Misguided efforts to reduce debt pose the greatest threat to a still-shaky global recovery.

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Wilf Day
Misguided efforts to reduce debt pose the greatest threat to a still-shaky global recovery.

Opening post.

Wilf Day

This should be well-known: why is Jim Stanford the only one saying it?

Counterintuitively, however, financial investors haven’t been losing sleep over debt itself. Neither have economists. Deficits and debt are symptoms of trouble (namely, weak spending power and disappointing job creation), but they’re not the cause. Financial and economic experts grudgingly accept that huge public debts will be part of the economic landscape for years to come. In fact, down on Wall Street they’ve learned to love debt – especially the $85-billion the U.S. Federal Reserve pumps into asset markets every month.

To the contrary, financiers and economists alike were fretting that the United States might suddenly stop borrowing. It’s the potential freezing of debt, not its continued escalation, that’s evoked nightmarish scenarios of financial meltdown and renewed recession. In other words, the problem is not that there’s too much debt – the problem is that debt-phobic politicians, motivated by general ideological suspicion of “big government,” might successfully erect roadblocks to debt’s continued orderly growth.

Worldwide, it’s increasingly clear that it’s misguided efforts to reduce debt that pose the greatest threat to a still-shaky global recovery. . . .

We should accept the growing international consensus that more public debt is helping the recovery, not hurting it. To paraphrase Franklin Roosevelt, we have nothing to fear from debt – except an ideological fear of debt itself.

Jim Stanford is an economist with the trade union Unifor.



Yep. Austerity is motivated by fear of the debt. That's why Conservaives like to create debt, with unsustainable tax giveaways.


Has the NDP said anything about Harper's proposed "balanced budget law"?



Seeing as it was just announced a few hours ago I certainly hope not.

When it comes to finances the NDP is treated quite differently in the media than the right-wing parties like the Liberals and the Cons.

My hunch is that this is a trap for the NDP and if they NDP were to come out against it they would be crucified by the press.



If I were a social democratic leader, I would agree, with two caveats:

- They aren't allowed to force future governments into balanced budgets until they balance the budget themselves.

- They aren't allowed to cut taxes under any circumstances, unless there's a budget surplus. After all, how would they keep the budget balanced?

Because I agree in principle with Tommy Douglas's attitude that debt gives the banks the power to extort government, and in practice, the Conservatives would never agree to tie their hands when it comes to tax giveaways.