Good reply and good article. The only thing I didnt understand was how taxing people and spending the taxes constituted increasing the money supply (creating money as the author said it). No money is created in taxing and spending as I see it.
We also hear about how wonderful illegal immigrants are for our economy, but when some of them are sending much of their paycheck home, their savings don't help our economy one iota.
Well, because taxation reduces disposible income (which is why we all hate it :)), and people spend part of their disposible income and save part of it.
It some one saves 25% of their posttax income, and spends 75% of it, we can increase consumption by taxing them (taking part of both the 25% and 75%) and devoting it 100% to spending. It basically causes an artificial change in what economists call the marginal propensity to consume (though my old econ prof would probably have shot me if I ever phrased it that way in class). The problem is that if your spending doesn't go to form capital, it could be more effectively used in the private sector (so, hole digging out, roads arguably in). Also, government spending tends to spur on inflation.