from the cited article: > The only way to break this feedback loop is to have *dramatic write-downs of debt*. (quote from R&R)<
right. Of course, the Austerians don't want write-downs. > ... Moreover, quantitative analyses provides evidence that *private*debt > levels matter *much more* than public debt levels<http://www.washingtonsblog.com/2012/11/top-economists-told-obama-that-economic-recovery-required-a-reduction-in-private-debt.html> < that's absolutely right. Governments do go bankrupt, but not as easily as private citizens and corporations do. > Finally, the austerity-versus-stimulus debate cannot be taken in a vacuum, given that the *Wall Street giants have gotten the stimulus* and the little guy has borne the brunt of austerity. > Steve Keen showed that giving money *directly to the people* would stimulate much better than giving it to the big banks<http://www.washingtonsblog.com/2009/09/steve-keen-out-thinks-larry-summers.html> < I don't think the idea of giving money to the banks was meant to stimulate the economy. The idea was rather that the economy (as its currently set up) _needs_ banks, which _need_ to be saved. Nationalizing banks to save the system was ruled out from the start (unlike with the Savings & Loans circa 1989). . > *Neither* stimulus nor austerity can ever work … unless and until the *basic problems* with the economy are fixed<http://www.washingtonsblog.com/2011/07/what-both-sides-are-missing-in-the-debt-ceiling-debate.html> < it depends on what the goal is. stimulus works better to reduce unemployment, since austerity raises it. However, it's possible that fiscal stimulus will run into barriers because of excessive private-sector debt and/or industrial capacity which prevent businesses from doing new fixed investment. In that case, stimulating business investment further would simply cause inflation. I don't think we're at that point yet, so that stimulus should be tried. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante.
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