Sunday 4 January 2015


Cameron wasn't telling the truth in his claim to have halved the deficit. It's down by a third, but half what it was in ratio to GDP. Which points the way for Labour. BOOST GDP and you reduce the deficit in ratio to it.

Which is what we need to do. Stop the obsession with debt and realise that a stronger economy can bear more. So how do we boost the economy?  Borrow more and spend to stimulate demand for jobs, build houses and invest in manufacturing.

Public sector debt isn't like household debt. Private debt drags down. Running a deficit and borrowing to spend are what we need to do in a recession. Spending public debt multiplies jobs and stimulates the economy. Austerity does the opposite.

Which is why the clamour about debt and deficits and the competition about who can cut best is such a waste of time. Best to hope that Labour has joined this Carey Street clamour as a necessary hypocrisy to show itself respectable. Just as Roosevelt promised to balance the budget in 1932 as the prelude to the biggest Keynesian boost in history. That's the way to do it.

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