An eleven-minute interview with post-Keynesian economist Steve Keen, which begins one minute into the video. He discusses the huge accumulation of private debt in the US and how it is to blame for the Great Recession and the aftermath of sluggish growth. This story has been repeated in many countries across the world. In my view this is only part of the story, but it is an essential part. He usefully counters the hysteria over public debt and the ignorance over levels of private debt with some lessons from history.
Nation states borrow to provide public capital: For example, rail networks, road systems, airports and bridges. These are examples of large expenditure items that are more efficiently provided by government than by private companies. The benefits of public capital expenditures are enjoyed not only by the current generation of people, who must sacrifice consumption to pay […]
via The golden rule of public debt — LARS P. SYLL
The UK chancellor, George Osborne, today announced that he intends to legally bind current and future governments to running a budget surplus (an excess of tax receipts over spending) when the economy is growing. Does this make sense? The answer must be no. Continue reading
In my previous post, I suggested that for UK public (and private) debt to fall sustainably would require a dramatic shift in the current account from deficit to surplus, which would need to be maintained for a number of years. I also suggested that this seemed an unlikely scenario in the medium term. The UK current account deficit hit 6% of GDP in the third quarter of 2014 and has averaged over 5% for more than a year. Continue reading
The UK’s current account deficit recently made the economic headlines, hitting 6% of GDP in the third quarter of 2014. Indeed, the BBC’s economics editor Robert Peston has been worrying about it for some time and commented on this statistic in his last blog before Christmas. As he says, the UK chancellor of the exchequer George Osborne and the Prime Minister David Cameron, publicly obsess about the public sector deficit, claiming that it is the UK economy’s major problem, but choose not to mention the current account deficit, which has been over 5% of GDP for 15 months. Continue reading