democracynow | Well, Amy, we all know what Ponzi growth is—right?—what a Ponzi
scheme is. It’s when you pretend to be growing your income on the basis
of unsustainable debt. And the more debt you take, the more you pretend
that you’re growing. But then you have to have even more unsustainable
debt in order to maintain this illusion. Now, what is Ponzi austerity?
Once these bubbles burst, the only way you can continue to pretend that
you’re solvent is through even more debt, that will be utilized in order
to repay or to pretend to repay the previous debts. And if you’re going
through a period of belt tightening to impress creditors that you’re
doing the right—the good Protestant thing, which is, you know, to be
parsimonious and to tighten your belt, you have austerity, which
continuously reduces national income, because when you reduce pensions,
when you reduce investment, when you reduce all the determinants of
aggregate demand, income of the nation shrinks. And you keep tightening
that belt through more pension cuts, more reductions in public health
and so on, and public education, and you keep on taking new
unsustainable loans in order to pretend that you’re not insolvent.
That’s Ponzi austerity for you.
AMY GOODMAN:
Yanis Varoufakis, we’re going to continue this conversation after
break. Professor Varoufakis is the former finance minister of Greece,
now teaching economic theory at the University of Athens. His new book
is titled And the Weak Suffer What They Must?: Europe’s Crisis and America’s Economic Future. We’ll be back with him in a minute.
