Monday, 2 February 2009

Is this a good idea?

One has to ask why several major economies are currently in the crapper.

The short answer to me seems to be that people who already had a lot of debt borrowed even more money, and spent more money than they earned. Eventually, the whole thing collapsed.

So how will Obama and Gordon Brown combat this?

Both the US and UK governments already owe an awful lot of money - their debt levels are huge. But they are going to borrow even more money, and spend more than they take in as tax.

Anyone see a horrible symmetry there?

Why is it that something which led many individuals to their financial doom is suddenly a good thing when practiced by socialist politicians?



Kaboom said...

The simple answer, BOAB (coming from an armchair, chickenhawk psuedo-economist who only does this for a hobby) is that the only way out for home-debtors in the USA (who manage to hold onto their homes) is good old monetary inflation, so that the capital value of debt is comparitavely reduced by income-push inflation.

It happened in the '70's, and there is no reason why it cannot happen again, if the money-printing impetus is applied quickly and substantially enough.

Oh, and wages need to go up as well, or else just Government largesse thrown from helicopters...

The leftoids of the Western World are hoping and praying for price inflation, in order to get their respective economies (and voting base) out of the shit.

Otherwise, it's going to be burning torches and pitchforks marching towards Government House.

Australia will not be immune.....

kae said...

"Burning torches and pitchforks marching towards Government House"

You say that like it's a bad thing.

WV: reckedne