Well, I am not a big fan of today's "more debt, more gov't spending = more prosperity" but markets only parallelize a process and the best ones at this process survive while the worse ones drop out of the market.

So, in a sense, if you assume ideal markets to have an "infinite number of participants", then yes, you can solve TSP in polynomial time but otherwise they will just evolve like bitcoin miners which as of yet still didn't solve the "find a decent hash" problem an order of magnitude faster even though there are many of them.

My beef with economists is that they themselves are not subject to markets so the bad ones and the good ones survive and you end up with lots of noise.

>Well, I am not a big fan of today's "more debt, more gov't spending = more prosperity"

Because austerity is working out just brilliantly everywhere it's been tried?

What people tend to forget about government deficits and debt is that it is just one side of the economic coin. It's exactly the same thing as saying "the private sector saves too much".

There are problems that can only be avoided before the fact but not solved once they occur.

Austerity in the last few decades would have avoided the crisis but once you have more debt than you can ever afford to repay neither spending nor saving will do the trick and the only possible way forward is default.

Since you refer to Greece in your other comment - I am more concerned about the politics than about the economics, given they don't default even though they have a clear democratic mandate.

>Austerity in the last few decades would have avoided the crisis

No it wouldn't. The 2008 crisis and the European Crisis were both caused by an unsustainable build up of private debt. The levels of public debt had nothing to do with it

Even in Europe where there was multiple sovereign debt crises, the debts all started out in the private sector and were later shifted on to the public balance sheet. Same story in Spain, Ireland, Slovakia, etc. (even Greece to a large extent).

>once you have more debt than you can ever afford to repay

"Afford to pay" means something different to governments than it does to the rest of us. Governments that print their own currency cannot run out of it. The only decision they have to make regarding the deficit is "is the current level of inflation too much?"

Austerity in the UK and the US is thus kind of like saying "well, we must stop spending money because what if we run out of little green bits of paper". It would be funny how stupid it is if it weren't so devastating.

Similarly in the EU inflation is rock bottom and the ECB could kickstart every ailing economy easily. They just don't want to.

>Since you refer to Greece in your other comment - I am more concerned about the politics than about the economics, given they don't default even though they have a clear democratic mandate.

Greece has unfortunately handed over control of their payments system to the ECB and wresting back control is not something that can be done in under 9 months.

Thus it doesn't really matter what the Greek government says or what their electorate wants - if they don't follow Troika orders they flip a switch and the economy seizes up completely. Instant 3rd world status. No jobs, no money, no food, no life saving drugs.

This is why successive Greek governments have done the opposite of what they were elected to do. They have a gun against their heads and Schauble is just itching to pull the trigger if they don't fall in line.

'Because austerity is working out just brilliantly everywhere it's been tried?'

Measured on what timescale?

Well, the IMF and ECB's time scale for predicted recovery in Greece has been 18 months ever since austerity was implemented in 2009.

So that's roughly four complete and total fuck ups in a row.

How much more time do you need?

There's always a chance, of course, that austerity is utterly destructive towards the Greek economy but very good for German financiers (with the ear of the ECB) who would like to pick up a port or state electric company on the cheap and who like the flood of cheap labor the austerity crisis has instigated.

The one in which we're not waiting until we're all dead?

The private sector saving too much or too little is explicitly NOT the issue.

The question is whether that savings goes into G or I - i.e., whether the money is spent on prisons or a new Tesla factory (to borrow two examples that contradict the standard mood affiliation).

>The private sector saving too much or too little is explicitly NOT the issue.

Quite. This is what I was saying.

Public sector deficit 'too high' = Private sector saving 'too much' = Not a particularly concerning issue.

Deficits matter only insofar as they cause inflation.

>The question is whether that savings goes into G or I - i.e., whether the money is spent on prisons or a new Tesla factory (to borrow two examples that contradict the standard mood affiliation).

As far as pushing aggregate employment higher and escaping from the liquidity trap is concerned, you could do either. Just so long as it employs people.

The highest multiplier for any government spending was probably FDR's new deal public works program.

ROI is a different question and not one that can really be looked at in purely monetary terms. If the government paid people to write open source software they could end up creating staggering amounts of value but it wouldn't show up in any economics statistics.

Actually, calculating equilibrium prices of markets is PPAD-hard (similar to NP-hard, but not quite) in general. See for example http://arxiv.org/pdf/0904.0644.pdf

When you ignore externalities....