The Austerity Deniers – Seeking Alpha

At heart, the Keynesian analysis is remarkably simple. The private sector suffered large losses in wealth due to the housing crash. As a result, it reduced borrowing and spending and increased savings (or were forced to do this by creditors).

The problem is that on the level of the economy as a whole, where my spending is your income, if everybody (or at least a large number of people) start to do this, the economy can easily spiral down, and this is exactly what happened. This process can easily feed on itself

via The Austerity Deniers – Seeking Alpha.