Thank god! Austerity is a terrible solution to the debt problem. It just sends countries into a negativity spiral they cant get out from. The more taxes you have the less money people have to buy goods and therefore taxes on purchasable goods goes down. In the end, the countries doesnt grow, maybe even recedes economically and the states doesnt get any more revenue from taxes.
Its a ridiculous solution that could never and wont even work. Actually economics already told you that the best way to overcome crisis times is to invest, creating more jobs and therefore more revenue through taxes.

But, if you ask me, this wasnt about growth or debt, this was because some people wanted to profit from this by sending countries into difficult situations where they can profit from by demanding unreasonable interest rates.

Despite the stagflation of the Japanese econmy for the past 20+ years, there are a few key differences between Japan and say the US and UK which in some ways cushions them or at least it has so far. The following 'pros' could become 'cons' in the near future though-

Pros- Japanese people save loads (like a lot of other Asian countries) and look after their parents in old age. Their state welfare state isn't anywhere near as big.

Cons- Japanese buisness could really do with that money being spent.

Pros- They are still a net exporter and export tons of goods to the rapidly growing East Asian market as well to Western Europe and the US.

Cons-  Being over releiant on exports means if the countries they export to suddeny can't afford to buy as much (i.e recession hit Europe) it could badly damage the economy.

Pros- Japanese society is largely homogenous. They have a large population and don't want nor feel the need to allow in immigrants which in the Western world businesses have used to stall inflation adjusted wage increases for the past few decades.

Cons- It's only a matter of time before Japan needs to open up it's borders unless Japanese people suddenly start having loads of babies.

Pros- Japanese productivity is legendary. Despite it's shringking working age population and negative demographic trends compared to practically every other developed country out there it still managed to grow it's economy with low unemployment.

Cons- Some of the so called employed are actually working for just a few hours a week so the modest unemployment statistics is quite misleading.

good point.  I think the interest rate of money borrowed by the us is below 2%.  However,  with this money being giving away, how much revenue do you suppose is generated directly or indirectly by this borrowed money?  Look at the chart below and see if you can point out which area creates revenue from borrowed money.  You're saying you gotta spend money to make money... so borrow to spend.

If revenue from borrowed money (indirectly and directly) is 2%.  Then the interest gets paid. But the money borrowed is spent and must be paid with taxes.  Some day.  By us. 

Yeah... though Gamestop hardly make anything on new games.  It's why they push used games so much.  Really, retail margins in general are lower then they've ever been.

To quote Keynes...  “A favorable balance, provided it is not too large, will prove extremely stimulating; whilst an unfavorable balance may soon produce a state of persistent depression"

He wrote this after the route of stimulating yourself out of a depression became the standard.

It's worth noting as well that Keynes was for Free Trade,(violently so) and Anti-Tariff.  So he wouldn't fall into the usual camps afraid of the trade deficit either.

He thought the only way out of the problem was to get rich people to invest in exportable goods.

As for Supply side economics being a tax evasion scheme... tax cuts are demand side policies.  Tax cuts are something Keynes would of supported... greatly.

To quote Keynes....

"Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance, than an increase, of balancing the budget.  For to take the opposite view to-day is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more;—and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.  ”

He actually saw such "Tax Avoidence schemes" as equally valid as stimulus spending.  Since he argued, they had the same effect.

Substantially the same argument also applies to a relief of taxation by suspending the Sinking Fund and by returning to the practice of financing by loans those services which can properly be so financed, such as the cost of new roads charged on the Road Fund and that part of the cost of the dole which can be averaged out against the better days for which we must hope. For the increased spending power of the taxpayer will have precisely the same favourable repercussions as increased spending power due to loan-expenditure; and in some ways this method of increasing expenditure is healthier and better spread throughout the community. If the Chancellor of the Exchequer will reduce taxation by £50,000,000 through suspending the Sinking Fund and borrowing in those cases where formerly we thought it reasonable to borrow, the half of what he remits will in fact return to him from the saving on the dole and the higher yield of a given level of taxation;—though, as I have pointed out above, it will not necessarily return to him in the same Budget. I strongly support, therefore, the suggestion which has been made that the next Budget should be divided into two parts, one of which shall include those items of expenditure which it would be proper to treat as loan-expenditure in present circumstances.

http://gutenberg.ca/ebooks/keynes-means/keynes-means-00-h.html

It's worth noting, that one of Keynes main reasons for supporting public works was that... by the government paying for stuff to be done.  Less people would be paid unemployment.   He would actually be against increases in unemployment, and money given "for free".  Instead wanting to put people to work, hopefully gettin something out of it that would of been going to the poor anyway, getting that money back and then getting some back in taxes.

In otherwords, "If we're paying someone $150 a week to be unemployed, why not pay them $300 a week anyway, since we're basically getting a deal... and since this $300 would be borrowed, taxes for unemployment would be lowered.  Meaning more spending power for tax payers."

Or in his direct words.

" If the dole was as great as a man's earnings when in work and was paid for by borrowing, there would be scarcely any repercussions at all. On the other hand, now that the dole is paid for by taxes and not by borrowing (so that a reduction in the dole may be expected to increase the spending power of the taxpayer), we no longer have to make so large a deduction on this head."

Of course... one could argue that we are facing such an issue since... a lot of government spending is based on borrowing... which he would of hated... and the huge trade deficit.

Even Keynes probably woud think we've done fucked up with our debt naturally so high in the first place and having a trade deficit.  Keynes was a big proponent of country self sufficency. 

So generally, if you support Keynsian economics.  You should support tax cuts just as much as any additional spending.  Becuase Keynes did.  Economic thought that doesn't is not in actuallity based on demand side economics or Keynsian economics but instead supported by political support or specific policies to help the poor trying to cloak itself in economic legitamicy.  Not that there is anything wrong with wanting to help the poor... but don't try to sell someone a fork by telling them it's a spoon.  Otherwise they're just going to be mad when they find they can't eat soup.

That the Bush tax cuts didn't work... nor the stimulus... isn't exactly surprising from a Keysnian perspective due to the aforementioned huge trade deficits.   If you don't think trade deficits matter... you shouldn't be a Keynsian but instead Neo-Classical in terms of economic belief.

I think that's more or less a false narrative though when our GDP to debt ratio has constantly increased.  Even before the financial crisis.

and again, i'd point out... Demand side economics says that tax cuts are equal to stimulus spending.  So raising taxes would be just a negative an action as an equal amount of austerity.

Stimulus spending = The Bush tax cuts. (Per Keynes, well not the Bush tax cuts, but tax cuts.)

They should have the exact same effect.  Someone who thinks the Bush tax cuts didn't work should also think stimulus spending won't work

Again though.. I showed why that wasn't the case, and a pointless arguement.

I mean, debt vs gdp isn't different from public and private debt.

For example.  It's why you get a Home Morgatge.

Your borrowing money... at interest, but what you save on rent, and the equity of the house makes it a good purchase.

Debt to GDP ratio's effecting growth really are relative to the size of the credit market you have... more importantly, the domestic credit market.  Again, if we were to look at Keynes.  He'd be HORRIFIED just how much of our creditors were foreign.   I doubt very much he'd actually want us to sell bonds and instead just fire up the printing press for EVERYTHING.

If you want to view WW2 as a success from a Keysnian perspective.  War Bonds play a huge part.  (Which... was Keynes idea FYI...)

You can't stay afloat in a leaky boat, and to try to before fixing the holes is madness.  This was the real heart of Keynes message.   One that was lost due to the fact that it wasn't really relevent to the powerful countries at the time.

This is why... desptie being cast as opposites.  Keynes and Hayek were great friends... and saw themselves as believing 98% the exact same thing.

Oh, i'm just putting down a general basis belief of Keynsianism before i explain why.... it doesn't work now, even according to keynsianism.

First off.... the APY of the CD isn't as great as you think. 

US government bond interst rates are currently at ~1.5%.

US GDP growth is currenty at ~2.5... HOWEVER.   Goverment taxes ~16% GDP.   So the government only recoups 0.4% on it's investment.

Now you COULD argue that they are borrowing collectivly... for us all.  And that eventually the entire nation is growing enough in wealth to pay everything off.

However THAT doesn't track... because of the afore mentioned private debt. (and depreciation, and plenty of other stuff)  Also while GDP may increase a nations net wealth may stay static... or decrease.  (As has been the case with the United States.)

So if you look at it from a "The US Citizens will help the government pay it back later"   You need to take into account that rather then growing.  Average net wealth often shrinks, even when GDP is growing. 

The money Keynes would say, is being lost to "Leakage".  Going overseas due to the USA's huge trade deficit.  Stimulus to him today would make about as much sense as pumping a bunch of water out of a sinking ship.   Without the holes being fixed, all you are doing is exhausting your ability to swim to shore.

I think Keynes would have said the stimulus wasn't large enough. He would have also detested the way it was implemented. I don't think he would have rejected it though. He would have championed it (as long as it was real stimulus, not pork). He would have wanted it to go to infrastructure, which he believed fueled economic growth. That was the basis of his theory. It has also been proven correct. If it weren't for the stimulus, the country more than likely would have gone into a deppression. Though I will never be able to prove it. Though the fact is, things have been slowly getting better. I personally think we as a country need to get rid of the tried but completely untrue and failed trickle down economics and policies we employ. We need to realize that investing in our children and our selves is the best answer to our problems. Not making sure our CEO's have golden parachutes for when they eventually run their corporation into the ground.

I feel like you haven't read much Keynes....  read the above keynes primary sources.

According to Keynes "pork" works just fine.

According to Keynes "trickle down" economics work.

According to Keynes, stimulus will be useless if their is sufficent leakage in the form of trade deficits,

I feel like you have no clue who Keynes was or what his economic theories were about. He definitely didn't believe in pork or trickle down economics. He was against those very things. He believed workers created demand, and when you put more money in workers hands, everyone wins. That is the total opposite of trickle down economics. He was for a free market with government regulation. He was for government intervention during economic crisis'. He also thought that some defecit was good. Keynes believed Stimulus was good as long as it was implemented properly. Keynes was a liberal.