Finance Ministers May Not Believe …
… in John Maynard Keynes, but the economy does.
Steve Bates notes that Krugman is still shrill about the Austerians, and keeps posting facts to make his point.
David Cameron has just admitted that the austerity will continue no matter what, because it is good for the country. This despite the fact that when he was campaigning he said it was necessary only for the fiscal crisis.
The Western economies are not growing because there is no demand. There is no demand because everyone, including governments, are cutting budgets and reducing costs. One of the major ways of reducing costs is by cutting jobs. Fewer people with jobs means fewer people to buy things, so demand continues to drop.
The only known way out of this death spiral is the way that worked to end the Great Depression – government spending to generate jobs, which provide people money to buy what they need, which increases demand, causing more businesses to hire more people to deal with the demand.
The rich get richer and everyone else gets nothing.
