With the events of 2008 (the GFC) still reasonably fresh in
our minds and the continuing demands by the International Monetary Fund (IMF)
for indebted countries to reduce debt
levels it is interesting to learn that IMF demands might have been based on
faulty research. The latest information to hand seems to indicate that the “tipping
point” of a country’s debt at 90% of GDP leading to negative growth is wrong.
There may actually be a low level of economic growth at this figure – about 2%
positive growth.
Also isn’t it counterintuitive to demand that Greece, Portugal
and other “loser” countries introduce stringent cuts to Government budgets,
increase taxation and reduce peoples wages and then to “expect” economic growth
and early debt repayment? I mean, really, with lower wages Government income is
reduced (even with increased taxation) and with lower income how can debt be repaid and with lower wages how can people
afford to buy anything other than necessities?
So how can “growth” occur?
Henry Ford was about right when he said that people should
be paid enough to buy what they make.
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