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Response to Sherman A1 (Original post)

Wed May 1, 2013, 09:36 AM

1. I'm not sure if the above is a copy/paste, but the second paragraph has two statements...

that blow the whole "austerity works" out of the water.

"Austerity -- the deliberate deflation of domestic wages and prices through cuts to public spending"
and
"Consumers and producers, the argument goes, will feel confident about the future and will spend more, allowing the economy to grow again."

That's the theory, however the people can't seem to put two points together: If you cut wages of consumers, they will have less money to spend, so they will not spend more no matter the confidence in the future. If consumers spend less, producers will make less.

Another point in this theory is that prices will fall as well. Only they didn't. Consumers have less money, prices are the same, therefore consumers buy less.

I just don't understand how they think that less money available means more spending.

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Sherman A1 May 2013 OP
LineNew Reply I'm not sure if the above is a copy/paste, but the second paragraph has two statements...
Thav May 2013 #1
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