Propaganda Debunking

Our government does. And that means that when it borrows, it has to print more money. The additional money could mean that money will buy less -- in an economy in which there is a lot of demand chasing products.

But in a deflationary economy, the government doesn't want to reduce the money supply or cut its expenditures because if it does it will reduce the amount of money that the government can tax in order to maintain the current tax rate and still raise sufficient funds.

In an inflationary economy, the government does want to reduce the money supply so it prints less money (requires banks to have more reserves and loans them more) and may raise taxes and cut its own spending.

Right now, if you think we are in an inflationary economy, then it would be right to cut the deficit.

But if you think we are in a deflationary economy, then we should not cut the deficit.