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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

G8: Deficit Terrorism Leads Agenda

Posted by WARREN MOSLER on May 27th, 2011

In the land of the blind, the one eyed man gets his good eye poked out.

While the statement regarding the US is perhaps a tad on the soft side, globally, political will and public support appears firmly in place for further stagnation and a too large output gap for the foreseeable future.

World Recovery Is Gaining Strength, Watch Debt: G8

May 27 (Reuters) — The Group of Eight leaders agreed on Friday that the global economy recovery was becoming more “self-sustained,” although higher commodity prices were hampering further growth.

In a communique to be issued at the end of a two-day summit in France, a copy of which was obtained by Reuters, European nations, the United States and Japan all agreed to ensure their public finances were sustainable.

“The global recovery is gaining strength and is becoming more self-sustained. However, downside risks remain, and internal and external imbalances are still a concern,” the communique said.

“The sharp increase in commodity prices and their excessive volatility pose a significant headwind to the recovery. In this context, we agreed to remain focused on the action required to enhance the sustainability of public finances, to strengthen the recovery and foster employment, to reduce risks and ensure strong, sustainable and balanced growth, including through structural reforms.

Europe has adopted a broad package of measures to deal with the sovereign debt crisis faced by a few countries, and it will continue to address the situation with determination and to pursue rigorous fiscal consolidation alongside structural reforms to support growth.

The United States will put in place a clear and credible medium-term fiscal consolidation framework, consistent with considerations of job creation and economic growth.

In Japan, while providing resources for the reconstruction after the disaster, the authorities will also address the issue of sustainability of public finances.”

2 Responses to “G8: Deficit Terrorism Leads Agenda”

  1. Craig Says:

    hi warren. elsewhere you have mentioned the following equations:

    public sector debt = private savings + foreign savings.
    foreign savings = capital account deficit

    do you have any insightful equations for private sector debt by chance?

    only thing i have found on your site associated with private debt is: “Reducing private sector debt (including non residents) is done by the private sector spending less than its income, which can only be accomplished if the public sector spends more than its income. Fact is, ’savings’ for the economy as a whole (not including govt) has gone up by exactly the amount of the deficit, or someone in the CBO has to stay late and find his math error.”

    Reply

  2. Dave Begotka Says:

    Pretty sure they were blind long ago from that eye for and eye thing

    Reply

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