Hayek on Reagan & “Supply Side Economics” in 1985

From the  March 25, 1985 issue of Profil 13, translated by an anonymous blogger:

“[Reagan’s] politics? When the government of the United States borrows a large part of the savings of the world, the consequence is that capital must become scarce and expensive in the whole world. That’s a problem.”

“You see, one of Reagan’s advisers told me why the president has permitted [massive deficits] to happen, which makes the matter partly excusable: Reagan thinks it is impossible to persuade Congress that expenditures must be reduced unless one creates deficits so large that absolutely everyone becomes convinced that no more money can be spent .. [Reagan believes he can] persuade Congress of the necessity of spending reductions by means of an immense deficit. Unfortunately, he has not succeeded!!!”

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