FE@CAMPUS MASTERMIND: Response by Prakash Mohan Markar to question for Jan 21-27
Instead of reducing the ratio of Debt to the size of overall economy, this strategy increases the ratio because it causes the economy to shrinks even faster.
Greece is already in the austerity death trap. Spain and Italy are perilously close. Even Britain, France and Germany are trap toeing up to it.
Deficit hawks have to understand that the first step must be to revive Growth and Jobs. That way, Revenue increases and Debt/GDP Ratio drops only then- when the economy is back on trap.
(This entry is part of our FE MASTERMIND contest. The views expressed in this article are personal and not that of the newspaper.)