Economic recovery: the method

US public spending as proportion of GNP in the inter-war years.

End-of-war recession to 1920, Harding cut hard and fast, cuts in public spending and taxation, recovery and golden years.

Wall Street Crash 1929, Hoover increases spending, doubles the size of government (oh how laissez-faire - there's one myth debunked), causes Great Depression.

So the "taking money out of the economy" brigade are just plain wrong, especially when we're talking 1% of GDP (out of 48% of GDP government spending).

Cut spending and then taxation hard? And please don't raise in Capital Gains Tax, whatever loopholes there are, it's the worst tax to raise when the Laffer curve comes into play (above 15% has bad effects I've heard).

And it makes sense that less money spent on government bonds is instead used by banks to lend to individuals (since they've been told to have more reserves).

Government spending cut from 48% of GDP to 30%? Sounds good.