If you don't manipulate the interest rates, the market takes care of it. It's just so incredibly stupid that we have to even have to have this argument. If people believe you can pay it back they will borrow to you, if you don't think you can then they won't. If debt levels go up then interest rates go up, and if people borrow you when you can't afford it then those investors take the loss. That should be basic economics, but every country is the world is manipulating their interest rates and many countries have already found themselves in a debt trap with no way out. Just watch now as the real wealth gravitates from the west to the east.

Well, I have even problems measuring growth in money. That is a problem that lies in the root of it.
scenario 1: If prices drop people can spend their money on more things. The wealth is increasing - but as the same amount of money is spended, the GDP stays the same.
scenario 2: If prices stay the same, but people start to save more money, the GDP decreases, although people don't have the impression the personal wealth is decreasing.
scenario 3: If prices stay the same, but people take credits to spend more money, the GDP increases, although people while having more stuff are in debt now.
scenario 4: If prices increase, people buy less stuff with the same money. As the money that is spended stays the same, the GDP stays the same, but people have less wealth.
Also take into account, that if you recalculate GDP by converting into another currency, the picture may change depending on current exchange rates.
We need some other index to talk about general wealth in population and the state of economy. GDP is often enough misleading.

Household Net Worth per capita would probably be a pretty good indicator.  Or just total Net Worth if you want a big number.

Then it accounts for savings, debt, government debt, government benefits and new earnings.  Increases in technology, loss of value of assets etc.

The sewers was probably just a bad example but they are very old. Stuff like High Speed Rail would probably be more beneficial to the economy.

But the problem is, how can we follow Keynes theory when we wasted all our money from the good times of 1992-2007? It's an interesting topic but very complicated. 

But from what you're saying, each economy needs some amount of manufacturing to succedd, which could be why Germany is one of the least affected in the Eurozone. 

But i'll read the book when i have time 

Well, not straight to Japan. International trade is not quite so seamless as that, such that demand in one market necessarily produces jobs in that market even if the demand were 100% for foreign made goods. Enough of a boost and NoA would have to hire people, or more Gamestop branches open and they hire more associates

Not that video games are entirely a product where increased demand creates more jobs, though. That's one of the real problems of demand-based economics: it was devised some 60 years before the information age, whereby content generation doesn't have to match the scale of demand, and only delivery networks have to expand. Unlike, say, GM, who rapidly reaches a bottleneck of how many cars they can sell should there be a surge in demand that they don't have enough factories or workers for.

There's still much to be said for demand economics (moreso than the giant tax-evasion scam that is supply-side economics, anyway), but the math complicates dramatically as the notion of "product" becomes more dynamic.

I will not lie, I dont know much about the Chinese economy. But I did not think they entered a recession when the rest of the world did. China is also unique in that it is growing and modernizing so fast. I will have to look more into their stimulus and see exactly what they did and how they look now. thanks for the info. Most other major econmies in the world have already gone through this phase, so I dont know how well it will compare.

Only because their economy is more closed, and because there is a LOT of price-fixing and general unnecessary real-estate development going on.

Chinese still rapidly move from the country to the city, but the growth of cities is even more rapid. Much of it just seems to be building for the sake of building, similar to the Japanese (although that is truly in the spirit of Keynes, the proposed government paying people to dig ditches and then fill them back up)

There is no austerity in the UK as spending and borrowing more than ever before is not austerity.

In the UK our Chancellor ' George Osbourne' isn't being honest about austerity. He is not as concerned about growth or employment rather he want's to reduce the deficit whether it takes 5 years, 10 years, 20 years even. Issue is such measures will mean a stagnant or a recession hit economy for years to come in order to get the debt under control and furthermore the welfare state would balloon in size as more unemployment increases benefits paid out which would slow down the the time it takes to pay off the debt. Most individuals and businesses don't want to live in a depressed economy for that long, they would rather the Government tries to spend it's way out of the crisis which in turn would mean more tax is collected and less benefit paid due to higher employment BUT once again you are back to a large state capitalist based economy where many businesses rely on Government spending to keep the money rolling in. There's no real issue with that until until you realise for years the Government or opposition bribes the electorate with promises of large scale spending to keep unemployment low and business happy by borrowing money to pay back years later not by the electorate it's bribing but by taxing the future generation.

It's a cycle that works when everything is going right but comes tumbling down when something like the financial crisis happens as suddenly the banks who were lending them money needed to be rescued and investors who could lend the money charged higher interest rates to do so meaning the Government will have to charge the future generations a higher rate of tax to pay it off unless they suddenly discover a trillion barrels of oil in the River Thames.

The other issue with austerity is there are countries out there like India, China and Brazil to name just a few who are growing at a rate of 5-8% while the austerity driven Eurozone are lucky to get 1%. At that rate if austerity economics goes the distance it won't be long before a monumental shift in economic, political and even military power shifts to other parts of the world. I mean it's already taking place to a certain degree but it's been accelerated. However should austerity go the distance and debt is finally brought under control, it could pay off not soon but many decades down the line (you and I will be nearing retirement, retired or dead) as Europe has a very strong economic, intellectual and high technology foundation that could be put to real good use if the political will is there.

EDIT- There is one way Europeans can spend their way out of trouble but it will mean taking on the (current majority) Chinese work ethic i.e 6-7 days of work a week, lower pay, more hours, saving for a rainy day, buying a house with a 40% deposit, less labour rights etc etc....and that ain't gonna happen anytime soon.

why are ppl defending debt in this thread?

keynes is why we have inflation, paul krugman is PR for the LENDERS, colbert is a paid actor, and few of you are economists.

Could you or I survive on debt? no.