I N DE PTH
Austerity
the truth behind it
W
Christian Milotte budget deficits a bad concept? What
here does austerity come
from?
Austerity derives from the word
austere which generally means grave,
sober or serious. However, it also
has second meaning- self-discipline.
When this definition is applied to
economics, it specifically refers to the
policies which governments use to
reduce budget deficits during adverse
economic conditions. When people
hear about austerity in the news and
in economics, it seems to possess
many negative connotations, but
is implementing policies to reduce
are the consequences of enforcing
such policies? Are there examples in
history where austerity measures have
worked? These are the questions about
austerity that everyone wants to know.
a new thing: governments have found
themselves in these situations for
centuries.
Deficits can be sustainable and
important in the short run as
governments can borrow money from
Why would governments roll out
individuals and other countries with
austerity measures?
the promises of paying interest and
a future return of their investment.
Throughout the globe, governments
If running these short term deficits
have been running massive annual
evolves into long term ones and
deficits for years where extreme
borrowing money continues indefinitely
spending on government programs and (which seems to be the epitome of
an incessant desire to inject money
what is happening at the moment),
into the economy has exceeded the
it will, ultimately, lead to the
amount of money collected through
accumulation of massive debt.
taxation, fines and fees. But this is not