2) What do the moralizers say is the answer to our debt problems? Explain. What is wrong with their analysis that states that debtors must tighten their belts? How can debt problems create employment problems? What is a practical way out of debt induced employment problems? Explain. Which side is winning the political debate over debt? Explain.

Moralizers say the answer to our debt problems is “belt tightening” by the government, people living within their means, and people paying off their own debts. The problem with debtors tightening their belts is that if they are not spending, there is no one to replace that spending, and the economy will remain in a slump. If no one spends more, the overall income falls, depressing the economy and keeping unemployment high.  By refusing to support debt relief, they are keeping unemployment high. A practical way out of debt induced employment problems is for the government to spend when the private sector refuses to, to raise overall income and raise employment. Also, there needs to be debt relief implemented so that those in debt can pay back their debts in a way that is manageable and time-efficient to eliminate the debt overhang. The side calling for belt tightening measures is winning the political debate because most people are unaware of the real issues and causes, and what needs to be done. Most people do not understand very much about economics, so when politicians sell them an idea and it sounds good, they accept it at face value instead of questioning why it might not be the best measure.