Slavko
pre 12 godina
I am happy that Soskic is bright enough to see that increasing domestic consumption (aka devaluing the dinar further by increasing the volume of fiduciary media and lowering the market interest rate in order to fool people that they have more in their pocket) is a defeated Keynesian method for further problems, even for large economies such as the US. In Serbia's case, these methods would indeed bomb the economy because of the problems Soskic enunciated, and just extend the painful road to recovery from false booms by not letting the market economy take control again.
But, Soskic ruined his insightful grasp of economics by bringing up the public expenditure/infrastructure "cure". This will not work as these projects will most surely be funded by further foreign loans, increasing the future indebtedness for Serbia's youth, leading to fiscal unsustainability on a grander scale. Projects funded through the budget seem highly unlikely, and the employment increase that these projects would bring would be temporary. Capital projects do not cause an overall positive benefit/cost ratio; the employments will merely cancel themselves out as transfer payments made between the government and the employees. This strategy is a quick fix that does not solve anything but instead retards future solvency.
It is hard medicine to take, but Serbia, like all other countries experiencing woes, needs to buckle down and cut out the extreme excess of government. Austerity is an ugly word, but needed.
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