Domino Dictum

A balanced budget is pointless when a nation is bankrupt.

"A country is not a company." -- Paul Krugman

Austerity mirrors the paradox of thrift.

   Austerity means stop spending. But that's what caused the problem in the first place. If everyone saves, no one spends, and when no one -- including government -- spends, the economy fails.
   In the UK, government officials are pushing for austerity, claiming government is like a household or a firm, and the proper way to return to fiscal health is to limit spending.
   Germany, while still prospering, insists on austerity for other nations as a way to balance budgets and revive the economy.
   Reduced spending, however, reduces the money flow. Reduced money flow means fewer jobs. Fewer jobs means less wages. Less wages means reduced spending. And so it goes.
   In the abstract, the idea is enticing, and has the ring of truth, of an ideal answer. But the enticing idea of austerity, while it may work for a household or a firm, is toxic for a nation, and spreads its toxicity to other nations.
   Trade in goods and services is essential in any economy, whether local, regional or international. If one link is broke, the chain cannot hold.
   In the U.S., there is a groundswell building for government austerity to resolve the national budget dispute. But far from healing, national austerity further sickens, and mirrors the paradox of thrift.
   What's needed is a planned infusion of government spending to keep the economy moving while the private sector of consumers and firms rebuild the confidence of health.