Courtesy of Steen Jokobsen, chief economist at Saxo Bank in Denmark, here is an interesting article via email. Steen writes ...

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Mike Shedlock

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.

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10 Comments So Far
MoreFreedom Wrote: Oct 15, 2012 7:04 PM
Please define "austerity" when you use it. Does it mean austerity for taxpayers (more taxes), or austerity for government (cutting spending)?

Frankly, I find the idea of a multiplier (each dollar taken and spent by government) is contrary to common sense. When government spends, we get poorer, simply because government doesn't produce anything and takes it from us to do it.

Contrary to Keynesians who say we need to prime the pump due to lack of demand, there is always plenty of demand for goods/services, unless it looks like government may just take away part or all of what's produced (or more) from the producers or the buyers.

When government spends like it has been, one can only conclude that we'll be paying for it.
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Blair31 Wrote: Oct 13, 2012 2:43 PM
We should have austerity. Let's cut taxes and spending. How to cut taxes? Get rid of the IRS and adopt a flat tax. How to cut spending? Take a chainsaw, not a scalpel, to budget. Cut the budget, including the deficit, by $10 trillion dollars, and adopt the Chilean Model for Social Security, Medicare,
and Medicaid. What else? Crack down on China.
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FreeThinkerGuy Wrote: Oct 13, 2012 1:46 PM
This whole "austerity" gig is misleading. Will someone point to an actual country that has reduced real spending (i.e. they were spending $X billions last year and are now spending $X - Y billions this year). Taxing more isn't "austerity" it's stupidity. Biden inadvertently let it slip that he understands this fact when he commented that removing American troops forces the Iraqis and Afghans to step up. Well, Helloooo! He made that statement because he wasn't protecting or hoping to get votes from a constituency. "Removing" taxes allows people to "step up" and become more self reliant thereby reducing the perceived need for govt action/intervention. Remember, a govt dollar spent is a private dollar taxed.
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Greg1084 Wrote: Oct 13, 2012 11:08 AM
The Dane gets it. Krugman doesn't.
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Independent in Texas Wrote: Oct 13, 2012 10:53 AM
Why not mention the President who made it possible for Clinton to be "successful". It wasn't because he wanted to be, the republicans handcuffed him. R E A G A N is the MOST SUCCESSFUL GROWTH President.
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David4015 Wrote: Oct 13, 2012 10:16 AM
No...its short for ":Ignorant Mo Fo"
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johnm h Wrote: Oct 13, 2012 9:29 AM
The article is confusing and misleading. It obviously matters what governments spend on and what they tax. If all revenues came from consumption taxes and all spending were transfer payments, it would not affect investment, work , and production, and savings would be enhanced. If all revenue were collected from work, savings and investment as is the largest share of the burden now, and all spending went to industrial policy, it would severely distort investment and reduce growth. While the IMF is and has always done more harm than good it is not alone. All Western economic policy makes the same consistent mistakes.
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Greg1084 Wrote: Oct 13, 2012 11:07 AM
I think you still need to throw in that the amount or percentage of productivity matters, as does the mode. Also, I find the discussions of taxes by Madison and Hamilton in The Federalist to be very pertinent to today.
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silvereagle Wrote: Oct 13, 2012 7:44 AM
IMF = Idiotic Major Foul-up.
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