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A questions, is the broken window a fallacy if it forces you to spend money when instead you were just going to put it into the bank, and there is already enough money in the banks.



It's not. That's the original Keynesian analysis of the liquidity trap. Dollars have no inherent stored value, so putting them to use can improve economic productivity, even if the reason they start moving is silly.

Breaking windows is a stupid way to crate liquidity though. Better to do some debt-financed spending without destroying anything. For example, the USA's CCC and TVA, that started ending the Great Depression.


Is that an argument in favor of China's relentless infrastructure spending?


Unless we're talking about physical cash under a mattress, "stored" dollars in banking are put to use through loans and investments.




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