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

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

Quote:

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.