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Why austerity's failing

There's a simple reason for this. Net government borrowing is the counterpart of private sector net lending. Whilst the private sector is a big net lender, therefore, the government will remain a big borrower whatever its fiscal policy.

This is not a heterodox theory. It's simple maths. Let's recall the basic national accounts identities. GDP is the sum of consumer spending (C), investment (I), government spending (G) and net trade (X – M):

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