UK is no longer in reccession

[famousringo]

Kasz216 said:

famousringo said:

Machina said:
Deferred pain.

Deferred pain is exactly what the game's about. You smooth out the curves so that the bumps are less traumatic and fewer people get hurt.

It's like an insurance plan. You pay into it over a long period of time, and when calamity strikes your insurance helps ease what might otherwise be a very difficult decision.

But democratically elected governments have a hard time saving up for the future because taxpayers hate paying money for vague disasters that might possibly happen sometime in the future. So instead of paying into a plan ahead of time, they generally borrow the money when the catastrophe hits and (hopefully) pay it back later. This works pretty well when you're a government and you have access to nearly unlimited cheap credit whenever you want it. Don't we all wish that we could buy insurance retroactively?

I'd actually argue deferred pain is part of why this problem happened.  Rather then have the ups and downs of a real economy governments tinkered with it because noboy wants to go through a minor depression on their watch because it's bad for elections.

Actually, I agree completely, because the foot was never taken off the gas in the Bush years. Interest rates never came back up and the deficit was allowed to grow larger and larger in order to finance both massive spending and big tax cuts. The plan breaks down if government can't muster the will to pay back the loan after the crisis has passed. Market adjustments do have to happen, they just don't have to be as scary as they were in 2008.

That was just the US Government, though. There were other governments in the world which had the proper fiscal flexibility to stimulate the economy without resorting to helicopters full of cash.