Even if we don't go over the "fiscal cliff" at year's end, the cries for governmental austerity will only grow louder. So writes Bob Seawright, chief investment and information officer for Madison Avenue Securities and a contributor to AdvisorOne.
"Yet such austerity would be a real and immediate drag on our economy," Seawright (left) writes in a blog post on Thursday that was posted on Real Clear Markets.
Noting that Augustine famously prayed for chastity, just not yet, Seawright writes that "In much the same way, Fed Chairman Ben Bernanke warns that federal debt and deficits are a real problem. Indeed, he gave a speech on the economy earlier this month and asked Congress to address the issue. But he doesn't want anything done quite yet."
Pointing to Europe, he argues that heavy austerity seems to have crippled growth in countries like Spain and Greece.
"With unemployment near Great Depression levels and with middle-class workers reduced to picking through garbage in search of food, austerity arguably appears already to have gone too far. The International Monetary Fund recently released a report conceding that tax hikes and spending cuts can inflict far more damage on weak economies than previously thought. Pretty much everything that has happened economically since the general move from stimulus to austerity, from interest rates to inflation to output, has supported the idea that austerity hurts struggling economies."
