The Austerity Class is Wrong: Budget Cuts Hurt Our Economy

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9. I don't understand what you're asking

At least in the US, interest rates for government bonds are effectively negative at the moment -- that is, less than the rate of inflation. According to Paul Krugman, US bonds are so in demand as a safe haven that we may even start to see interest rates that are literally negative. This means that right now it's possible for the government to borrow without interest becoming a burden in the future.

The other side of the equation is that all other forms of spending are plunging. State and local governments are slashing spending and private investors are just sitting on their money, with no incentive to start making anything new because there's no one to buy it. Further austerity for the poor and further tax cuts for the rich would only make that situation worse.

The only alternative is for government to get us out of the hole we're in. Right now, government is the investor of last resort, and government investment in jobs and infrastructure is the one thing that can keep us out of a tailspin and get us back on track. And thanks to those low, low interest rates, it's cheap and easy to do that now -- and then pay off the loans out of tax revenues as the economy recovers.

This is why I have no idea what you mean about investors deciding "they don't want to fund government spending." Are you suggesting that the people who invest in government bonds might decide they don't want to do that any more because -- why? Because the government would spend the money they lend it? That just doesn't make sense.