Recently I read about a tweet from some guy that writes for Slate named Matthew Yglesias. He wrote:
"Incidentally, India would be a great place for all of America's deficit hawks to go and hang out for a while. India is actually in the situation that many people seem to want to believe that the United States is in. The central bank could easily cut interest rates aggressively to boost economic growth, but it's reluctant to do so because the baseline inflation rate is fairly high and the government's budget deficit is big. "
Sorry old boy, but apparently you don't get out much. Real inflation in the US is approaching 9% (disregard the tripe from the administration about inflation, employment, etc.) and we have a budget deficit as % of GDP is the 14th largest in the world according to the IMF. Nearly matching that of Ireland and actually higher that Portugal! Maybe our central bank should cut interest rates to spur growth.....oh, yeah, interest rates have been cut until they can't cut any more. Looks like the deficit hawks have looked at India and saw the US and THAT is why they are deficit hawks. Lib economic ideas sound great to the unwashed masses because they see something for nothing, but the people who actually understand how the economy works know that they don't.
Keynes thought that free markets worked ONLY after fiscal policy achieved full employment...in other words the govt has to have its thumb on the economy at all times. Most of his theories have been proven to be unworkable in the real world, but the people who can only see the inside of the ivy from their offices never see the real world in action.
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