Why is austerity in a depressed economy a bad idea? Because an economy is not like a household, whose income and spending are separate things. In the economy as a whole, my spending is your income and your spending is my income. What happens if everyone tries to cut spending at the same time, as was the case in the aftermath of the financial crisis? Everyone’s income falls.

Paul Krugman (b. 1953) American economist, author
“The Legacy of Destructive Austerity,” New York Times (20 Dec 2019)
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