More austerity is not the answer

Published 1:34 pm Thursday, February 28, 2013

Ordinarily I don’t comment on old columns, but I could not allow this nugget from the pen of the always risible, but seldom accurate, James McCusker, to pass unchallenged:

“We’ve got lethargic growth, serious unemployment problems, and a Federal Reserve with a record-setting $3 trillion balance sheet, inflated by unmarketable Treasury debt and questionable bank obligations. These are economic weaknesses that our enemies around the globe are all too eager to exploit.” (Feb. 15, “Sequester is theater but consequences are very real.”)

Ten-year Treasury yields are at 1.86 percent, which is not exactly indicative of a debt instrument, which is impossible to market. On Feb. 25, the yield went down for the same reason it always does. There is instability somewhere in the world and foreign investors flocked to U.S. Securities, because they are safe.

I would also suggest, with appropriate temerity, that enemies seldom risk their own assets in an economy that they are trying to ruin. Those enemies sure seem comfortable holding our debt. If they didn’t the yield would be higher. Oh, the paranoia!

Read this and learn, deficit hawk, McCusker. You do not increase demand by cutting government into the face of a low demand economy. The U.S. deficit has been shrinking without more austerity and McCusker refuses to acknowledge it. Austerity has not worked to cure the recession in Europe and you refuse to acknowledge that either.

Mr. McCusker is no Paul Krugman. But, my gosh, man! One would certainly expect you to be capable of learning!

William Mezger

Lynnwood