Beyond the Austerity Debate: the Deficit Bias in the post-Bretton Woods Era

By Carlo Cottarelli

(Version in Español)

The austerity vs. growth debate has raged in recent months, pitting those who argue that fiscal policy should be tightened more aggressively now to bring down high levels of debt, even though economic growth remains weak, against those who want to postpone the adjustment to better times. This is a critical issue for policymakers, perhaps the most important one in the short run.

And yet, this debate—which, mea culpa, I have myself contributed to―is attracting too much attention.

This is bad for two reasons:

  • The debate is driven, to some degree, by ideology and is therefore more focused on the relatively limited areas of disagreement than on the far broader areas of agreement. Most economists would agree that fiscal consolidation is needed in advanced economies, and that the average annual pace of adjustment during 2011-12―about 1 percentage point―is neither too aggressive nor excessively slow. Most economists would also agree that countries under pressure from markets have to adjust at a faster pace, while those that do not face such constraints have more time. Of course, there is disagreement on some aspects of the fiscal strategy, but it relates to specific country cases.
  • The debate is detracting attention from policy issues that may seem less urgent, but which are nevertheless critical in the medium term. I am referring to what I would call the institutional gaps in fiscal policymaking that still exist in most advanced and emerging economies. These gaps have contributed to a bias in the conduct of fiscal policy in favor of deficits that is behind many of the current problems.

The deficit bias

Since the collapse of the Bretton Woods system of fixed exchange rates in the early 1970s, it has been pretty obvious that there is a bias in favor of increasing public debt levels. Even before the global economic crisis hit in 2008, the average public debt-to-GDP ratio for advanced economies was at its highest level ever during the past 130 years, surpassed only by the Second World War.

On average, the public debt-to-GDP ratio increased from 29 percent in 1974 of GDP to 74 percent of GDP in 2007. During this period, the debt ratio surged during bad times but did not decline in good times. In some countries where public debt appeared to be low before the crisis (examples include Iceland, Ireland, Spain and United Kingdom), no consideration had been given to the exposure of these countries’ fiscal accounts to large risks linked to the size of their financial sector and revenues that were boosted by factors that turned out to be transitory.

In emerging economies, fiscal accounts currently appear to be in reasonably good shape. This group of countries has been growing at unprecedented rates for almost a decade (with the brief exception of 2009), and many have benefitted from high commodity prices. And yet, 40 percent of them (representing some 60 percent of emerging market debt) still has a debt-to-GDP ratio exceeding the 40 percent threshold that is often considered prudent for this country group. In many of these economies, financial repression (the use of various measures to channel funds to the government) is still used to facilitate the financing of public debt.

Plugging the gaps

In order to overcome the bias in fiscal policymaking in favor of deficits, several institutional gaps need fixing. They relate to:

    • budgetary processes that are too focused on the short term
    • a lack of transparency in fiscal accounts
    • inadequate comparability of information across countries
    • governance issues

Let me address each in turn.

Planning for the future

In most countries, the budgetary process is essentially a short-term (annual) business. In the United States, for example, which faces severe―and largely unaddressed―medium-term fiscal challenges, much more progress is needed in establishing a binding multi-year budgetary framework.

But the focus on the medium term is lacking in several other countries as well. While medium-term forecasts are prepared in many countries, they do not really constrain policy decisions in any meaningful way. The result is a focus on short-term developments, rather than underlying trends, which often implies a bias towards procyclical policies during high growth periods, and insufficient attention being given to long-term spending pressures, such as those related to age-related spending.

This short-termism also hampers policy planning. For instance, spending reviews aimed at assessing the medium-term effectiveness and financial impact of certain government policies are still absent even in advanced economies―Italy, for example, is only now moving more forcefully in this direction. Budgeting is also too focused on cash, rather than accrual, measures, which again often implies a short-term bias.

Being open and transparent

Transparency is far from adequate. Hidden fiscal imbalances have emerged in some European economies (Greece and Portugal come to mind), with negative consequences for the credibility of policymaking in these countries. Spain announced it would miss its fiscal deficit target by over 2 percentage points at end-2011. Public debt in China was recently revised up by 17 percentage points of GDP, owing to previously unrecorded local government debt. And there are many more examples.

One key issue is data coverage: less than half of the IMF’s 188 member countries publish fiscal data beyond the central government, and few publish comprehensive information on public enterprises. The frequency of information is also inadequate. Monthly data are scarce, quarterly data often unreliable. Only seven countries publish fiscal risk assessments, thus preventing a full appreciation of the exposure to shocks. Very few publish balance sheet data on assets and liabilities.

No private firm would be allowed to operate, let alone issue securities, with such a limited degree of transparency.

Comparing apples and oranges

International comparisons of fiscal trends are hampered by idiosyncratic accounting and budgetary practices. There are well-established accounting standards for private firms. Standards have been developed for the public sector too, but most countries do not pay much attention to them. In the European Union, a directive was issued only last year to bring some order to government accounting, and even then, it was framed in fairly general terms.

International statistical standards also exist (including the Government Financial Statistics Manual of the IMF), but they are not adhered to closely. For example, countries report widely varying definitions of financial assets held by governments. Gross debt definitions are also inconsistent. For example, Japan does not net out intra-governmental debt holdings in its general government debt figures, as most other countries do.

The IMF has recently intensified its efforts to publish a fully harmonized definition of government debt—an initiative which over time will have to be broadened to other statistics.

Checks and balances

Finally, there is the issue of governance―who is in charge of making decisions about income and expenditure. This is a delicate issue. Surely the approach followed for monetary policy—giving unelected officials the ultimate control of key policy decisions—is impossible for fiscal policy. Fiscal policy decisions redistribute income both across groups of citizens and across generations. As such, they must be taken by parliaments.

However, more progress must be made in allowing for an assessment of fiscal policy trends, risks and policies by independent agencies―often referred to as fiscal councils. One example that comes to mind is the Fiscal Policy Council in Sweden, but there are others.

The introduction of fiscal councils has been encouraged in the euro area by the reform of the Stability and Growth Pact and is a requirement under the recently signed intergovernmental Fiscal Compact. But fiscal councils are still relatively uncommon, particularly in emerging economies, with a recent remarkable step backwards in at least one prominent case in emerging Europe.

If the gap is not closed . . . 

The importance of fiscal institutions was discussed recently at a conference in Stockholm organized jointly by the Swedish Ministry of Finance and the IMF. During the final panel,  Eric Leeper of Indiana University underscored that there is a gap between our knowledge of the way fiscal policy works and the way monetary policy works. He is right.

But equally important is the gap that exists when it comes to fiscal and monetary institutions.

If this gap is not closed, the deficit bias will persist. We risk seeing debt stabilize at new record-high levels, and not being brought down to more manageable levels once the good times are back. Their exposure to shocks will thus be even higher than it was in 2007.

18 Responses

  1. Carlo Cottarelli’s comment that national parliaments need to be more active in fiscal policy formulation is highly relevant (“…Checks and balances: Finally, there is the issue of governance…”).

    He mentions Fiscal Policy Councils as one type of consultative body.

    As I have in the past mentioned in a paper on inclusive public expenditure management,


    civil society at large needs to be included in PEM control and in fiscal policy formulation.

    This inclusiveness for a wider range of civil society actors is notably absent in existing fiscal policy councils. Even if employer federations and labour representatives are included in such councils, this does not mean that wider consulations are reflected in their contributions to said councils. In developing economies quite the opposite can be true: Central trade union and employer entities can be far removed from views on the ground – as the IMF well knows.

    Personally, I am advocating a much more inclusive approach to civil society consultation in fiscal policy matters than just the recourse to a few central entities which risk being seen as “elitist” outside of national capitals.

  2. Is the IMF missing something here?

    Are government deficits the consequence of witlessly anti-social behaviour by manic people in finance?

    For example, Boaz Weinstein of Saba Capital and Bruno Iksil of JPMorgan Chase have been participating a duel in derivative trading in which JPMorgan Chase has lost an estimated $2-3 billion.

    Mitt Romney, the presumptive Republican presidential candidate, says that loss is someone else’s gain, and asks how that can be a bad outcome for society.

    Romney’s understanding of the implications of that duel, one that is not uncommon in the world of financial institutions, for society as a whole strikes me as juvenile. He is completely unaware of the recognition that the IMF and the Bank of England, among others, have developed of what is called ‘financial contagion’, in which strictly speculative transactions not serving the real economy trigger disabling instability not only in the financial economy but also in the real economy.

    For more of an understanding of this, see the following references:

    1. For the background to the Weinstein-Iksil duel

    2. For an overview of recent Bank of England work on financial contagion theory

    3. For a conceptual institutional solution to minimizing contagion from morally bankrupt derivative design and trading

    Word at the political level, including by senior IMF people, is now needed to end this disastrous nonsense in which assininely presumptive people in the financial world are, when all is said and done, triggering the tragedy of enormous resources being wasted while others starve or fester sullenly, and increasingly violently, outside the fortress walls of Wall Street and the City.

  3. How come that bank regulations principled on allowing all banks to compete globally on an equal footing were allowed to be based on the principle that borrowers should compete for access to bank credit on an unequal footing?

    This is of course what results when banks are required to hold different amounts of capital, when lending to different borrowers, all based on the perceived risks of default, and as perceived by fallible humans.

    A declared objective of the Basel regulations was to ensure that capital allocation was to be more risk sensitive… which effectively, in the mind of a wimpy regulator, signifies making the bankers even more risk-adverse than what they already were.

    As should have been expected, these regulations were too successful, and so now the world is drowning in obese bank exposures to what was ex-ante perceived as absolutely not risky, and therefore already liked by bankers, and anorexic exposures to what ex-ante perceived as risky, and therefore already disliked by bankers.

    And the IMF keeps quiet about it?

    How can Europe even dream to get out of its current predicament, when the principle cause for it, the ridicule small capital requirements on some bank lending, like only 1.6 percent when lending to Greece, which allowed banks to leverage over 60 times when lending to Greece, is not even acknowledged?

  4. Friends at the IMF, here some public questions to you, on your Blog.

    Over the years you have preached much against public policies that distort the economy, like for instance many subsidies do, and against capital controls, of which of course there are many truly horrendous.

    But how come you remain so silent about that mother of all distortions that the imposition on banks of different capital requirements based on perceived risks causes, or the mother of all capital controls those same capital requirements signify, when channeling bank credit so much toward what is officially perceived as not-risky, and away from what is officially perceived as risky? Is that not being intellectually dishonest?

    For instance, has anyone of your professionals any real idea where treasury rates, such as in the U.S. or in Germany, would be were the public sector not being favored by the fact its bank borrowings do basically not generate any capital requirements for the banks? Especially these days with so much bank capital scarcity?

    Are you not IMF, like us all, flying blind after having had our instruments beaten up by bank regulators?

    Do you not think the world is in dire need of a Financial Functionality Board to substitute for that Financial Stability Board which has only helped to produce dysfunctional financial instability?

    A Financial Functionality Board which (like Mark Twain) understands why all what is ex-ante perceived as risky does not cause systemic bank crises?

    A Financial Functionality Board that would at least dare to discuss and compare the merits of capital requirements for banks based on for instance job creation or environmental sustainability against those only based on the perceived risks of borrowers?

    • A Financial Functionality Board? Well, I like the name. Yet, if financial stability boards are producing financial instability, would financial functionality boards produce financial dysfunctionality? Perish the thought!!

      Nonetheless, I think Mr. Kurowski has asked some very good questions.

      While I endorse his call, I think it worth reflecting on how radical a shift in senior bankers’ thinking and behaviour would have to happen before that can be brought about. And I confess this: I very much doubt it would happen quickly even if the Basel risk-weighting framework were simply abandoned, although that might be a good start.

      At its heart, the shift in thinking that Mr. Kurowski, Mr. Javed, and I (along with countless others) contemplate would require that bankers take up ‘doing due diligence’ on applications for funds prepared by people to whom they do not currently talk much and with whom they are therefore CURRENTLY unskilled at empathizing. So, unfortunately, they are CURRENTLY ill-suited to form the partnerships that our vision of an economic world in which small entrepreneurs are given a little more credit and attention would entail. For that shift to happen to any significant degree, and I believe it must or we will truly descend into a horrible world, will require that both investees and investors be able to express themselves much more authentically, yet still empathically, and both would have to learn to listen empathically, an equally rare skill. Even if both types of personalities, senior bankers and small entrepreneurs, respected each other more than my opinion is that they currently do, is it not doubtful that either would be likely to succeed very quickly at this new world?

      Isn’t the ethical norm of the current financial world “to hell with social justice and the long-term, let’s focus on mathematical efficiency today with people we can talk to”? Someone tell me it isn’t.

      So, as Sir Mervyn King would say, many new behaviours in the profession of finance are needed to resolve the global crisis we now face.

      But one thread runs through all solutions: the desire and ability to communicate accurately. And that is why the need for ACCURATE COMMUNICATION, which means both authentic and empathic communications, is now so necessary.

      • I am absolutely sure there are plenty of professionals who would love to be good bankers, willing to try to rationally discriminate for perceived risks, the moment the regulators decide to stop doing the same… as there is no rational room for so much discrimination based on the same risk perceptions.

        As is, today´s bankers are not even learning how to analyze a company, but how to analyze credit scores, credit ratings and how the credit rating agencies might change their opinions and, sincerely, that sounds like a deadbeat job.

  5. Those proposing more aggressive government spending often argue: “With long-term government borrowing as cheap as in living memory, with unemployed workers … this is the time for government to borrow and invest”

    But, if to the low nominal rates on public debt, we add the opportunity cost of all those who are squeezed out from access to bank credit, only because their borrowings generate higher capital requirements for the banks than those of the “infallible sovereign”, then the real rates on government borrowing could even be at its historical highest.

    Why do they not for instance cut in half the current capital requirements for banks when lending to small businesses and entrepreneurs, so as to allow these to also lend a helping hand? Or has the whole debate, and regulations, been monopolized by the “we-trust-only-governments” crowd?

    • An excellent defence wall constructed for small businesses and entrepreneurs. In fact we need a Global Movement for the Small- and Medium-Sized Entrepreneurs to crowed out the infallible sovereigns.

      We need thinkers and writers who can persevere since perseverance always creates positive results.

    • Yes, if credit is not available, then its cost is in essence infinite, and that appears to be the case today for any company/entrepreneur whose idea is so radically new or whose connections to the establishment are so compromised by unorthodox thinking that a banker or vencap would actually have to do work to vet the idea and investee.

      But note that in the United Kingdom, the BofE is not following the Basel risk-framework rules for bank reserves, yet the U.K.’s small entrepreneurs are not faring any better than in other European economies, as far as I know.

      So what does that mean? I think it means that — surprise, surprise — it is far simpler for the could-be investor to look up the standard credit rating and bid at the next government bond auction than do the to diligent work of vetting serious new ideas that actually will make the world juster and more healthy. And the same goes for the relationship between the would-be intrapreneur and his/her potential corporate sponsor. So, once the prevailing ethic among high-profile leaders in economic activities ignores issues of justice or health beyond the screamingly obvious, the inevitable result is absurdities in the investment process.

      Take a look at the media photographs of the ‘retiring’ Chief Investment Officer of JP Morgan Chase after her ‘oversight’ of $2 billion in derivative trades having no observable connection except paper or digital entries with the real economy proved to be incompetent, and you will see the face of an insane society. I have alternating anger and despair when I read of such nonsense. What emotion do you have?

  6. Data coverage and international comparability issues are particularly relevant.

    The IMF’s Government Finance Statistics Manual 2001 (GFSM 2001) provides guidelines on how to classify public sector units into central government, state governments (if applicable), and local governments. Together, these groupings form the general government. These guidelines will be further elaborated in the update of the GFSM, which will also provide guidelines for classifying public sector units according to whether they are nonfinancial or various types of financial public corporations. Following these international standards to group public sector units would not only improve transparency (as the article suggests) but also improve international comparability of fiscal data.

  7. It took 130 years to reach the present debt levels, so it could not be unrealistic to project that it will take not less than three decades for restoring the normal acceptable levels. As politely suggested by Carlo Cottarelli and is also considered unavoidable that moderate pace of adjustment will generate the desired balance between economic growth and the needed fiscal consolidation. That prudent 40 percent threshold will not transpire unless austerity is practised with religious fervor. We have to do our best to develop such environments so that coming generations can live comfortable and care-free lives.

    Policymakers at the national and cross-national levels should learn to properly book liabilities. Forecasting needs to be given adequate attention. Idiosyncratic accounting cannot be permitted in this age of high technology.

    Carlo Cottarelli has not committed any mea culpa rather has explained the prevailing global situation in a very professional manner giving all the expected risks, solutions, and options.

    • “That prudent 40 percent threshold will not transpire unless austerity is practised with religious fervor.”

      Religious fervour is a term that, for me, evokes rather mad rushes of enthusisam. I doubt that’s what you intended to covey, Javed, so I think I might be able to suggest another term: equanimous deliberation. By that I hope to convey that our choices, at EVERY LEVEL of economic problem-solving, are motivated by the wisdom that comes from finding equanimity after earnest and conscientious deliberations in which much passion is experienced with fortitude and no one is irrationally judged as meriting being ignored.

      “Carlo Cottarelli has not committed any mea culpa rather has explained the prevailing global situation in a very professional manner giving all the expected risks, solutions, and options.”

      Well no, I agree that Mr. Cottarelli has not committed any mea culpa in his post above. But I do think that, collectively, the IMF as an institution is not rarely at fault in embodying the logical positivism implicit in Mr. Cottarelli’s recommendation that prevailing debates be focused on areas of agreement rather than on areas of disagreement.

      Logical positivism is still an ‘ism’ and therefore the vision of someone from the past. But what we are in much more need of is FULLY PRESENT problem-solving conversation in which an institution like the IMF is less afraid of offending and more engaged in learning and explaining with an ear and a tongue for accuracy.

      As an illustration, take Per Kurowski’s ten-year campaign to point out the absurdities and inequities and therefor dysfunctionalities, of the Basel risk-weighting framework for bank reserve regulation. I have personally watched videos of not one but TWO IMF Chiefs listen to his point of view, express understanding of its validity, and yet no word has reached me that any IMF person has stood toe to toe with a member of the Basel Committee on Banking Supervision to clarify the issue with them.

      Why not? My hypothesis is that the IMF’s top echelons are soaked in the now ancient and discredited philosophy of logical positivism, when a problem-solving approach dedicated to accuracy in communications, such as is offered by Eye-Zen English, would be much more capable of getting the corrections made that we all so desperately need today.

      • Mr. Angus Cunningham thank you very much for adding to my knowledge of banking. When I said moderate pace of adjustment I, in fact, meant evenness of mind, putting a little more comprehensively, equanimity as preferred by you.

        In future I will be more careful about the Eye-Zen English. I agree with you that effective communication plays a very important role in solving the problems.

        Kind regards

  8. What a load of Bull! Let’s take the latest bailout given to Greece. Can someone tell me where the money given to Greece went?

    1. It was used to repay the markets; 2. It was used to repay bankers; and 3. It was used to pay for the pensions of civil servants, army, fire personnel [etc].

    What is the point of giving a bailout if all/most of the money is going to pay civil servants and corrupt bankers? Austerity serves no-one, unless you are a banker or friends of the German government. Austerity been forced on Euro-zone states by Germany.

  9. […] the austerity debate: the deficit bias in the post-Bretton Woods […]

  10. But to what end is this debt going to be contained? What if it never gets paid, the United StatesS has $15 trillion+ in debt, Europe is in just crisis, and it seems that China is propping up everyone, but again to what end?!

    If you don’t have growth and jobs, then money will not flow and the debt could never be paid; if you tighten up, then what about the future as it could get a lot worse if it just “stays the same.” I think every nation should have a plan, build growth and lower their cost of living so money can flow and build up their countries.

  11. One way in which we bring disorder into life is by failing to acknowledge we might be wrong and to consider the perspectives of others with whom we have a disagreement. This is especially critical in high-level debates such as the one now raging over the relative necessities for austerity or growth. Paul Blustein, a Rhodes scholar and winner of the prestigious Gerald Loeb award for business journalism, is the author of “And the Money Kept Rolling In (and Out)” – an account of how the Argentine economic crisis that peaked in 2001-2 arose. In it he wrote:

    “ … Argentina’s government – by refusing, until it was much too late, to restructure the debt in a meaningful way or to contemplate changes in convertibility – must bear its fair share of the blame for the outcome. But the IMF and its leading shareholders, particularly the United States, have the power in such situations to force countries into changing tack by rejecting requests for support. In Argentina’s case, top international officials succumbed instead to the tendency to keep playing for time when disaster looms, hoping against hope for a shift to better luck despite the serious misgivings among many that the strategy will work. Although playing for time can be an important objective of crisis management, and the eagerness to stave off a default-devaluation scenario in Argentina was understandable, the country’s would-be saviors engaged in time-buying exercises in 2001 that were based on far-fetched odds of success. This is not mere hindsight; as we have seen, plenty of well-founded argumentation was presented at the time that the approaches taken were futile and, by piling more debt on top of an already unsustainable debt load, would work against Argentina’s long-term interests”.

    Blustein drew these conclusions after interviewing more than 125 high-profile people from the Argentine government, the IMF, the U.S. Treasury Department, and Wall Street. If his observations illustrate many a high-profile person’s inability to be open to the possibility he or she might be wrong, consider what a 2006 survey by has to tell us about the incidence of dishonesty in the workplace:

    1. Incidence in the survey of lying and judgments of dishonesty:
    % of workers acknowledging that they tell lies at the office at least once a week: 19
    % of workers reporting they have been caught in a lie at work: 15
    % of hiring managers who have fired an employee for dishonesty: 25
    2. Mix of reasons given for feeling compelled to ‘bend the truth’, %
    “To appease a customer”: 26
    “To cover up a failed project, mistake, or missed deadline”: 13
    “To explain an unexcused absence or late arrival”: 8
    “To protect another employee”: 8
    “To get another employee in trouble or to look better in front of a supervisor”: 5
    Other reasons: 40
    3. Mix of kinds of lies told at the office, %
    “I don’t know how that happened”: 20
    “I have another call to make” or “I’ll call you right back”: 16
    “I’ve been out of town or out sick”: 10
    “I like your outfit” or “you look great”: 8
    “I didn’t get your email, voicemail, or fax”: 8
    Other kinds of lie: 38

    This data seem to me not at all inconsistent with reports that about 60% of English-speaking North Americans are unhappy with our jobs. We may all hope that the data above and the Blustein testimony of the bravado, incompetence, or outright dishonesty underlying the conduct of high officials in our economic affairs are not representative of the culture in our own particular organizations, countries, worlds, communities, or families. Yet even in the best of cultures, the incidence of less than full honesty is unlikely to be enormously much better – if only because the lightening speed at which ego-preserving pre-suppositions naturally arise in all of us has the consequence that many people never seriously consider whether the work of elevating our capacities for suitably articulated honesty would actually yield better connections and hence problem-solving productivity.

    Indeed almost all of us feel that some lying or pretence is necessary and most throw up our hands in a feeling of impotence. Even Steven Pinker, Harvard’s professor of Psychology and Linguistics, writes in his 2007 tour-de-force “The Stuff of Thought”:

    “Language is not just a window into human nature but a fistula: an open wound through which our innards are exposed to an infectious world. It’s not surprising that we expect people to sheathe their words in politeness and innuendo and other forms of doublespeak”.

    In short, temptations to ‘bend truth’ commonly arise. We either dismiss them or, in the blink of an eye, give them consideration under the sway of such pre-suppositions as “everyone does it” or “no one could do any better were they in my shoes”. But both pretence and judgment run the risk, as does also lying, of a loss of either authenticity or empathy in a relationship, and both authenticity and empathy are required in the conversations of any team that is likely to solve problems with the best possible realization of their technical capacities for accuracy and efficiency . So a potential opportunity for both learning and productivity growth, either in the present or in the future, is always lost when we let out a dishonest utterance or we prematurely judge someone else as dishonest.

    Do we lack, then, the courage to avoid dishonesty, or do we lack the perspective and articulation ability? This is clearly a serious question to consider before judging either others or ourselves as having been dishonest. Fortunately, there is a surprisingly simple and ‘doable’ way to address, in any such circumstance, this natural impediment to learning and productivity. Eye-Zen English is a set of rational and mutually reinforcing psycho-linguistic tools for lessening, even eliminating, dishonesty without loss of either empathy or authenticity. An overview of Eye-Zen English can be found at:

    The results of acquiring proficiency in Eye-Zen English can yield truly astonishing returns on leaders’ investments of time, money, and attention, as the following link shows:

  12. Is a public debt-to-GDP ratio in an economy where the public sector competes equally with the private sector for access to bank credit the same as when that competition is unequal? I do not think so!

    How much more do small businesses and entrepreneurs have to pay in interest to make up for the fact that banks are required to hold much more capital when lending to them (which makes it harder to make the same return on equity) than when lending to the public sector?

    These are questions that should be answered before making historical comparisons of the debt to GDP ratios.

    I bring this issue forth because in my opinion the whole austerity debate has completely ignored the risk-taking austerity that has been imposed by the bank regulators.

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