2 Ingelesez: “The reason the Greek economy is in Depression is not the stock of outstanding public debt (which is mostly now at very low interest rates and at rather long maturities), but the catastrophic collapse of spending (aggregate demand) since 2008.”

3 Ingelesez: “… the catastrophic collapse of spending (aggregate demand) since 2008 much of which has been driven by the ridiculous austerity that the Troika (aided and abetted by Germany dominance in European economic policy making circles) has imposed on the nation.”

4 Ingelesez: “That is why Greece fell into a massive Depression. The growth in its public debt was just a reflection of the rise in public deficit as its tax revenue fell and the welfare payments rose – that is, the automatic stabiliser component of the fiscal balance. Please read my blog – http://bilbo.economicoutlook.net/blog/?p=6373, Structural deficits and automatic stabilisers– for more discussion on this point.”

5 Ingelesez: “.. the basic rule of macroeconomics – spending equals income, which leads to output and employment. Someone’s spending is another person’s income. There has to be growth in spending for income and output to grow. If there is unemployment it means that total spending is insufficient to generate enough output and hence jobs to satisfy the preferences for work of the unemployed.”

6 Ingelesez: “The solution is always for the government to either directly increase spending to lift sales in the private sector and stimulate further income and/or to cut taxes, which might lead to higher private spending.”

7 Ingelesez: “A currency-issuing government is never at “the whim of banks, pension funds, and hedge funds”. The private banks etc are always beggars at the table of corporate welfare provision if the government asserts its full range of capacities.”

8 Ingelesez: “Anyone with any understanding knows that the comparison between Eurozone nations with use a foreign currency (the euro) and the US, UK, China, and Japan, which are fully sovereign in their own currency (they issue it under monopoly conditions) is invalid when discussing public liabilities and their implications.”

9 Ingelesez. “None of the Eurozone nations can guarantee their public liabilities with 100 per cent certainty. There are varying degrees of risk attached to any euro-denominated liability issued by a Eurozone Member State.”

10 Ingelesez: “It might be argued that Germany public liabilities are low risk. That is probably true but they are not risk free. Any public liability issued, say by Japan is risk free.”

11 Ingelesez. “Further, no Eurozone Member State can control the yields (interest rates) that it has to pay when it issues debt. Only the ECB can do that and it has demonstrated that capacity very obviously when it introduced the Security Markets Program (SMP) in May 2010.”

12 Ingelesez: “All currency-issuing governments can control the yields that they have to pay on their debt anytime that they desire to do so. The fact that in this neo-liberal era yields are mostly determined by auction processes whereby the last acceptable tender bid from one of the private primary bond buyers sets the rate for that tender doesn’t alter the power of the government as the issuer to set whatever yield it likes including zero!”

13 Ingelesez: “We also know that the central bank could simply purchase all of the bonds if it was instructed to do so by the government. If there are laws that prohibit that now, the legislature can change them. If there are regulations that prohibit that, the government can alter procedures.

The central bank can always announce it will buy whatever bonds are available for sale in the primary market (as above) or in the secondary markets (after the bond is issues) and use its infinite currency issuing capacity to drive the yields to near zero (in secondary market debt) if it wanted to by pushing up the face value of the bond in the markets.”

14 Ingelesez: “A currency issuing government, should it desire, can spend beyond its tax revenue without issuing any debt at all. It could simply instruct its central bank to credit whatever private sector bank accounts it desired to transfer purchasing power into – whether it be to purchase private labour, goods and services, or make income transfers.”

15 Ingelesez: “No Eurozone government has these capacities which makes any comparison with nations such as Japan and the US irrelevant. Anyone who attempts such a comparison thus discloses their fundamental ignorance of the way monetary systems operate and the opportunities that a currency-issuing government possesses to advance societal well-being.”

16 Ingelesez: “… Should the rest of the world adopt their particular constraints on domestic demand, suppressing real wages growth for their workers and running fiscal surpluses – the German fiscal surpluses would not exist for very long and they would be climbing, dare I say it, the ‘debt mountain’ except for them it would be a mountain of ‘schuld’ (guilt)!”

17 Ingelesez: “Apparently, when the Greek prime minister was negotiating at the time about fiscal austerity, the French were pressuring them to go ahead with billions of euros of military ships and helicopters. They agreed!”

18 Ingelesez: “Germany has continued to flog submarines to the Greeks and has put those expenditures outside the austerity net in its demands through the Troika.”

19 Ingelesez: “They [the Germans] observe that debt has risen during the crisis and nations are struggling to bring it down. But they fail to explain to their readers that the Global Fiscal Crisis was a particular type of recession – a balance sheet recession. Please read my blog –http://bilbo.economicoutlook.net/blog/?p=3225, Balance sheet recessions and democracy– for more discussion on this point.”

20 Ingelesez: “These [crisises] are generated by a crash of unsustainable levels of private debt and require sustained fiscal deficits by the government for extended periods to support growth and the restructuring of the private debt. It was not a typical V-shaped cycle where usually private capital formation declines, the economy recesses, and stimulus is applied as investment recovers relatively quickly. All that is required in that case is a return to confidence on behalf of private spenders. In a balance sheet recession, longer term balance sheet changes are required in the private sector as well as a return to confidence. (…) … they fail to tell their readers, they probably don’t know it themselves, that a government deficit (surplus) equals a non-government surplus (deficit) dollar-for-dollar, euro-for-euro.”

21 Ingelesez: “Not all sectors can run down their indebtedness at the same time (under current institutional arrangements relating to public debt issuance).”

22 Ingelesez: “Anyway, worse is to come …

So as they predict that “deficit spending won’t be possible for ever” – yes, at this point, they bring the next neo-liberal economics rabbit (myth) out of the hat – the ageing population myth – we read – metaphorically of course – that there is a:

… ticking demographic time bomb.”

23 Ingelesez: “This fantasy story then tells us that:

Germany is the success story of exactly such an austerity-driven policy. Europe’s largest economy survived the 2008 financial crisis better than many of its peers, thanks in part to a tough previous decade that was characterized by relatively low government spending, low wage growth and labor market reforms.“

24 Ingelesez: “Well, not exactly. It ran foul of the EU rules itself in 2002 and if the European Commission had have imposed its rules to the letter, then Germany would have been stuck in a worse recession than it experienced.”

25 Ingelesez: “And then … as noted above … Germany’s export boom relied on non-austerity elsewhere.”

26 Ikus The riddle of the deficit (or deficits for Dummies): http://think-left.org/2015/08/16/the-riddle-of-the-deficit-or-deficits-for-dummies./