The position can be characterized as:[citation needed] Any increase in government spending necessarily crowds out an equal amount of private spending or investment, and thus has no net impact on economic activity.In his 1929 budget speech, Winston Churchill explained, "The orthodox Treasury view ... is that when the Government borrow[s] in the money market it becomes a new competitor with industry and engrosses to itself resources which would otherwise have been employed by private enterprise, and in the process raises the rent of money to all who have need of it."
The term is sometimes conflated with the related position that fiscal stimulus has negligible impact on economic activity, a view that is not incompatible with mainstream macroeconomic theory.
In the United Kingdom, the staff of the Chancellor of the Exchequer, notably Ralph George Hawtrey and Frederick Leith-Ross, argued against increased spending by putting forward the "Treasury view".
Keynes argued against this position, and particularly in The General Theory of Employment, Interest and Money, provided a theoretical foundation for how fiscal stimulus can increase economic activity during recessions.
Noted macroeconomists such as Milton Friedman and Robert Barro[6] have advocated a weak form of this view, that fiscal policy has temporary and limited effects.