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Originally posted by tothetenthpower
reply to post by beezzer
John Maynard Keynes said in 1937: “The boom, not the slump, is the right time for austerity at the Treasury.” Contemporary Keynesian economists argue that budget deficits are appropriate when an economy is in recession, to reduce unemployment and help spur GDP growth.[8]
Economist Paul Krugman explained that a government is not like a household. Across an economy, one person's spending is another person's income. If everyone is trying to reduce their spending, the economy can be trapped in what economists call the paradox of thrift, worsening the recession as GDP falls. If the private sector is unable or unwilling to consume at a level that increases GDP and employment sufficiently, he argued the government should be spending more.[9]
I'm inclined to agree.
Austerity only hurts the middle class, in most cases. The government uses austerity as a means to ignore the larger economic issues on the table.
How are Greece and Spain handling all this austerity? I'm pretty sure the unemployment rate is hovering at like 20%?
Iceland didn't do any austerity a far as I know, and their economy is on the up tick.
There are other ways of getting a stable economy. It actually would be easier if the US had not dismantled it's manufacturing back in the 70's and 80's.
~Tenth
Originally posted by XPLodER
reply to post by beezzer
well im not american so i can say this,
you spend more money on your military than the next 10 countries combined,
the economy is based of military spending,
you need innovation and R&D,
you need to remove stuff like export benefits for companies who offshore jobs,
but most of all
YOU MUST UNDO THE BUSH TAX CUTS
they are structurally damaging your economy.
giving the rich more money wont help, they will just ship it offshore to a tax haven,
the only thing that can save your economy is money in everybody's pocket,
the consummation of goods and services ONLY feeds the economy
MONEY IS CRITICAL TO COMMERCE. when there is a "shortage of the medium of exchange" (money)
when even profitable business cant complete transactions, that is what causes where the us is NOW.
you need to understand taxing billionaires to flood the economy with the medium of exchange (money) is the only thing that will spur growth, (and that means non for the banks till it is profit)
xploder
To borrow XPloDer's analogy, the patient is on the OR table. The patient is crashing. The patient is dying. Keynesian policies are like giving this patient pamphlets on quitting smoking and benefits of jogging.
Spain and Greece are fighting austerity and are now being forced to tighten their belts. If we enact it voluntarily we may stand a chance.
Originally posted by tothetenthpower
reply to post by beezzer
Fair enough I'll take that.
But why would the middle class tighten it's belt when those at the top will still live like kings?
Especially since their wealth was made by mostly screwing that middle class worker?
I wonder what kind of growth would be generated if the top 5 companies on DOW or S&P gave ALL their annual bonus funds equally among it's non executive work force?
I'm not disagreeing that spending cuts are required. Really tough ones at that and everybody is going to have to settle down for a moment or two. But the middle class and the poor should be the least effected by all of this.
~Tenth
There's demand for greener products, nope can't have those. Our infrastructure is crumbling, nope can't fix it.
I don't have a problem with the rich not hiding behind loopholes. Not at all.
But that won't fix the problem.
Please allow me an analogy.
The government is like a heroin addict who is committing burglaries to support the habit. (Raising taxes) supplying heroin to the addict might prevent burglaries, but it won't cure the addiction.
Starving the addict might eventually cure the addiction, but it won't stop the thefts.
Treating the addiction and stopping the burglaries has to be done simultaneously in order for success to be achieved.
Just focusing on the wealthy won't rid us of the problem. The drain caused by entitlements also has to be addressed.
But the wealthy are the ones who hire lobbyists to get those tax increase/cuts and subsidies.