Crash writes:
Well, like I say I really see it more as a demand crisis - aggregate demand is down in the US by about a trillion dollars below the trend.
Isn't that because people were spending money on the basis of believing that the assets they owned would be worth more than they have ended up being worth?
Crash writes:
The appropriate response (in my country) is for the government to make up as much of that demand as it can...
Classic Keynesianism. Jobs. Growth. Deficits and debts as a proportion of GDP will fall as a result of growth rather than austerity. I completely agree. But in a global economy can any nation (even one as economically powerful as the US) do this if everyone else they sell things to is engaging in self-flagellating austerity?
Crash writes:
I don't know; there's issues because you live in a country that doesn't print its own money.
We do print our own money. The bank of England has been engaging in vast swathes of quantitive easing recently. But they give it to the banks who horde it and won't lend.
To increase Keynesian style demand the money would very arguably be better placed in the hands of the people. The last round of quantitative easing was equivalent to giving each person in the UK 3,500.
Crash writes:
Pretty sure Clegg's austerity budget is a bad idea.
Clegg (the Liberal democrat leader and junior coalition partner) won't thank you for describing it as his budget.
Osborne is the conservative chancellor. It's his budget.
And - No austerity isn't working. Unemployment spiraling. Growth non-existent and recession a real possibility. And as a result little dent is being made in the debt or deficit despite all the pain of massive cuts.
As Keynes predicts......