Burying Banknotes...

Even with signs of recovery arising from the current economic mudpit like so many fresh green shoots of spring, government spending continues to constitute a very large part of the American economy. In fact as we noted recently, the government provides 35% of the salary and wage benefits in the whole country. Other government spending is represented by the almost ubiquitous 'Brought to you by the American Recovery and Reinvestment Act' signs along the nation's roadways.

Serious and intelligent minds can disagree about whether stimulus packages have been too big or too small and whether there should be more or less government intervention in the economy. But surely there is some reductio ad absurdum regarding government spending which can show that Keynes on steroids isn't the best answer for all economic ills...or is there? Tim Harford of The Financial Times explores the famous example of the government burying banknotes to stimulate private sector activity in an article which is slightly dated, but no less interesting for it, here.