Damien Grant on the deficit

Damien Grant writes in the HoS:

The medical profession no longer drills holes into fevered skulls because science has demonstrated that such measures do not work, often kill the patient and leave a shocking mess in the surgery room.

When it comes to economics, however, there is no shortage of amateurs recycling discredited miracle cures: deficit spending and printing money.

Bryan Gould has been complaining that austerity does not work and is no solution to our current woes. He points to Greece, Spain, et al, to illustrate his point.

Greece, however, is a mess precisely because it has never practised austerity. Greek governments used to print drachmas, and lately borrowed euros. If borrowing money was a path to riches then Greece would be wealthy. It isn’t.

And he deals with the other fad:

If that sounds unpleasant, do not worry. Bryan Gould and Bernard Hickey have an idea – we can print the $13.6 billion. All we need to do is write ourselves cheques for $3000 each. Christchurch will be rebuilt, our butter will be cheaper and the Auckland man-drought will end as our talented lost-boys rush back.

Sadly, this will not work. Printing money to stimulate growth worked when citizens could be tricked that inflation meant economic conditions had improved.

Quantitative easing, a modern form of printing money, has been used overseas to help bolster the capital base of failing banks and prevent deflation in Japan. It does not create jobs.

There is no miracle cure. It is time we stopped listening to the snake oil salesmen.

We need to live within our means, not borrow more or start printing money.