Quick Link – Austerity vs Tax Increases. What works best?

Junto friends,

Hythloday recently shared with us a very interesting video produced by billionaire Ray Dalio, founder of investment firm Bridgewater Associates, entitled “How the Economic Machine Works.”  Dalio discusses the various factors that affect short and long term business cycles and the levers used to respond.

The Junto often discusses economics since it is such an integral part of how we practice social charity as American Catholics.  Thought I’d share this link to a recent interview on the podcast EconTalk, hosted by Professor Russ Roberts of Stanford.  Harvard’s Alberto Alesina argues (against the prevailing sentiment in much of southern Europe and of Keynesian economists such as Nobel winner Paul Krugman) that a properly administered austerity program works better to stimulate a flailing economy than tax increases.

Mr. Dalio mentions both of these available actions in his video.  It’s also evident in the EconTalk interview that Alesina and Krugman have exchanged barbs regarding this dispute.

An interesting commute listen.


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