Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

According to calculations by the IMF, if the US economy had been at full employment in 2009, the crisis-fighting policies adopted by the Bush and Obama administrations would have been enough to produce a deficit of 6.2 percent of GDP—this was the discretionary deficit. The actual general government deficit was 12.5 percent of GDP.22 More than half the support provided to aggregate demand was automatic or quasi-automatic. And this was typical of all advanced economies. According to the IMF’s calculations, of the vast increase in public debt in the developed world over the course of the crisis, just under half was due simply to the reduction in revenue produced by the contraction of the tax base.