The best was also the shortest, only 335 words. Stated were 12 economic concepts every college graduate should know. Sargent started out by saying, “Economics is organized common sense. Here is a short list of valuable lessons that our beautiful subject teaches.”
Here is lesson number 10:
10. When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.
With Obama’s annual deficits of a cool trillion dollars, we should take that one to heart. The bill for this indulgence will come due one day, probably after Obama is long gone. As Milton Friedman pointed out, the government can only get the dollars it spends in one of three ways: taxing, borrowing, or creating new money. Taxing and borrowing take from the economy, essentially canceling out the effects of the spending or worse. Creating new money amounts to monetary stimulus which mainly helps those who own substantial assets in real estate, stocks or other investments. The Obama/Bernanki/Yellen economy has recently proved that. Private sector spending is the real stimulus although it is actually a symptom of genuine wealth creation kindled by business investment and supply side growth. Supply side wealth creation is the only stimulus that creates economic growth and benefits everyone in the whole economy, either directly or indirectly. Organized common sense, indeed.
Read the other 11 economic concepts every college graduate should know at the Business Insider.
Psssst: You’re allowed to know these even if you’re not a college graduate. In fact, a lot of people who know these concepts the best never finished college.