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Politics : Mainstream Politics and Economics
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To: koan who wrote (7849)1/31/2012 4:22:21 PM
From: Bearcatbob3 Recommendations  Read Replies (1) of 85487
 
There is no doubt that the US is still in a position to borrow money and spend more today. I trust you would agree that at the current rate of debt building this condition will not last. At the point when borrowing costs rise substantially that smoke screen of our structural problems will be gone and we will be Greece.

Ah - but you say we are the US - we an always simply print more money while Greece cannot. I submit that at some point the Confederate policy of government finance will crash and burn as did that of Jefferson Davis.
You say austerity is bad. Well, when you come to when you have no money and no ability to borrow - of course it is bad. That is why it is so necessary to adopt policies now while it is still possible to avoid that fate.

Ah you say - what if Greece simply had the Drachma - then they could print money. Yes and it would become essentially worthless. The people of Greece are going to have to have a compensation decrease of circa 50% to become competitive. It will either be through harsh adjustments while they stay with the Euro or by use of a semi worthless Drachma.

The dance has ended in Greece. Yes - austerity is tough. However, unless we or the Germans are willing to subsidize their profligate lifestyle - there will be painful austerity. Hopefully they will react to the pain by throwing out the loony leftist statist socialist policies that have lead to their - and will lead to our - financial stagnation.

Krugman is right - austerity is tough. But when the money comes out - change you can believe in - but many not want - will have to occur.

So koan - you and the rat may want to practice Confederate economics - but I do not.

Bob
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