Fenrir wrote:Most seem to agree that cutting spending will slow growth and that it makes more sense to spend more, i.e. stimulus, and fix the problems when the economy begins to stabilize and unemployment drops. Sometimes I wish I knew more about economics.
It goes both ways. If you have to take out a lot of debt to fuel spending, then the value of your currency is diminished. Spending/bailouts can fuel economic growth if used effectively... though, in the case of the bank bailouts in the US a few years ago, most of that government-infused cash flow just sat in place. The banks did not use the money to improve the flow of money to consumers (which is their purpose)... they just sat on it to improve their balance sheets and, subsequently, credit ratings. But, good spending on programs that are actually useful to the public does put money in people's hands and keeps it flowing, which is the entire idea of capitalism.
Unfortunately, capitalism is a very diluted concept these days. Not just in terms of big governments, but also big corporations, which are equally as anti-free-market as government (an often-overlooked fact here in the US ... an excellent book on this subject is The Nature of the Firm by Ronald Coase).
Just my ten cents. And as for Greece, I have a hard time sympathizing with a population that committed tax fraud on such a massive scale. What did they expect?