Wednesday, April 25, 2012

The deficit experiment: mid-term results are in

In October 2010, I wrote of divergent approaches to the economic crisis being followed in the United States and in the UK. Well, the mid-term results are in with the UK officially slipping back into recession.
It seems such a simple principle: in a slump raise spending, not taxes. Cut back on spending and raise taxes once the slump is decisively behind you. Yet, both in the UK and Europe, governments have chosen to focus on deficits, dooming prospects for growth, and scrambling deficit reduction targets as a consequence. It's inexplicable behaviour. I'm waiting for an investigation titled Chronicle of a Recession Foretold.

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