Debt, Deficits and the Cost of Free Lunches

By Richard M. Ebeling

“As I explain, politicians love spending other people’s money to get elected, and especially when they can create the fiscal illusion that it does not cost as much as it really does because this fiscal year, $900 billion of the federal government’s expenditures will be with borrowed funds to cover the deficit spending over what is collected in taxes.

But there are no free lunches. There are real costs from that government borrowing, in the form of misdirected savings in the economy of that $900 billion not being available for private sector investment and capital formation to better serve future consumer wants. I explain what types private sector production we lose from the government’s borrowing.”