He wants more money poured down the pipe. The money will seek the shortest path toward liquidity. Congress can easily spend it, and Congress is borrowing most of it. The second biggest chunk is going overseas, and will for a while as long as bond holders feel Treasury bills remain liquid. Little of it goes into the American domestic sector because we are still jammed up, dealing with state bankruptcies, oil shortages, and sticky wages.
But Congress doesn't seem to be turning a profit, see the Crowding Out post. And the IRS has no authority to collect taxes over seas, nor are investors likely to return overseas profits back to the US any time soon.
So Scott Sumner does have to worry about output distribution, he has to worry about whether the money path corresponds to the macro economy he is measuring. If he is measuing national accounts in the US but much of the money flows to Eastern Asia, then he has a problem, he will continually advocate NGDP growth unit the results are not showing up on national acounts, as higher oil pirces
Have no fear, however, bond holders are much smarter. They will shut off the flow with crunching interest rates long before.
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