Austerity Explained

What is Austerity?-Austerity is a policy adopted by countries around the world, to get rid of debt, usually after a recession. The most common austerity measures include cuts to public spending, tax rises, or a combination of both.

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Debt is a major problem in modern societies because interest has to be paid on it, meaning that if the interest rate rockets up, countries can fall into even bigger debt. In the long term, some argue austerity measures can create a more fiscally responsible society, increasing the markets confidence in an economy, and giving more power to wealth creators. However, in the short term, a reduction in public spending can lead to increased unemployment, and therefore may require the government to spend more on the welfare state and possibly increase taxes.

One of the major opponents of austerity was John Keynes. He claimed that to reduce the effects of recession, the government should stimulate the economy with more money, to help to spur on GDP growth and reduce unemployment. He also stated that large deficits were not a bad thing, if they were caused by governments spending more to alleviate the effects of a recession. "The boom, not the slump, is the right time for austerity at the Treasury."- Keynes once said. Whatever your opinion is on the matter, it seems austerity will be continuing for the foreseeable future, with many European economies adopting it as major policy.

[mondayjoker]

Correct, austerity should be enacted when production is high and interest rates are low, but it never is. Not at the household level and certainly not at the government level.

[moyurbird]

Great explanation with a pleasent voice over compared to the many other intolerable clips of austerity. Thanks

[Jason-os]

Cheer~~~sternness or severity of manner or attitude.😊

[vebdaklu]

That's what happens when you center a society around money, instead of around need - things that aren't profitable in the short term are ignored, everyonr is looking to spend the least amount of money and do the least amount of work. Peoples needs go unmet, and they go into debt to repair them - and all of a sudden, everyone is shocked how "the free market" didn't solve the issue. It's like expecting a market to solve slavery - it just turns into a slave market, it's easier and more profitable that way.

[rentatent]

I'm glad these clowns will never gain power of my local council

[Cromper]

Austerity is not about combatting debt but SERVICING a debt. Austerity is about reducing a deficit when the debt cannot be serviced.

[BlinEd]

Great simple and informative video thanks for that

[theJMBgamer]

I hate terms like "wealth creator" and "job creator". Those terms assume that there's only an elite few fat cats who know how to create jobs, and without them the working class wouldn't know what to do with our time and labor.

[carllelendt]

So it's a phenomenon which occurs from mainly Keynesian-debt based economics(?).

[amanlalshrestha]

thank you so much. Keep the good work up !

[generalluna]

John Maynard Keynes... Not John Keynes...

[ragnaroksora]

wow this is pretty dumb. first of all why is there debt to began with. and no stimulation of economy works best when you are NOT in debt.

and the real danger of austerity is when the country will remain stagnant stage with zero money in circulations which will result in zero production and stimulation. liquidity of assets makes more sense.

[jean-pierredevent]

The 2008 banking crisis resulted in much money in danger of getting lost forever that existed only as credit. I fear now that all that at first only digital existing money that saved the banks but is now because of austerity as much as possible but not deliberately transformed into real assets in the end squeezed out of the middle class and poor. I hope the world is not that black though.

[JohnDoe-dlub]

Debt in Britain is due to excessive public services and economic crash of the Banks. It will only get worse - Last time was 1920s/30s ended with WWII

[jebremocampo]

Austerity is when govt actually does what a responsible person would do. Address the debt

I believe austerity should be done with low to minimum govt spending. No tax raise, but shut down most govt programs and govt depts. Most of them are ussless and harmful for the economy anyway