MMT-Canada Community

Make contact if interested in MMT-Canada discussion or occasional news.


Facebook page:

Modern Monetary Theory in Canada - facebook


Surpluses and Depression




[Reference: Thayer, F.C. (1996) 'Balanced Budgets and Depressions', American Journal of Economics and Sociology, 55(2), 211-12]


The article is the evidential basis for statements you will hear from Modern Monetary Theory (MMT) presenters over the last 15 years that every time the US government runs a surplus, a recession has followed soon after.


… the consistently startling historical record.

He documents 6 depressions – 1817-21; 1823-36; 1852-57; 1867-73; 1880-93; and 1920-30 – as “significant economic depressions among the innumerable ‘business cycles’”.


He demonstrates that:

Each sustained period of budget-balancing was immediately followed by a significant depression. There are as yet no exceptions to this historical pattern.



The message from this analysis is clear. As Frederick Thayer notes:

… if the market for consumer goods cannot do the job, there is every reason to turn to the production of public goods, always in short supply anyway.


The paper is available – HERE