Economic concepts

Governments can reduce deficits by reducing spending or by increasing revenues. Revenues can come from taxation, or from tariffs. Keynesian economic theory holds that governments should interfere in the monetary market to assure macroeconomic outcomes--it is definitely not laissez-faire. One of the most common keynesian methods has been deficit spending, which is not exactly consonant with reducing the debt. One problem of deficit spending by the government to shore up the economy is that it reduces the money supply with which businesses would otherwise expand their operations or re-tool their manufactories.

Reducing deficit spending, balancing annual budgets and paying down government debt is not, as far as i know, accorded any specific name as an economic policy. (I propose sensible government--but i don't think it will catch on.) It has been tried, recently, in a large economy. Clinton, faced with a Republican Congress after 1995 (he is a Democrat) fought the good fight, and got the Repbulicans to balance the budget for several years. He left Mr. Bush a surplus. Of course, Mr. Bush promptly squandered it with what his father called vodoo economics--the "Reaganomic" principle of tax cuts and trickle down.

Thank you so much! So the act of stopping government stimulus and letting businesses take care of themselves is still Keynesian economics?