Austerity Doesn’t Always Work

[riqster]

"Not quite a century ago, America had the Great Depression. The government at first tried to let the free market fix everything, used a tiny amount of stimulus, imposed austerity measures, and made things even worse. A subsequent administration used huge amounts of stimulus, which helped the economy to recover and made it possible for the United States to avoid being taken over by the German Empire later on. Only a few fringe theorists think that we should have stuck with austerity in that case."

More at the Link:http://bluntandcranky.wordpress.com/2012/11/14/austerity-doesnt-always-work/

[jody]

1. War was the answer and the Bush-Obama never-ending war on terror is the ultimate answer. nt

[al_liberal]

2. How about it never works.

Withdrawing money from the economy during a depression will only exacerbate said depression. Adam Smith might have introduced the Western world to economics but John Maynard Keynes defined how economics actually works.

[riqster]

4. Adam Smith is often mis-quoted by the Right

Or selectively quoted, at best.

[jody]

5. And Ludwig von Mises defined how economics actually works BEST. nt

[theKed]

7. I hope we find,

and i think i'm not mistaken, that we're finally coming out of the shadow of Friedman, Hayek and the rest of the Chicago school of economics.

On Keynes, and the Chicago School

&feature=related

Noam Chomsky on Smith

[octoberlib]

3. Has austerity ever worked?

The economy has always done better under Democrats http://www.forbes.com/sites/adamhartung/2012/10/10/want-a-better-economy-history-says-vote-democrat/tic presidents.

[Warpy]

6. Austerity at the national level NEVER works!!

While it might make sense to people who don't know much outside their own lives and who have experienced periods of diminished expectations during tight cash flow periods, it doesn't work that way when scaled up.

The only choice during economic crisis is government spending to create jobs, repair or replace necessary infrastructure, and give labor the means to buy the goods and services that keep money in the larger economy moving. Nothing else will work since the next boom usually hinges on the improved infrastructure and the next boom is necessary to keep the whole thing going. That's why simple handouts don't work all that well, they don't build anything.

Austerity is mostly the darling of the rich, who know their ridiculously huge fortunes will be tapped to support the vitally necessary increase in government spending. Never mind that down the road their fortunes will increase as the economy gets going again, all they can see is numbers trending downward and that makes them hear the wolf at the door.

This is what we are facing. Expect austerity in the short term, the rich will insist upon it and they still own most of Congress. However, with Republicans out of office, don't expect it to last as long as it has in Greece.