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January 25, 2012


 Luis Enrique

"Which makes the debate between big cutters and little cutters a little like arguments about how many angels dance on the head of a pin."

except, presumably, that the decision whether to make big or little cuts will have important real-world consequences, even if we lack the theoretical and empirical understanding to predict what it will be.

even if you think the IMF has changed it's tune too recently, its current advice to take fiscal adjustment slowly would seem to be consistent with the idea of non-linearity.


Try extending the curve from 'Extreme Austerity' to Zero Government Spending.

It would start curving back toward lower deficit, and eventually zero deficit, would it not?


Bruce I'm not sure of your point. There wouldn't be an economy.

Ralph Musgrave

Duncan Weldon’s idea is pure unmitigated B.S. It is simply a minor variation on the conventional and nonsensical wisdom, namely that consolidation causes austerity. For an explanation as to why consolidation DOES NOT cause austerity, see:


As for the importance that Weldon attaches to the views of the IMF, Prof. Bill Mitchell regards the IMF is disastrously incompetent and not fit for purpose, a view I share. Mitchell has written a large number of blog posts on the IMF’s incompetence: just Google “Billyblog” and “IMF”. See also:



The reason why cuts hurt is that that government spending increases GDP and thus revenue, and in theory, government spends money on things which increase GDP more than they cost - for example, redistribution to people excluded from employment not only reduces the costs of social unrest and of service provision arising from poverty and boosts demand by moving money from people with lower marginal propensity to spend and gives it to people with higher marginal propensity to spend. Or spending on social services and early intervention which is cheaper than spending on the other services which people end up needing without social services.


pebird, The Greens in the UK used to be olrvtey in favor of a zero economic growth model as in your 8a. There must be no increase in net financial assets over a business cycle, regardless of the productivity of the economy. Its perfectly possible to have increasing affluence due to increasing efficiencies whilst at the same time having asset price deflation due to a government surplus surely?


The Thirteenth Angel Gala is a wfrednoul helpful event that gives back to the surrounding communities in need in Toronto. Everyone who participates becomes an activist to help other people. Very rewarding.

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