this post was submitted on 05 Jul 2025
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[–] konki@lemmy.one 1 points 12 hours ago

No, it doesn't. What could lead to inflation is government bidding up prices by spending in areas where the resources are already fully employed. That can happen whether the government runs a deficit or a surplus. If the government spends on something where there is idle productive capacity, the spending is not necessarily inflationary, as the increased demand is easily met by an increased supply. If, on the other hand, the government spends on something where the production is already at full employment, they will be engaged in a bidding war against the private sector (a bidding war the government will always be able to win) which will drive prices up. My point is that both these scenarios are independent of whether or not the governemnt runs a deficit. It is simply a question of real resources.