4 ms·
Austerity, is it really? How about not increasing spending at the same pace as other countries. Many countries could be come debt free by simply keeping spendin
by Shivetya 7y ago
Austerity, is it really? How about not increasing spending at the same pace as other countries. Many countries could be come debt free by simply keeping spending increases under the rate of inflation.
Krugman was having a hissy in 2014 about Germany for similar things, yet it worked for the Swiss. They have a cap! So staying under three percent paid off for the Germans and this upsets those who subscribe to the idea that government spending is never bad, well if you never plan to pay it off in your lifetime you can borrow against the future quite easily.
- starbugs 7y agoThis. Plus all the new money printing debases the currency eventually (even if you are the world reserve currency issuer). This is what transfers the bulk of the wealth from the bottom to the top. Wages can't keep up with inflation and the new money only arrives at the bottom once its value has been inflated away substantially already.
- chewz 7y agoIn principle, yes. But each and every Minister of Finance welcomes inflation as it increases budget revenues faster then expenses. And with increased revenues you can buy a lot of votes.
- Aperocky 7y agoWhy going debt free though? What's the point of going debt free? The real economy is dictated by production and consumption, not amount of number that you have on the either side of the balance sheet. If going into debt creates a bigger economy by balancing/revitalizing production/consumption, it should be done. The debt gets larger but so does the economy.
- toomuchtodo 7y agoThis assumes the debt you’re incurring is going to grow the economy. This is a big “if” in most developed countries, where no amount of debt will change foundational demographic transitions (see: Japan). But as long as you control monetary policy and can inflate debt away in the future, no one today really cares as the can is kicked down the road.
- Aperocky 7y agoAnd that's correct too, how much debt you have doesn't nearly matter as much as the perception that it will be paid eventually. And sovereign countries (Might only be a few on this planet) have almost unlimited choices there. The only kind of debt that matter is the debt denominated in another currency, which is dangerous.
- RockIslandLine 7y ago"Many countries could be come debt free" Why is "debt-free" a desirable condition for a nation?
- AnimalMuppet 7y agoWhy would "in debt" be a more desirable condition? If nothing else, debt free increases your freedom of action. If you're debt free, and you decide that being in debt is better, well, it's really easy to get there. But if you're in debt and decide that debt free is more desirable, getting there is much harder.
- RockIslandLine 7y agoBecause debt can be valuable. The Federal government has a unique ability to guarantee that you will hold a certain number of dollars on a certain date. That should sound a lot like "escrow" to you. Federal debt lubricates a number of economic processes.