Benefits of Fiscal Stimulus

If you had any question as to the benefits provided by fiscal stimulus in a currency issuing country just look at the recent data coming from Japan.  Japan has produced strong economic growth despite maintaining low interest rates, low levels of unemployment, modest inflation, large fiscal deficits, and high public debt for decades.

For some time we’ve been concerned about the long-term impact of austerity in the Euro Zone, primarily because none of the countries are currency issuing entities. Austerity measures have certainly wreaked havoc on Greece’s economy, as well as others.  In our very humble opinion, the Euro is not sustainable in the current construct.

For more information on this subject, we would highly recommend that you read today’s blog by Bill Mitchell, an Australian economist, which can be found at http://bilbo.economicoutlook.net/blog/.

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