regulated. To keep track of inflation.

  Increased spending, low interest rates, tax cuts all help boost the economy. All three also have an effect in increasing inflation. Decreased spending, high interest rates, and increased taxes all help weaken the economy, but also helps control inflation.

  The traditional understanding of inflation is simply more money chasing after fewer goods. In actuality, inflation also encourage businesses to produce more aggregate goods. Government spending, interest rates, and taxation all have a real effect on the money supply.

  The financial contraction of 2008 helped reduce prices for goods and services across the globe. The lower prices reduced incentive for businesses to even produce.