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shamrock_uk · 03-08-2005, 02:59 PM

Nice article.

Actually this was covered in a fiscal policy lecture I went to this very morning. Our lecturer is Chris Allsop, formerly of the Monetary Policy Committee (that's the 9 person committee that decides the UK interest rates, much as the Fed does in the US) and he had many similar points to make. As he's by all accounts 'in the know' it suggests that we should take this article seriously.

Ultimately America has been following a rather bizarre trend since Reagan for what I can only really describe as fiscal irresponsibility founded on the belief that fiscal policy simply doesn't matter and thus neither do debts. The problem is (and not surprising either IMO!) that the deficits are not self-financing as the likes of Laffer suggested and Reagan and Bush have assumed - therefore the US economy is certainly in trouble.

There just seems a complete lack of political will to deal with this - in the UK, a public sector debt target is one of the two central rules governing fiscal policy, yet in America people hardly seem to raise eyebrows about this issue or even to think about 'paying it off' in the future.

Perhaps one interesting way to think about it is to consider the huge cost of the wars in Iraq and Afghanistan along with the reconstruction and continuing troop presence. Then look at the US' balance of payments situation over this period and realise that actually America hasn't paid for any of it - the rest of the world has. It's only gonna be a matter of time before we all start calling that debt back in...

I really don't want to see all my friends in America hurt over this, not to mention the impact it would have on the British economy - please please kick Bush out next time. Despite the Republican rhetoric, recent history shows that its only the Democrats who are capable of running an economy responsibly and with an eye for the long-term.

[ 03-08-2005, 03:13 PM: Message edited by: shamrock_uk ]

03-08-2005, 02:59 PM	#2
shamrock_uk Dracolich Join Date: January 24, 2004 Location: UK Age: 42 Posts: 3,092	Nice article. Actually this was covered in a fiscal policy lecture I went to this very morning. Our lecturer is Chris Allsop, formerly of the Monetary Policy Committee (that's the 9 person committee that decides the UK interest rates, much as the Fed does in the US) and he had many similar points to make. As he's by all accounts 'in the know' it suggests that we should take this article seriously. Ultimately America has been following a rather bizarre trend since Reagan for what I can only really describe as fiscal irresponsibility founded on the belief that fiscal policy simply doesn't matter and thus neither do debts. The problem is (and not surprising either IMO!) that the deficits are not self-financing as the likes of Laffer suggested and Reagan and Bush have assumed - therefore the US economy is certainly in trouble. There just seems a complete lack of political will to deal with this - in the UK, a public sector debt target is one of the two central rules governing fiscal policy, yet in America people hardly seem to raise eyebrows about this issue or even to think about 'paying it off' in the future. Perhaps one interesting way to think about it is to consider the huge cost of the wars in Iraq and Afghanistan along with the reconstruction and continuing troop presence. Then look at the US' balance of payments situation over this period and realise that actually America hasn't paid for any of it - the rest of the world has. It's only gonna be a matter of time before we all start calling that debt back in... I really don't want to see all my friends in America hurt over this, not to mention the impact it would have on the British economy - please please kick Bush out next time. Despite the Republican rhetoric, recent history shows that its only the Democrats who are capable of running an economy responsibly and with an eye for the long-term. [ 03-08-2005, 03:13 PM: Message edited by: shamrock_uk ]