The fallacy of "fiscal austerity..."

[Lukey]

The fact is, in the Eurozone, as well as in America, governments are spending more now than they were before the economic crisis:



There have been no "savage" spending cuts that would constitute "fiscal austerity" as the Keynesians claim. What we had were massive spending increases in the mid-00s in response to the financial crisis and the recession, and then as was planned, spending declined (fairly modestly) from those temporary bloated levels after the recession ended. So the fact is that governments are spending more than they ever have (save for a year or two when "stimulus" spending was added to the budgets in the developed economies) yet there has been no return to economic growth - not because we aren't letting governments be profligate enough - but because the "stimulus" didn't work! And because we aren't removing the tax and regulatory speed bumps enacted since the turn of the century to allow for a more normal recovery, and, in fact, have continued to add more. So don't be fooled by the misleading charts and cherry picked facts and the false narrative woven by the Keynesians. The only fact you need to know is ever bigger government and ever higher debt levels (deferred tax increases) slow the economy, not speed it up. They are selling a counter factual snake oil.

 

[Jets]

Bottom line is that we will always spend more than we take in revenues. Borrowing money that cannot be paid back is the rule not the exception. Our elected officials will never deal with this issue head on, because kicking the can down the road is too easy to get away with.

My two cents

 

[Lukey]

Bottom line is that we will always spend more than we take in revenues. Borrowing money that cannot be paid back is the rule not the exception. Our elected officials will never deal with this issue head on, because kicking the can down the road is too easy to get away with.

My two cents

You might be right. The only reason the Greeks are being forced to face their debt problem is because they don't print their own money. As can be seen with Japan (debt @ 270% of GDP and still paying close to zero percent interest) this can go on almost indefinitely if you do. But I'm thinking the debt amounts the US is running up in relation to, say, Japan, may make the road this particular can can be kicked down a bit shorter for us.

 

[as seen on tv]

governments need to approach spending cuts the same way which private businesses do.

private businesses - like the one which employs me - DONT ask "how can we cut a nickle and dime from this function?"

instead they ask - "does this function need to be done at all? does it make our customers richer, or more satisfied? does it fulfill some regulatory mandate? none of the above you say? then get rid of it . . . "

 

[Lukey]

governments need to approach spending cuts the same way which private businesses do.

private businesses - like the one which employs me - DONT ask "how can we cut a nickle and dime from this function?"

instead they ask - "does this function need to be done at all? does it make our customers richer, or more satisfied? does it fulfill some regulatory mandate? none of the above you say? then get rid of it . . . "

Yes, which is precisely why the "sequester" ended up not fulfilling the dire predictions of the Keynesians. Any entity can find bloat to cut and not lose a step, and that is precisely what the bureaucrats did when they were forced to. We should do it again. And again. And again. Until we get the size of government back to where it is no longer crowding out the private sector. Maybe that's why the Keynesians are so diehard trying to paint the ongoing failure of the developed economies to recover (falesly) as a result of "austerity" - the best economic performance since the recession was in 2013 when the sequester was enacted. Now they are falling all over themselves to explain it away by claiming the "austerity" wasn't as bad as they expected:

http://www.zerohedge.com/news/2014-12-31/paul-orwell-krugman-touts-job-growth-obama-recovery

And the return to spending increases (and an end to "austerity") is what drove the better economic performance. Well, the spend-a-thon resumed (thanks to entitlement spending) and what happened? You guessed it - the economy slowed back to a crawl.

And then there's the UK, excoriated by the Keynesians for pursuing "austerity" that was bound to doom them to depression - surprise - they are turning in the best economic recovery of the Euro-socialist economies:

http://www.businessinsider.com/uk-recovery-is-pulling-away-from-europe-2015-2