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hammy
02-06-2012, 11:08 AM
Hello fellow paulites, i had a discussion with a liberal professor at my university. It was pretty short but he basically said Ron Paul was wrong that cutting the budget works because Europe did the same thing last year and it destroyed their economy. I didn have time for a rebuttal, but I was always under the impression that Europes budget cuts came out of necessity from the debts not the other way around. Thoughts?

ssjevot
02-06-2012, 11:15 AM
Hello fellow paulites, i had a discussion with a liberal professor at my university. It was pretty short but he basically said Ron Paul was wrong that cutting the budget works because Europe did the same thing last year and it destroyed their economy. I didn have time for a rebuttal, but I was always under the impression that Europes budget cuts came out of necessity from the debts not the other way around. Thoughts?

You're right, they had austerity measures because they realized they couldn't spend their way out of debt. I don't see how he can think they should have kept spending when these countries were bankrupt.

Epic
02-06-2012, 11:20 AM
Too much noise overriding the signal in Europe. If a country goes from a massive government to a merely huge one, would you expect improvement or a slower decline? You could get either. The signal is lost in the noise. Your professor is committing a logical fallacy in focusing in direction of change, rather than absolute policy.

Also, many European governments have raised taxes, not lowered them.

Plus, GDP stats are inherently flawed in a compositional way, which introduces more complications and noise into the equation.

All major economic freedom studies have found that more economic freedom gives more prosperity, and even more equality.

Travlyr
02-06-2012, 11:22 AM
Ron Paul is right about spending being a tax. Cutting spending cuts taxes. When that happens then the planned economy stops growing.

Increased spending taxes the productive sector (workers) and benefits the insiders (the economy) but along with that comes higher debt for future generations until the interest payments are so high that everything borrowed goes to pay the interest.

I agree with your professor. A debt based economy must grow until it defaults or default when it quits growing. Default is certain.

Paul Or Nothing II
02-06-2012, 11:30 AM
Hello fellow paulites, i had a discussion with a liberal professor at my university. It was pretty short but he basically said Ron Paul was wrong that cutting the budget works because Europe did the same thing last year and it destroyed their economy. I didn have time for a rebuttal, but I was always under the impression that Europes budget cuts came out of necessity from the debts not the other way around. Thoughts?

If you're income is $50,000 & you're 1,000,0000 in debt & your current year's budget is 100,000.........what's the right thing to do? I don't know.......may be BALANCE THE BUDGET or better.......SPEND LESS THAN YOU'RE EARNING & START PAYING DOWN THE DEBT!

Simple enough, right! Same holds true for a country. But with a country, it's WORSE than that because politicians spend all the money on their plushy lifestyles & BUYING VOTES by spending on socialist/communist policies that never work in the long-run &.........the people get stuck with all the debt & their livelihoods are destroyed :(

These economic "experts" (especially Leftists) make simple things too difficult, that's why people don't even understand what money is & why the hell are we using toilet-paper as money when it can essentially be printed endlessly! And this DESPITE THE FACT, that many many countries throughout history have hyperinflated & destroyed their toilet-paper-currencies & the livelihoods of billions of people by governments & banks simply printing & "conjuring" more & more "money" into existence!

Keep things simple & they'll be easier to understand ! :)

karat32
02-06-2012, 11:38 AM
Ron Paul is the only US politician with a clue when it comes to the European debt crisis. The last thing Europe needs is another president who sends his minions (Timmy-G) here and tells our politicians/bureaucrats to print more, they are quite capable of doing that on their own.

The last person I would listen to when it comes to this subject is a liberal professor, instead have a look at this:

http://mises.org/books/bagus_tragedy_of_euro.pdf

EaSy
02-06-2012, 11:42 AM
No way. Europe doesn't have a destroyed economy (yet). We suffered from global market losses caused by US fail in 2008. Later the Greece got itself into trouble. They were reporting false budget reports. Real numbers showed they have a huge debt and they were spending to much money on pensions and goverment. Dunno exact numbers but I think 33% of all greeks were goverment workers. On top of that all rating agencies started to lower ratings for EU members because of their high debts. Markets were very unstable because of that. Funny thing is that they kept A+ numbers for so long even if they knew Italy, France, Spain and others are no way in the best category. Another problem is Euro. Greece cannot go into bankruptcy using euro so the other states bail-out Greece. LOL. For example Slovakia had to actually borrow money to lend them to Greece. HAHA. Europe is in same "fiat currency and too much goverment" mess as US. But right now the situation is not that bad expecially thanks to strong economy of Germany.

KingNothing
02-06-2012, 11:48 AM
Hello fellow paulites, i had a discussion with a liberal professor at my university. It was pretty short but he basically said Ron Paul was wrong that cutting the budget works because Europe did the same thing last year and it destroyed their economy. I didn have time for a rebuttal, but I was always under the impression that Europes budget cuts came out of necessity from the debts not the other way around. Thoughts?

Austerity was imposed on the PIIGS, mostly Greece so far, because their financiers -the ECB and Germany- refused to lend them any more money without strict budget cuts.

Now, your professor is partly right though. The Greek debt problem was projected to INCREASE as a result of the austerity program. So much of their economy was based on government spending that without it, things would grind to a halt. That is a tremendously large burden to overcome, and it will take a decade or more for the Greek people to dig their way out of the mess they're in. Unless they take a drastic measure, like dropping the euro and declaring bankruptcy/devaluing their currency, the hurt will continue. Expect Portugal and Spain, and possibly Italy and Ireland to be in similar situations at some point in the future.

The lesson to learn from the Europ-periphery is multi-fold:
1.) Don't lie about your debt burden to join a cumbersome monetary union. Greece did this with the help of Goldman-Sachs, similar to what Lehman did to hide it's debt from the public (http://www.economywatch.com/economy-business-and-finance-news/lehman-repo-105-goldman-greece-global-financial-system-has-irreversibly-failed-15-03.html). More here (http://blogs.reuters.com/felix-salmon/2010/02/09/how-greece-hid-its-borrowing-in-the-swaps-market/).
2.) Don't freely lend money to governments that are running lousy economies. More here (http://theinflationist.com/stocks/eu-banks-exposure-to-piigs-2010).
3.) Decrease spending BEFORE your financiers force you to do so. (http://www.nasdaq.com/article/threat-to-block-bailout-aid-if-greece-stalls-on-austerity-20120206-00835)


We've still got time to solve our problems.... but it's running out. If we get to 2020, or so, and things continue on as usual, we could be in for a world of misery.

KingNothing
02-06-2012, 11:54 AM
For more information on this kind of stuff, you should be reading Zerohedge.com, http://globaleconomicanalysis.blogspot.com/, the stuff Ambrose Evans-Pritchard has written for The Telegraph and as much as you can about how Iceland and Sweden dealt with their debt and banking problems, and what Japan has done with their absurd level of debt.

It's all interesting stuff, and an understanding of it will help us all see what could be in our future.

The Gold Standard
02-06-2012, 11:59 AM
Europe didn't just voluntarily impose austerity out of nowhere. They did it because they couldn't borrow any more money.

mandrake
02-06-2012, 03:13 PM
Want to read a pretty good article showing how the "8.3% unemployment rate" data that was released (to the euphoria of the network media) last Friday was calculated based on wholesale manipulation? Interesting links in this article, including one to the shadowstats site which calculates real unemployment at 22.5%:

http://truthingold.blogspot.com/2012/02/bureau-of-lying-statistics.html

GrahamUK
02-06-2012, 06:15 PM
The Eurozone is in trouble, dire trouble.. For instance, Ireland the 2nd most expensive eurozone nation to try and live in.. Prices have gone absolutely bonkers in the last few years.. I hear a loaf of bread can be anywhere between 2.5 and 4 Euro-thingies, and of course all the other staples, tabacoo, alcohol, petrol, gas and electricity are crazy dear too. 5 Euro-thingies for a 33ml bottle of beer! pfft no tyvm

The Gold Standard
02-06-2012, 06:26 PM
The Eurozone is in trouble, dire trouble.. For instance, Ireland the 2nd most expensive eurozone nation to try and live in.. Prices have gone absolutely bonkers in the last few years.. I hear a loaf of bread can be anywhere between 2.5 and 4 Euro-thingies, and of course all the other staples, tabacoo, alcohol, petrol, gas and electricity are crazy dear too. 5 Euro-thingies for a 33ml bottle of beer! pfft no tyvm

Welcome to quantitative easing. The difference between the Euro and the dollar is that we enforce the dollar's role in the world with the blood of our children, so we get some extra time before our money printing bites us in the ass. The ECB hasn't printed nearly as much as the "experts" are calling for, and this is why. Other countries don't need to accept Euros or risk being invaded and occupied. If they printed like we have they would be pushing carts full of Euros around town to buy their groceries.