Chris Dillow— Austerity's Not Working

Chris Dillow does the sectoral balances and concludes the obvious.

Now, as long as these three sectors want to save, the government will have to borrow, simply as an accounting identity. The mechanism through which this happens is, of course, that higher private savings mean weak activity, which means weak tax revenues and higher welfare payments.

But he doesn't draw the more obvious conclusion that government is not borrowing enough to offset non-government saving at full employment.

Stumbling and Mumbling
Austerity's Not Working
Chris Dillow | Investors Chronicle (UK)