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State Economy

The consumer has silver to import and to spend. That makes the State increases its tax revenue on consumption and imports. And as the State always has the tendency to spend all their income, and something else, of course it will increase public spending and the economy will show abundant. But, as says the village idiot: that good does not give so much! It is foreseeable that after some years, three or four, things change. Indebted citizens and enjoying their durable goods, will begin to be prudent in their spending. Unable to continue growing and with a significant deficit in the trade balance, the economy will begin its boomerang effect. And when you expect an economy with problems, investments decrease, interest rates increase, decreases the tax revenue of the State and the deficit starts to increase, reason for the which the State decides to finance its budget with more loans that international banks begin to hinder or deny, before distrust of markets. National and foreign investors feel fear and begin to take his talk again.

Interest rates continue to rise, inflation gallops joyfully, unemployment makes the rounds, and in the end, the economy enters recession. The Government, seeing their income, seriously damaged trims as public spending, in the first investment sector and then the operating, can proposes another tax reform to increase taxes, makes tremendous efforts to control evasion chasing their taxpayers and forcefully intervenes to save savers from banks in bankruptcy and for, then alsosave one to another important company in its liquidation. The recession becomes critical. And for critical realities shock measures are the most common solutions. The country that we imagine will now become victim of the strong devaluation of the rigorous plans of fiscal adjustment, of paralysis in its investments, of mass dismissals, salary adjustments below the rate of inflation and everything else. And, of course, the country will recover!