The British and the Canadian prime ministers yesterday called for a restoration of responsibility in fiscal policy, namely the management of debt. As if to underscore their appeal, the markets took a serious tumble across the board in fear of an impending global recession propelled by debt burdens in Europe and in America.
Harper said that
without a will to address growing uncertainty to decisively [sic] tackle what are, in some cases, dangerous and unsustainable levels of national indebtedness, without actions on these matters, the world will not avoid such consequences [a global recession].
To be a devil’s advocate Marco, why not crank up the printing presses and finance government expenditures with new money? In this era of de-leveraging of consumer, bank and private sector operations, it could be argued that what the world needs is an expansion of broad money supply to offset to loss of money supply from the de-leveraging effect.