There's a point I made in my previous post that I'd like to emphasise. It's that voters support austerity for the same, sometimes mistaken, reason that they support price controls - because they under-estimate the extent to which emergent processes sometimes produce benign outcomes.

What I mean is that what free marketeers say about the price system - that it is the benign outcome of uncoordinated individual decisions - is also true of government borrowing now.

This borrowing is the counterpart and effect of decisions by millions of companies and households (pdf) around the world to save and not invest*. Given that much of the rest of the world wants to be net savers, somebody must be a net borrower - and that somebody includes the UK government.

This borrowing is as John says a solution not a problem - because it is helping to sustain demand.

At this point I could write thousands of words about MMT. But why bother? Just look at real bond yields. These tell us that financial markets are untroubled by government borrowing - because the same net savings which cause this borrowing also cause low interest rates.

In this sense, the division of opinion is not between left and right but between economists and non-economists. Most economists are more or less relaxed about the deficit for the same reason that they often support freeish markets - because they appreciate that individuals' uncoordinated decisions sometimes have tolerable outcomes. Non-economists, being less aware of this, are keener for the government to "control its borrowing" just as they want state control over other aspects of the economy.

All that said, there are two massive caveats here.

First, I am NOT saying that deficits are always benign any more than I am saying that other emergent processes are. Whether either is the case or not varies from time to time depending upon the circumstances**. I can imagine - and have seen - circumstances where big government borrowing is a problem. It's just that those circumstances are not here not now.

Secondly, some of the reasons for high net private savings around the world are assuredly not benign: weak welfare states, a lack of consumer confidence and secular stagnation. In a better world, the government would be borrowing less. But inferring from this that the government should cut borrowing is like withdrawing medicine from a sick man because he wouldn't need it if he were healthy.

Which brings me to a problem. It's possible that many of the causes of global net savings - and we can to them ageing populations in Europe - are longlasting. To the extent that they are, government borrowing might persist. If so, the Fiscal Charter's promise to achieve a surplus on PSNB by 2019-20 might require yet more counter-productive fiscal tightening. Deficit reduction should be state-dependent, not time-dependent.

I appreciate that there political reasons why Labour might support the Fiscal Charter, but I'm not so sure there are good economic ones.

* I stress around the world: the counterpart to government borrowing is now an overseas deficit - which is to say net savings by the rest of the world.

** Note here that, yet again, the bigotry of anti-Marxists is 100% wrong. It is me the Marxist who is stressing that context is everything whilst anti-Marxists of right and left want to see lawlike generalizations where none are appropriate.