The debt-bloated West must cut spending systematically for year after year, off-setting the deflationary effect with monetary stimulus, says Ambrose Evans-Pritchard.

“This is the only mix that can save us,” he writes in the UK Telegraph.

“My awful fear is that we will do exactly the opposite, incubating yet another crisis this autumn, to which we will respond with yet further spending.”

“This is the road to ruin.”

For a glimpse of what awaits Britain, Europe, and America as budget deficits spiral to wartime levels, look at what is happening to the Irish welfare state, Evans-Pritchard advises.

Events have already forced Premier Brian Cowen “to carry out the harshest assault yet seen on the public services of a modern Western state,” he warns.

“The West cannot support its gold-plated state structures from an aging workforce and depleted tax base.”

Nor is a Keynesian spending spree is not the answer, Evans-Pritchard says.

“Such policies have crippled Japan. A string of make-work stimulus plans - famously building bridges to nowhere in Hokkaido - has ensured that the day of reckoning will be worse, when it comes.”

Three months ago, President Barack Obama announced he had ordered each of his cabinet secretaries to cut a collective $100 million from their departmental budgets within 90 days.

“The recommendations have been gathered by the cabinet secretaries who will be reporting them to the President shortly,” spokespeople for the administration announced on the 91st day, and said we should see the exact cuts “in the coming days.”