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My... Let's see what the Economist has to say about all this:
The austerity fad is also distorting politicians’ priorities. Many European governments, for instance, are fixated on cutting their deficits, when they should also be trying harder to shake up their labour and product markets. A new analysis by the IMF suggests that fiscal austerity coupled with structural reforms would yield far higher growth than austerity alone. In America the new deficit-focused climate is preventing politicians from passing a temporary (and sensible) fiscal stimulus package without inducing them to tackle the sources of the country’s huge medium-term deficit by, for instance, reforming social security. The result probably won’t be another Hooveresque Depression. But it could be a recovery that is weaker and slower than it should have been.
My... Let's see what the Economist has to say about all this:
The austerity fad is also distorting politicians’ priorities. Many European governments, for instance, are fixated on cutting their deficits, when they should also be trying harder to shake up their labour and product markets. A new analysis by the IMF suggests that fiscal austerity coupled with structural reforms would yield far higher growth than austerity alone. In America the new deficit-focused climate is preventing politicians from passing a temporary (and sensible) fiscal stimulus package without inducing them to tackle the sources of the country’s huge medium-term deficit by, for instance, reforming social security. The result probably won’t be another Hooveresque Depression. But it could be a recovery that is weaker and slower than it should have been.
What past examples of heavy stimulus spending is Krugman using as an example of why his suggestion will work?
According to this Keynes use of stimulus spending wasn't supposed to be used when countries are dealing with the massive debt we're seeing with most countries now.
Quote:
Keynes himself never imagined that peacetime government borrowing of more than 25 per cent of GDP would be necessary, and so funding his spending programmes was never a problem since the government's creditworthiness was never called into question.
By 2014, however, government debt across the US and Europe is expected to be around 90 per cent of GDP. The crisis in the peripheral European government bond markets this year is showing that, at such levels of debt to GDP, the capital markets are now questioning the creditworthiness of the governments as borrowers.
So it is that the western world now finds itself in a real mess. Decades of deficit spending and borrowing appear now to have reached their limit.
What past examples of heavy stimulus spending is Krugman using as an example of why his suggestion will work?
According to this Keynes use of stimulus spending wasn't supposed to be used when countries are dealing with the massive debt we're seeing with most countries now.
The problem is that Krugman operates under the sphere of influence known as neo-Keynesianism, a religious cult akin to the Church of Gore or the altar of neo-conservatism, at least in terms of zeal and vitriol (aka bull****).
No, the mistake that Japan AND the U.S. made, was spending on a micro level, w/out pushing lending to small business' and encouraging lending from the larger institutions to smaller.
Japan spent and spent and spent, w/out investing in the consumer. That was their mistake.
Maybe he can go do something more productive with his time, like be a garbage man or something. I swear, it seems the smarter someone is supposed to be, the dumber they get....
My... Let's see what the Economist has to say about all this:
The austerity fad is also distorting politicians’ priorities. Many European governments, for instance, are fixated on cutting their deficits, when they should also be trying harder to shake up their labour and product markets. A new analysis by the IMF suggests that fiscal austerity coupled with structural reforms would yield far higher growth than austerity alone. In America the new deficit-focused climate is preventing politicians from passing a temporary (and sensible) fiscal stimulus package without inducing them to tackle the sources of the country’s huge medium-term deficit by, for instance, reforming social security. The result probably won’t be another Hooveresque Depression. But it could be a recovery that is weaker and slower than it should have been.
What the Economist conveniently omits is the inflation rates that each country that is pledging to cut their budgets is facing. Approaching double digit inflation MUST lead to a slow down and deficit reduction approach and 'austerity' vs. spending.
Maybe he can go do something more productive with his time, like be a garbage man or something. I swear, it seems the smarter someone is supposed to be, the dumber they get....
Yep, stimulus money and zombie banks worked great for Japan during the 90s.
Again, Japan and so far we as well, have spent in the wrong manner. We've not observed the pit-falls, and have caved on financial regulation, the same as Japan has done. THAT is the only coincidence. Spending and propping up the consumer and small business is necessary, or the recovery and economic health will be stagnant through out the medium to long-term.
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