I just wouldn’t say that they are opposed to deficit spending, they know it works and demand from undeveloped countries that they don’t do it on the basis that it’s safeguarding their ability to pay the debt, so they essentially turn the whole country into a debt paying machine which is unable to develop social infrastructure, national industrial complex, its forced to sell whatever the country has too keep the debt from spiraling out of control
That’s true as well, but because deficit spending raises inflation, they are also ideologically opposed to it.
Deficit spending usually is done to maintain social welfare programs, which makes more money available to low income citizens, which raises inflation. It’s telling that the first parts of the budget they always want to be cut are government wages and benefits.
This also acts as a signal for the private sector that it’s ok to reduce wages.
But they don’t hold it against the US or European countries, even with inflation but to under developed countries any amount of deficit spending is a deadly sin which gravely damages their risk indices
They applied the same things to the European PIICGS that went under (Portugal, Italy, Ireland, Cyprus, Greece, Spain), in coordination with the European Central Bank.
They don’t care as long as it’s not the US, the UK, and to some extend France, Switzerland and Germany. Maybe the Scandinavians would get away with it too. Everyone else is fair game.
I just wouldn’t say that they are opposed to deficit spending, they know it works and demand from undeveloped countries that they don’t do it on the basis that it’s safeguarding their ability to pay the debt, so they essentially turn the whole country into a debt paying machine which is unable to develop social infrastructure, national industrial complex, its forced to sell whatever the country has too keep the debt from spiraling out of control
That’s true as well, but because deficit spending raises inflation, they are also ideologically opposed to it.
Deficit spending usually is done to maintain social welfare programs, which makes more money available to low income citizens, which raises inflation. It’s telling that the first parts of the budget they always want to be cut are government wages and benefits.
This also acts as a signal for the private sector that it’s ok to reduce wages.
But they don’t hold it against the US or European countries, even with inflation but to under developed countries any amount of deficit spending is a deadly sin which gravely damages their risk indices
They applied the same things to the European PIICGS that went under (Portugal, Italy, Ireland, Cyprus, Greece, Spain), in coordination with the European Central Bank.
They don’t care as long as it’s not the US, the UK, and to some extend France, Switzerland and Germany. Maybe the Scandinavians would get away with it too. Everyone else is fair game.
Exactly the more in center of capitalism the more okay it is deficit spending.