IMF = International Monetary Fund
Once again, sorry for the lost source. I'm trying harder to keep track.
Now, a new IMF working paper released today details the true damage of austerity:
In a new paper published Thursday, IMF Economic Counsellor Olivier Blanchard and research-department economist Daniel Leigh show the IMF recommended slashing budgets too fast early in the euro crisis, starving many economies of much-needed growth.
In “Growth Forecast Errors and Fiscal Multipliers,” Messrs. Blanchard and Leigh calculate IMF and European economists underestimated the euro-for-euro effect of cutting government budgets. While economists expected that cutting a euro from the budget would cost around 50 cents in lost growth, the actual impact was more like 1.50 per euro.
The Republicans, all of a sudden (since Barack got elected), are all gung-ho on austerity. Notice that they weren't so inclined when W was in office, but now they are. Only one problem - lots of other nations are trying it and they are suffering big dips in their economies. Take note of the quote below, from the Daily Kos blog.
"Earlier this week, the International Monetary Fund made a striking admission in its new World Economic Outlook. The IMF's chief economist, Olivier Blanchard, explained that recent efforts among wealthy countries to shrink their deficits - through tax hikes and spending cuts - have been causing far more economic damage than experts had assumed."
Maybe John Maynard Keynes wasn't as wrong as they all want to think he was.
Paul Ryan, highly esteemed leader of the right-wing in America, has a plan to help make the rich richer. Aren't we fortunate to have such inspiring leaders?
John Cassidy at the New Yorker ..
"With Republicans in Congress still intent on pursuing a strategy similar to the failed one adopted by the Brits, this is a story that needs trumpeting. Austerity policies are self-defeating: they cripple growth and reduce tax revenues. The only way to bring down the U.S. government’s deficit in a sustainable manner, and put the nation’s finances on a firmer footing, is to keep the economy growing. Spending cuts and tax increases can also play a role, but they need to be introduced gradually. [...]
That austerity has led to recession is undeniable. … consumer and investment spending have remained depressed. [...]
In adopting a fiscal stimulus of gradually declining magnitude over the past four years, the Obama Administration has administered what was, until recently, the standard medicine for a sick economy. As one would have expected on the basis of the textbooks, the American economy, while hardly racing ahead, has fared considerably better than its British counterpart. [...]
Having adopted the policies of Keynes in response to a calamitous recession, the United States has grown more than twice as fast during the past three years as Britain, which adopted the economics of Hoover (and Paul Ryan)."
