I'm so glad he has done so, we are not talking about home economics as I am so tired of saying, we are talking about how money should flow in the global economic model.
You can see that misunderstanding at work every time someone rails against deficits with slogans like “Stop stealing from our kids.” It sounds right, if you don’t think about it: Families who run up debts make themselves poorer, so isn’t that true when we look at overall national debt?
No, it isn’t. An indebted family owes money to other people; the world economy as a whole owes money to itself. And while it’s true that countries can borrow from other countries, America has actually been borrowing less from abroad since 2008 than it did before, and Europe is a net lender to the rest of the world.
So in essence this whole Austerity craze is a load of bollocks and designed to keep the wealthy even richer and the rest of us struggling. This is also why Greek government is correct in saying that they want to renegotiate a bad deal.
All this austerity has, however, only made things worse — and predictably so, because demands that everyone tighten their belts were based on a misunderstanding of the role debt plays in the economy.
So can we finally please drop all pretense that national debt is in any way, by any measure, similar to our own finances.
European leaders completely bought into the notion that the economic crisis was brought on by too much spending,
As the results have so proven
This was a prescription for slow-motion disaster. European debtors did, in fact, need to tighten their belts — but the austerity they were actually forced to impose was incredibly savage.
No the austerity itself was not forced, but those upon whom it was imposed were forced to conform. Imposed by a central bank and hang any government that tried to resist.
His conclusion
And if the euro does fail, here’s what should be written on its tombstone: “Died of a bad analogy.”
Here is my conclusion.
A Euro that was imposed on a group of countries without a unified economic policy in a unified federal state was destined to fail. By trying to prevent its failure using the failed Austerity plan, they are instead assuring its collapse and harming millions in the process.