Going into endless debt does not grow economies any more than running up your credit cards makes you wealthier. It just gives you the illusion of growth. If you want to see where this leads look at what happens in Japan over the next 12 to 18 months.
And anybody who lived through the Carter years understands high inflation is something to be avoided at all costs. It's not a stimulant to the economy, it's a drag. Companies don't know what the real return on their money will be so they don't make investments.
>Politics and demographics are pro-austerity, not economists.
Nonsense. Politics is very, very, very anti-austerity. Governments do not get smaller without a major upheaval. Look at the UK, where you hear much wailing and gnashing of teeth over "austerity" that's simply a tiny cut in the rate of growth of the budget.
Projected cuts of 10% next year on top of the already in the pipeline cuts of 25% would be difficult to sell as "a tiny cut in the _rate of growth_ of the budget". The cuts to government capital expenditure has been largely the cause for the contraction in the construction [1], which has in turn contributed to the UK going back into recession.
Borrowing in order to increase sales (taxes in the case of governments) or to decrease costs (increase economic efficiency, spending on infrastructure and the like) is a good idea; both companies and governments do this all the time. Borrowing to spend frivolously is a bad idea no matter who you are.
>Borrowing in order to increase sales (taxes in the case of governments) or to decrease costs (increase economic efficiency, spending on infrastructure and the like) is a good idea
It can be a good idea if the economic activity that results covers the cost of borrowing. But that's not an easy thing to determine, and any rational start to the process tends to get warped by political reality. The fetish for infrastructure spending results in, for example, rail projects that lose ¥32 for every ¥1 they take in:
And anybody who lived through the Carter years understands high inflation is something to be avoided at all costs. It's not a stimulant to the economy, it's a drag.
And everyone who remembers the Great Depression says the same thing about deflationary spirals.
And anybody who lived through the Carter years understands high inflation is something to be avoided at all costs. It's not a stimulant to the economy, it's a drag. Companies don't know what the real return on their money will be so they don't make investments.
>Politics and demographics are pro-austerity, not economists.
Nonsense. Politics is very, very, very anti-austerity. Governments do not get smaller without a major upheaval. Look at the UK, where you hear much wailing and gnashing of teeth over "austerity" that's simply a tiny cut in the rate of growth of the budget.