{"id":14603,"date":"2012-03-14T07:51:03","date_gmt":"2012-03-14T07:51:03","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=14603"},"modified":"2012-03-14T07:51:03","modified_gmt":"2012-03-14T07:51:03","slug":"you-can-only-deleverage-by-taking-on-more-debt","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/03\/14\/you-can-only-deleverage-by-taking-on-more-debt\/","title":{"rendered":"You can only deleverage by taking on more debt"},"content":{"rendered":"<p>From <a href=\"http:\/\/www.ft.com\/cms\/s\/0\/07b419ac-6c39-11e1-8c9d-00144feab49a.html#ixzz1p4j6Sk8g\" target=\"_blank\">Martin Wolf in the FT this morning<\/a>, and\u00a0important\u00a0pre-the budget:<\/p>\n<blockquote><p>One cannot get out of debt by taking on more debt. How often have you read such remarks? It is a clich\u00c3\u00a9. As the McKinsey Global Institute study points out, it is also false.<\/p>\n<p>The benign story unfolds like this: a big increase in leverage ends in a huge financial crisis; the government promptly restructures the financial system; excessively indebted private borrowers reduce their obligations by slashing spending; central banks cut interest rates; the resulting collapse in activity and profits pushes the government into huge fiscal deficits, which also support the economy; finally, the economy recovers, helped by exports, and the government begins its fiscal retrenchment.<\/p>\n<p>Thus the temporary rise in fiscal deficits helps protect the economy from the forced private retrenchment. The alternative would be a depression, in which mass bankruptcy, not repayment, lowers debt.<\/p><\/blockquote>\n<div>Osborne's plan is mass bankruptcy.<\/div>\n<div><\/div>\n<div>He'll fail becasue as is very obvious he'll run a deficit instead.<\/div>\n<div><\/div>\n<div>Some of us told him to positively embrace that fact long ago. He didn't listen. It's one of the many failures to listen by this hopeless government.<\/div>\n<div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>From Martin Wolf in the FT this morning, and\u00a0important\u00a0pre-the budget: One cannot get out of debt by taking on more debt. How often have you<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/03\/14\/you-can-only-deleverage-by-taking-on-more-debt\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[],"class_list":["post-14603","post","type-post","status-publish","format-standard","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/14603","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=14603"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/14603\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=14603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=14603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=14603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}