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overtheedge
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The Success of Irish Austerity: The Joke is on Krugman

- Michael Pento - Delta Global Advisors

The first thing to remember is that Krugman did NOT get a Nobel Prize in Economics.
He got the Sveriges Riksbank (Swedish Central Bank) Prize in Economics in Honor of Alfred Nobel.
Banks produce nothing.
They rent money to borrowers, often money the bank doesn't have in stock.

Tis far too easy to forget that government is an extension of the citizenry sharing similar attitudes.
As a citizen's wages increase, for the most part so does their debt load and spending.
It is no different with government. Tax revenues increase and so does spending as well as the number of new programs.
Hence we see the government engaging in tax revenue enhancement schemes and increased borrowing.

The problem occurs when revenues decline, be it in gross receipts or purchasing power.
Both the citizen and the government are loathe to kill spending programs.
Citizens go into bankruptcy while government just borrows more to cover the constantly growing debt.
This borrowing often incorporates expansion of the base money supply and increased user fees for regulatory enforcement that add no value to the marginal services provided by government.
All that is ever required to begin to balance the budget, whether public or private, is elimination of all programs enacted since spending exceeded revenue.
Just like in many union shops where last hired is first fired, so must newer spending programs be cancelled.
And yes, this demands roll-backs in government wages.

It is only through austerity that capital can be accumulated by citizenry and governments be able pay down debt without stealing purchasing power from its citizenry.
Krugman is desperate to maintain credibility and maintain his revenue stream.
Successful use of austerity undermines his economic stature.

Commented 3075 days ago

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Beginning of the headline :During the late 1990s, Ireland's economy was booming. This was mostly due to a low corporate tax rate of just 12.5% and an international real estate bubble that boosted global Gross Domestic Product (GDP). For a myriad of reasons Ireland was a magnet for foreign direct investment and the envy of Europe. Buoyed by cheap money, the Irish government embarked on a debt-fueled property boom from 1997 to 2006, which caused the price of an average house to jump more than four-fold. Flush with... Read More

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