Austerity – a dangerous idea

12 Apr, 2013 at 14:45 | Posted in Economics | 4 Comments


(h/t Jan Milch)


  1. This is a classic example of an economist who doesn’t get the distinction between the EZ and in contrast countries which issue their own currency (monetarily sovereign (MS) countries). At least he certainly confuses the two in the first three minutes, so I cannot be bothered watching any more.

    His points are valid for MSs. As the EZ periphery (and he specifically mentions Italy) his points are irrelevant. The basic reason for austerity in the EZ periphery is the disparity in competitiveness as between periphery and core. And that can be dealt with by cutting wages and prices in the periphery, and attempts are being made at the moment to cut those wages and prices via austerity. But that’s a horrendously slow way of doing it as compared to an MS, which can devalue overnight.

  2. Starts out promising…then falls-off-table out-of-paradigm quickly.

    Borrow from ourselves? Conflate public and provate debt? Repay public debt?

    Most will come away from this more confused than ever.

  3. The floggings will continue until morale improves.

    • Maybe the austerians have watched to much of Ingmar Bergman’s “The Seventh Seal” …

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