Douglas Carswell's Blog

When in a hole, stop digging

Ever since the credit crunch first struck back in 2007, we’ve switched from one kind of bailout-and-borrow economics to another. 

The first wave of bank bailouts in late 2007 was followed by bailouts for Fannie Mae and Freddie Mac. In 2009 it was not just banks and car companies being bailed out, quantitative easing in Britain and America saw government bailout private debtors directly.   Obama blew $200 Billion on one fiscal stimulus, then $ 800 Billion on the next. 

By 2010, we were bailing out entire countries – Greece, then Ireland, then Portugal, then another round of US bank bailouts, then Greece again.... Today Washington is preparing yet another $400 billion bailout, while the Bank of England is preparing to print £100 Billion to give to the banks.

But all this bailout-and-borrow economics has not worked.  One wave of bailouts simply begets another. 

You cannot make yourself richer by spending more – even if it might make you feel that way for a short while.

Bailout-and-borrow economics is based a flawed belief that an economy grows because demand increases. Boost demand, and all will be well. 

But that is now demonstrably not true. We have spent $ Billions testing to destruction the fallacy that the economy grows when you increase demand. Demand increases because the economy grows.

Yet still expert economists, central bankers and public officials keep digging.

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