Is it time to ditch our obsession with austerity and deficit?

Linton

CLAPTON wrote: »

at the moment we are borrowing money every day

if we are going to increase spending on 'investment' then either (or both) we increase borrowing still more or cut current expenditure (increase austerity) even more

of course it also depends what is meant by 'investment' : does it increase tax take or reduce spending to enable the debt to be repaid and in what timescale.

as I see it, we aren't starving anyone to pay off a cheap mortgage : we are increasing the mortgage daily

Current government debt as a % of GDP is still below what it has been for 50 of the past 100 years according to here. So its a concern, not an unprecedented disaster to be resolved immediately. At current interest rates the debt is not a large factor in our economy. Holding back growth by say 1% by austerity would have more impact than the interest saved.

How much of the increase is due to time limited circumstances arising directly from the crash and how much from ongoing "business as usual"? It would be nice to see a high level itemised list of incomes and expenditures.

CLAPTON

Linton wrote: »

Current government debt as a % of GDP is still below what it has been for 50 of the past 100 years according to here. So its a concern, not an unprecedented disaster to be resolved immediately. At current interest rates the debt is not a large factor in our economy. Holding back growth by say 1% by austerity would have more impact than the interest saved.

How much of the increase is due to time limited circumstances arising directly from the crash and how much from ongoing "business as usual"? It would be nice to see a high level itemised list of incomes and expenditures.

of course, during much of the period of high level of debt, times were not very good for the people so I'm not really sure the 'we have always had debt' argument is a good one.

wiki tells me our interest payments run to about 30 billion which is about 4% of government spending

This will increase
-because the debt is rising
-sometime (I'm not sure when) interest rates will start to rise

Unless one believes we have abolish boom and bust we are likely to enter a recession sometime in the (nearish) future.
WE will enter that period with higher debts than we have and I guess all will be agreed we need a period of Keynsian borrowing.

...............
we can then repeat the rational for less austerity and more borrowing because
-we have always been in debt

-the interest isn't very much
-expansion of the economy is better than reducing interest

etc.

danothy

Generali wrote: »

spanked all their money up the wall

Damn economists and their jargon.

Generali

danothy wrote: »

Damn economists and their jargon.

I'm sorry. I do try to use regular language but you get used to using jargon and it's hard to stop.

Thrugelmir

Linton wrote: »

Current government debt as a % of GDP is still below what it has been for 50 of the past 100 years according to

What's the relevance of this statistic?

Linton

Thrugelmir wrote: »

What's the relevance of this statistic?

The relevance is that our current situation isnt unusual.

HAMISH_MCTAVISH

cepheus wrote: »

Leading economist attacks austerity, praising Greens and SNPhttp://www.businessforscotland.co.uk/leading-economist-attacks-austerity-but-praises-greens-and-snp/

Ha!

"Professor Keen".... The infamous "Debt Doomer" Steve Keen.

The man who lost a very high profile bet on Aussie house prices and had to climb a mountain wearing a T-Shirt saying he was wrong....:)

Debt doom prophet Steve Keen will embark on his 225-kilometre trek to Mount Kosciuszko today, showing the debate over Australian house prices really does have legs.

As one of the conditions of the wager made in September 2008 with Macquarie interest rate strategist Rory Robertson, Keen will be wearing a T-shirt silkscreened with the words, ''I was hopelessly wrong on house prices – ask me how”.

http://www.smh.com.au/business/property/keens-long-march-to-lower-house-prices-20100414-sdn0.html

Thrugelmir

Linton wrote: »

The relevance is that our current situation isnt unusual.

That's a politicians way of sticking a plaster over the real issues.

lvader

Why should future generations pay for our mistakes? If anything we aren't cutting enough.

antrobus

cepheus wrote: »

Is it time to ditch our obsession with austerity and deficit?

Oh, absolutely!

After all, Gideon's polices have transformed the UK economy into a complete basket case compared to the rip-roaring success of Hollande's anti-austerity programme in France. Goodness knows how the Tories hope to win the next election with that kind of economic record.

What? You're telling me they just did. That can't be right. How could the British people have failed to take account of what all these "top academics" were saying? It's a conspiracy, I tell you, an obvious conspiracy. There should be a public inquiry.