It looks like we’re approaching an inflection point of great danger in working through problems in creating Economic Recovery. The inflection point is coming because there has been little economic recovery both internationally and domestically, with some nations continuing to run large deficits, and a growing chorus from many, calling for austerity and Governmental budget balancing even though it’s well known that the consequences of these policies will be economic contraction and further hardship for all of us but the rich. The big question is: which way will nations that have debts held in their own sovereign currency like the United States, the United Kingdom, Japan, and Australia go? Will they listen to the domestic and international deficit hawks (e.g. the ratings agencies, the IMF, the European Commission (EC), and various currency traders and hedge fund managers) and cause further contraction and hardship for their citizens, or will they tell the deficit hawks to “take a hike,” create demand from the public sector, where private sector demand is falling short, full employment, and healthy economies?

I can’t answer this question, but what they ought to do is stated quite clearly in a recent blog post by L. Randall Wray and Yeva Nersisyan. Here’s an extensive sampling of their views along with some comments.