AUSTERITY, DEBT and LIES

It is clear that two Harvard professors used incorrect data and insupportable math formulas to help conservatives "sell" austerity. I believe that governments should be able to borrow money just like corporations borrow money. Just as some badly run corporations may not be able pay their debts, some badly run governments may not be able to pay their debts.

Harvard Professors Reinhart and Rogoff published "Growth in a Time of Debt". They used a speadsheet to "prove" that government debt over 90% of GDP stops economic growth. Too bad the paper is total bull dung. The professors used an incorrect math formula and failed to put in data that disagreed with their theory. No other economics professor was willing to say more than that (s)he could not replicate R&R's results. It took Thomas Herndon, a brave grad student, to disprove R&R's results.

So now we know that people are homeless, starving, unemployed and angry due to totally unnecessary austerity programs.

How do we decide how much debt is too much? Make the analysis as if a country is a corporation. You look at management, ability to repay, debt to GDP (instead of equity), past repayment history, reputation, and current interest rate being paid. Honest economists can help with this problem, but, in the end, it is up to the persons lending the money to decide if the interest being paid is worth the risk of not being repaid.

Please note that the US is paying record low interest rates on its debt.