Source: Cobden Centre
by Dr. Frank Shostak
“By popular thinking the budget deficit reduces national savings, whilst a budget surplus is seen as contributing to savings. National savings are defined as the sum of private savings (the after-tax income that households save) and public savings. By generating budget surpluses, so it would appear, the government generates wealth, thereby strengthening the economy’s fundamentals. This argument would be correct if government activities were of a wealth-generating nature. This is, however, not the case.” (07/29/25)