Did central banks learn nothing from the 1970s? Did they learn nothing from the credit boom that preceded the crash two years ago?
Consumer demand is a consequence, not a cause, of economic growth. If you want people to borrow, there must be people with surplus capital to lend. If you systematically penalise prudence, the nation as a whole gets deeper and deeper in debt – which is precisely what has happened.
I recommend this book to any central bankers who want a primer on Austrian economics. In the mean time, there are some simple verities which you shouldn’t require an economics degree to grasp.
You can’t consume without producing, at least not in the long term.
You can’t cure a patient by giving him more of what made him ill.
You can’t inflate away your government liabilities without consequences.
You can’t spend your way out of recession.
You can’t borrow your way out of debt.
