Budget deficits from "summary" of The Economic Consequences of Peace by John Maynard Keynes
Budget deficits occur when a government spends more money than it collects in revenue. This imbalance can lead to a host of economic issues, including inflation, high interest rates, and a weakened currency. In my analysis of the economic aftermath of the war, I argue that budget deficits can have significant long-term consequences on a country's overall financial health.
When a government runs a budget deficit, it must borrow money to make up the difference. This borrowing can lead to an increase in interest rates, as the government competes with private borrowers for available funds. Higher interest rates can then dampen investment and consumption, further slowing economic growth. In extreme cases, budget deficits can even lead to hyperinflation, as...
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