The debate over deficit spending versus austerity continues globally. Both camps ultimately converge on the necessity of bringing spending, deficits and debt under control. Keynesians just don't think now is a good time whereas the von Hayek crowd wonders when have Keynesians ever thought it was a good time. The Brits under Cameron have seemingly joined Germany in the austerity camp. The U.S. under Obama is firmly in the "let's spend our way out of this mess" camp. Of course, spending one's way out of debt would probably cause even (or maybe especially) a 12 year old to be frightened by such logic. "Dad, I know you've already given me a year's advance on my allowance, but you see, I'm currently a little out of sorts so now would not be the best time to cut back on my spending and start paying you back and, besides, I'm hoping to spend my way out of my problems". H'mmm.
To me, the problem with Keynesians is that most are dishonest. They are supposed to spend more during tough times (deficits) and sock assets away (surpluses) for the rainy days in good times. The first part is easy. The second part rarely happens because it is the tough part and very unpopular. So there are few true Keynesians. Same goes for Communists. Most believe in sharing when it is the other fellow who is giving.
Anyway, some great discussion on the Keynes (deficit spending) versus Hayek (austerity) by Brady Willett and Dr. Todd Alway here.
