Often when critics of govt debt and over-grown welfare state use Greece as an example, Keynesians will respond that actually Greece is a bad example because it does not have its own currency and it is tied to the EU.
OK then. So what would be a good example of the dangers of high debt and bloated welfare state?
That’s a decent question. You might want to ask this guy.
The USA, England and Japan are the best examples I have of current welfare/warfare state disasters. How about Venezuela?
The only reason why Greece is a bad example is because this was all intentional on the part of the Greeks. The Greeks have managed to float billions in loans that they have no intention of ever paying back. It is the EU that is stupid because they are so afraid that the other PIGS will do the same that they are willing to buy Greek debt at 25% interest rates and higher.
Ah yes, Venezuela. Maybe also Argentina.
http://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/
First of all, there is an obvious relationship…in that graph…between the two…
^ that dumbass:
“Look!! the federal debt and inflation have INVERSE relationships!! The debt goes down and prices go up!! The gommurment needs to print muney to make them prices come down.”
Value is a distorted word my ass. It’s just …slightly metaphysical.
there is no doubt that production levels are hampered when oil prices rise and that inflation will come if oil rises…it is the basis for production of almost everything physical…Oil price is just a margin of where we are in the scheme of the finance markets though.
Ah yes, Venezuela. Maybe also Argentina.
Both are great examples, because it shows what countries with their own currencies do when their governments spend too much. In case it helps and/or you’re interested, I wrote an article on Venezuela’s current situation.
Are African countries allowed to be used as examples? I suppose they wouldn’t have taken on their debt without the World Bank and IMF, though. See, in order to borrow more money than a sane man should, there has to be some crook willing to lend it to you.
Why is Greece such a bad example? Sure, it was the Euro and its international banking and accounting prostitutes that was the specific mechanism in their case, but what does the Keynesian achieve by pointing this out? Does one imply that such a disaster could not have happened if Greece were using entirely domestic, national banking and financial institutions? Why? Because no one would lend them the money if that were the case?
How is this question relevant? It is the Keynesian who argues for monstrous public spending policies - he doesn’t strengthen his position by pointing out that comparatively few national governments ever take his advice fully to heart in practice.
Besides, there aren’t too many strong Keynesian Euro-skeptics. Maybe in the British Foreign Office.
Thanks Jonathan, nice article!