Social Security is a massive example of this as is our financial system in general.
Our finanical system is debt based, ie money is created when someone borrows it into existence but they never create the interest to pay that back, that is paid back by new entrants going into debt, creating more money through debt to keep the plates spinning in the air.
It's insanity to attempt austerity in a system like this, you'll literally explode it into smitherines.
What'll happen and what's happening now is that for a lot of generational, cyclical and other reasons we're in a natural slowdown.
This makes all the accumulated debt unpayable, because the new entrants have been cut down either by slowing birth rates or by inability to further borrow money.
What's been done so far is a select few have gotten what money has been printed, the banks, AIG, etc and they've used it to bet even more, to double down as it were.
This will end very badly and require ANOTHER bailout that we can't afford.
What the system needs is a flushing out right now.
You can do this by simply voiding x amount of debt or by printing the money and handing it out so everyone can pay the debt, thus debasing the debt.
People with a ton of money would love austerity, that makes all of us in debt cough up assets through default which they can then buy up on the cheap.
People say Ben Bernanke is printing money but he's really not, he's simply printing enough to plug holes in the system as they threaten the system.
It'd be better if he either:
Let the system collapse forcing the reset.
or
Printed up about 250k per person and gave it all out at once.
Either solution works
What we're doing now will end in massive violence IMO.
Honestly almost our entire existence is an example of a wealth transfer from young to old, which works well enough as long as the birth rates maintain steady growth.
The baby boomers were like a giant lump going through a python, they've so far helped things out but they are about to become the most epic drain ever.
Someone has to design a more mathematically stable monetary and financial system that is dynamic enough to allow some innovation yet function well in a stable population because we can't keep growing our population forever unless we institute a gigantic push to colonize space.
We're plenty grown up enough to understand all these principles, and to develop solutions for them, because frankly we have no choice.
If we do nothing it'll most likely generate a massive war over resources.
Everyone is a Keynesian now except they're not, he never advocated the government doing what we're doing he would of had us run pretty substantial surpluses for decades, store up money then shower it out right now, of course we didn't do that so we haven't been practicing it at all.
Austrians say you should just let the system collapse, it'll reset itself.
Personally my preference would be to do a massive money printing drop then convert over to a new monetary system in the process and be done with it.
That will never be done though, what'll happen is basically austerity with select bailouts for those connected and we'll grind our faces against a wheel of pain for about 3 or 4 more years minimum until it all explodes in violence.
