Are people not spending because of statistics? Of course not. They are not spending because they have less money in their pockets. Only this month, with the public sector pension changes, the government has taken about £100 million per month out of the economy.

Even now, 88% of the planned austerity has NOT yet arrived in the UK economy! When it does hit, this will scare people even more when it does finally arrive, and so growth will suffer again, increasing debts as a percentage, causing more austerity and so on. Until someone stops screaming “Austerity is the only cure!” and brings some positivity to the front of people’s minds, people will not spend, companies will not invest, and the claims that the economy is broken will have fulfilled their own prophecies.

Heisenberg’s Uncertainty Principle states that one can not simultaneously know both the position and the momentum of a sub atomic particle. The uncertainty principle states a fundamental property of quantum systems- not about the observational acuity of current technology.

As usual, the media are doing a terrible job at putting the data in perspective.

When unchecked, positive feedback in the economy will lead to bubbles and depressions. It has to be attenuated and dampened (the positive feedback response needs to be delayed as much as possible), and offset with negative feedback, to keep things from spiraling out of control (all bubbles burst, and depressions are often terminated by wars). One way to dampen and attenuate positive feedback in a growing economy is to increase the tax rate on capital gains for short term investments. This will prevent speculative gains from being fed back into the system – you know, like flipping houses that are bought with no money down and drive the prices even higher.

In a shrinking economy, we need to make sure more capital gets injected into the economy. We can do that by penalizing hoarding and rewarding investment, and if that doesn’t get that job done, we have to resort to the government printing and spending money. That’s not desirable, but if those with more capital than they could possibly use in 100 lifetimes refuse to deploy it, we shouldn’t just let the rest of the economy suffer.

So thanks for asking.

That is the old distraction trick.

The original point of austerity was that it would inspire confidence and that would spark suppliers to produce. It was supposed to be an effective policy over the short and mid term. That has not happened so the game is now to argue about the statistics. The next game will be to argue that austerity has long term benefits. That would distract from the original argument, which was that in the choice between two policies that end up the same in the long run – austerity versus a more Keynesian approach – the choice of austerity was the better way to reach the same goal of fiscal solvency and economic health. It has not worked that way so we’ll change the debate.