""If the government cuts spending by a certain amount, that amount doesn't just disappear from the economy"
As a matter of fact, yes it does. Government spending with a non-convertibile fiat currency is not constrained by its ability to tax and/or borrow. I'm not saying this is the way it should be, I'm saying this is the way that it is.
"it simply remains with whoever the government would have taxed or borrowed it from."
On the contrary, federal government deficit spending means that the government is literally spending currency reserves into existence.
"Government spending does not create or destroy any money, it only redistributes it. So what are you talking about?
You would be correct if we were still on a gold standard.
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