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America borrows it's way out of a debt crisis.
Comments
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Or completely vindicated?
Eh?
It's been proven austerity is a catastrophic mistake.
And that we should borrow to grow, as the US has successfully done.
Our dismal economic performance is a triumph of ideology over reality.:(“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Eh?
It's been proven austerity is a catastrophic mistake.
And that we should borrow to grow, as the US has successfully done.
Our dismal economic performance is a triumph of ideology over reality.:(
The US is a basket case."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
HAMISH_MCTAVISH wrote: »So back to the fact that you can borrow your way out of a debt crisis.
Bet those posters who compared a country's finances to that of a household (and you Mr Cameron with your absurd credit card anologies) feel pretty stupid now.
And if they don't they should do.
I don't see that the USA has borrowed their way out of a debt crisis. They have technically borrowed their way out of a recession whilst substantially worsening their their debt crisis.
I would love to see the UK cut public spending to below the percentage of GDP that the USA have, whilst at the same time significantly increasing taxation in order to fund infrastructure projects - including a massive social housebuilding project.
The UK will never be competetive when we have to pay wages at a level that allows people to afford the overpriced sub-standard housing that we have in this country."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0 -
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According to World Bank statistics, total central government debt, as a % of GDP, was 47% for the UK in 2007 and 46.8% for the USA. In 2011 it was 101.2% for the UK and 81.8% for the US. We appear to have borrowed more money than the Americans over the past 4 years, and yet it is the Americans who have the growth.
http://data.worldbank.org/indicator/GC.DOD.TOTL.GD.ZS0 -
The UK is borrowing hand over fist too.
The US's deficit peaked at 10.1% of GDP in 2009, the UK's peaked at about 11-12% IIRC and since then Government spending has continued to rise.
Now I hate to put words in your mouth as you didn't say in your OP that the British Government should be spending more but that is often the thrust of your argument. The fact is that British fiscal policy has been more expansionary than the US's. The problem the UK faces are more structural than the US's hence recovery being slower.
The UK has (had) a vast international financial services sector, much of which is now moribund and the rest is under attack from EU and US regulators (the EU just doesn't like banks, the US wants the business for herself). Replacing that output, the highly paid jobs and vast amounts of tax revenue is far from easy.
If the Government is going to run deficits at present it should do so to improve the productive capacity of the country: there simply isn't the spare capacity waiting for demand to fill it that we would expect to see right now. Things like building new roads and airports, better internet infrastructure, vocational education. They would improve things. Spending on welfare and bureaucracy seek to solve a problem that doesn't exist.
Britain's problems are on the supply side as well as the demand. Until the supply side is resolved, the demand side has nowhere to go but abroad.0 -
According to Peston, if China withdrew their credit line to America. The US economy would collapse overnight.
In the 1980's it was Japan who bought a huge chunk of US debt.
It was the same situation then too. Every auction was preceeded by rumours that Japan would buy none, or only a little but everytime they came to the rescue.'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
MacMickster wrote: »I don't see that the USA has borrowed their way out of a debt crisis. They have technically borrowed their way out of a recession whilst substantially worsening their their debt crisis..
They are on track to hit real terms reductions in debt within the next 3 years.
Because they've borrowed their way out of recession.
This is vindication for Krugman et al, who have been warning for years that UK austerity and real terms cuts at this stage of the cycle was absolutely the wrong medicine.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
In the 1980's it was Japan who bought a huge chunk of US debt.
It was the same situation then too. Every auction was preceeded by rumours that Japan would buy none, or only a little but everytime they came to the rescue.
Surplus producers must lend their excess acquired capital back to the consumers, or the producers economic model will collapse.
It's always been that way.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »They are on track to hit real terms reductions in debt within the next 3 years.
Because they've borrowed their way out of recession.
This is vindication for Krugman et al, who have been warning for years that UK austerity and real terms cuts at this stage of the cycle was absolutely the wrong medicine.
But the UK has borrowed more than the US. If US borrowing has go them 'out of recession', why has our borrrowing failed to do so?0
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