My God, Common Sense Showing In Europe?

Wow…(The Fraud of Austerity)

Denial is leading to collective economic suicide in Europe and the United States. The French elected a socialist president who wants to raise taxes on those elusive rich and keep spending as if there is no tomorrow.

Many on the left, including European socialists in tandem with the New York Times and its economist Paul Krugman, are falsely claiming that Europe and even the United States are being saddled with “austerity.” Their claim is that governments are not spending enough to reduce unemployment. They want higher taxes on the most productive plus bigger government.

They all suffer from a collective memory loss. Don’t they remember that socialism did not work? Every time the big-government “solution” has been tried for the past two centuries, it has failed, but those on the left seem to be incapable of learning.

When the current economic crisis began — largely caused by a government-created housing bubble — we were told that if the government spent an extra trillion dollars or so and ran up the deficit, all would be well. Did it work as advertised in the United States? No. In the United Kingdom? No. In France? No. In Italy? No. In Spain? No. And not even the left wants to talk about Greece.

The chart below shows that rather than the austerity the left is whining about, government spending has risen as a share of gross domestic product (GDP) in all of the major economies.


What’s being missed here (the author appears not to understand it) is that this is a function of basic mathematics.  That is, a matter of the denominator — the amount of money and credit in the system.

GDP / ( (Money + Credit) * Velocity ) = 1

It must!

Therefore if “Money + Credit” increases and Velocity is mostly-constant each unit of GDP requires more units of money and/or credit to buy, which means your salaries, savings and assets are worth less.

That’s it folks.  It really is that simple.

There is no evading this fact.  When you pull this crap something goes up in price.  In this case what’s gone up in price is financial assets (e.g. stocks.)  Last time it was that (some) and houses (a lot.)  Before that it was tech stocks (a monstrous amount.)

The common person got screwed through all three of them, especially the last two, as neither of those had any benefit to the common person in terms of earnings and jobs.

This must stop and the longer governments keep this crap up the worse it will get.

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