Crowding Out: Government Spending and Wealth Building

Your government trying to save the economy might actually be stealing your ability to build

wealth. It is a concept called crowding out and it is the dark side of fiscal

policy. When Congress decides to spend trillions to fight a recession, they have to borrow

that cash from the same credit market you use. But there is a limited pool of money available

for loans. When the government scoops up all that cash, the price of borrowing

skyrockets for everyone else. Suddenly, interest rates are too high for you

to buy a house or for a business to launch a new product. The government literally crowds you out of

the line for money, meaning their attempt to heat up the economy might actually freeze your personal growth.