Tapering called off

[MediumTex]

So if an economy is in a recession or depression, what effect would we expect to see from a dramatic increase in government spending?

The same effect as at any other time: impoverishment of the general public and enrichment of the government's favored producers and consumers.

Is that what happened in the early 1940s?

How about in the early 1980s when Regan cranked up government spending in the midst of a recession?

[Libertarian666]

So if an economy is in a recession or depression, what effect would we expect to see from a dramatic increase in government spending?

The same effect as at any other time: impoverishment of the general public and enrichment of the government's favored producers and consumers.

Is that what happened in the early 1940s?

Yes. Money incomes went way up but there was almost nothing for consumers to buy. Then when they could finally buy consumer goods after the war, prices had risen substantially due to the inflation, so their forced savings were much less valuable than when they had been saved.

How about in the early 1980s when Regan cranked up government spending in the midst of a recession?

Yes. All the government can do is to take purchasing power away from some people and give it to others. That impoverishes the former more than it enriches the latter due to the friction (overhead) inherent in such an operation, even if we ignore the injustice of it.

If the government inflates, people can be convinced that they are richer, in which case they spend more than they would otherwise. However, this also impoverishes them because their savings are decimated both by this overspending and by the increase in the average price level due to the inflation.

[Gumby]

their forced savings were much less valuable than when they had been saved.

this also impoverishes them because their savings are decimated

Umm... Are you sure we live in the same country? Not sure where you live, but here in the United States of America, we've had an extraordinary increase in standard of living since World War II — despite the fact that the US dollar has lost 95% of its value since 1913.

[align=center]Real Per Capita Wage and Salary Disbursements
(July 2013 Dollars)[/align]

[align=center][/align]

Our standard of living has virtually doubled since 1960. Americans haven't had their savings "decimated" and we certainly haven't been "impoverished".

Even Harry Browne wrote that people who left all their money in an FDIC savings account, or T-Bills, did OK over the past few decades.