Austerity is the common subject in all financial aware individuals and for the financial rookies’ austerity describes the policy a local, or national government employs to reduce budget deficits during unfavorable economic climates. This can eventually lower inflation rates. Common codes and conventions in these strategies are spending cuts, tax increases or a combination of the two.
Bill Gross, manager of Pimco is the latest individual with high enough credibility to slate the methods and choices the UK government has taken. The Summary of his opinion is that government needs to spend more money in order to improve domestic GDP. Mr. Gross supports and supported by many credible economists theory by stating United Kingdom and USA tightened their belt far too fast.
Mr. Gross quoted
“In the long term it is important to be fiscal and austere. It is important to have a relatively average or low rate of debt to GDP. The question in terms of the long term and the short term is how quickly to do it”
Mr. Gross continued to explain that monetary policies were to boost up higher economic growth, and may display to be counter productive, supporting this theory by recent drastic changes in the price of commodities, such as gold which has had his biggest fall in two years. Originally gold had a great run prior to the financial crisis of 2008 but fell in price with the rest of the economy. Predicted by Mr Gross to rise up again while the biggest economies in the world are on the way back, therefore it is best time to bulk buy” in order to gain economies of scale. This should create foundations for a solid investment in the future when economy sets itself to a healthy state.
- Who Is Defending Austerity Now? – Matthew O’Brien – The Atlantic (theatlantic.com)
- Fiscal Austerity – taking another hit today from Bill Gross (bereansatthegate.wordpress.com)
- Pimco’s Bill Gross Blasts Europe’s Focus on Austerity (financialsurvivalnetwork.com)
- Is austerity going out of fashion? (cbsnews.com)
- Pimco’s Bill Gross blasts Europe’s focus on austerity (blogs.marketwatch.com)
- Goodbye to austerity (cobdencentre.org)
- Thomas Herndon: How a lone grad student became a media sensation by blowing a hole in austerity’s ‘bible’ (thestar.com)
- The Austerity Zombies Fight Back (cnbc.com)
- Pimco’s Gross Urges UK to Ease Pace of Austerity, FT Reports – Bloomberg (bloomberg.com)