A note about the principle behind budget deficits in Keynesian economics
We are becoming a nation of savers
What happens when domestic spending falls and the government simultaneously cuts spending and raises taxes?
Surely, its good to be virtuous and pay of debt? In one sense yes, but the paradox of thrift shows the dangers of a rapid rise in saving, especially if government reduces its own spending.
Well, it’s not good and its likely to happen to the UK. Ireland has already tried a strict period of austerity, they have seen GDP fall by 7%! This year. Ireland and Austerity at NY Times