Austerity and the rise of the Nazi party [pdf]
I&#x27;m not sure why, but a lot of these articles fail to properly distinguish between government fiscal austerity (government reducing deficit or debt) and monetary austerity (central banks reducing the growth of the money supply).<p>There are reasons to perform austerity but it&#x27;s rarely a good idea to do it on both of these sides at the same time. When governments are trying to get out of a debt hole, monetary policy should be expansionary enough to allow for the private sector to grow and replace the economic activity that the government is halting.<p>The alternative double austerity leads to, on an economy wide scale, investors&#x27; attempts at building wealth, being transformed into hoarding of intrinsically valueless pieces of paper or electrons instead of being tied to something real, instead of being tied to factories, businesses projects and tools that allow people to work. It leads to people not working and not being able to subsist because the investment market is put into a gridlock.<p>The detrimental effects are not evenly distributed. It disproportionately and very nonlinearly affects groups that are economically vulnerable, the less educated, people working in commoditized industries where margins are thin, the inexperienced. The potential for livelihood for these people simply disappears when hoarding paper becomes more alluring than investing in these types of job creating projects.<p>The resulting desperation pushes people to extremes.<p>The ECB has been doing a mild version of this for the past decade, putting western civilization at risk. The US central bank is finally doing a better job but only after reasonable leaders were pushed aside and fanatics gained power. There is now a risk that the fanatics will get the credit for the better economy which might help them maintain power.