Posted on 12/30/2011 11:53:26 AM PST by Beave Meister
“The boom, not the slump, is the right time for austerity at the Treasury.” So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon, sending the United States economy — which had been steadily recovering up to that point — into a severe recession. Slashing government spending in a depressed economy depresses the economy further; austerity should wait until a strong recovery is well under way.
Unfortunately, in late 2010 and early 2011, politicians and policy makers in much of the Western world believed that they knew better, that we should focus on deficits, not jobs, even though our economies had barely begun to recover from the slump that followed the financial crisis. And by acting on that anti-Keynesian belief, they ended up proving Keynes right all over again.
(Excerpt) Read more at nytimes.com ...
If there had been austerity during booms over the past 6 decades, we wouldn’t be faced with the debt crisis we have today.
It’s not spending that is the problem, it is the spending of money that the government does not have.
Where’s the picture of Krugman holding a pussy cat, looking deranged? That would be an appropriate photo to go next to this idiotic column.
What do you mean we have to pay these loans back???!!!!
I always thought it was free money.
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Once you accept the first premise Keynes makes sense...
The government's trying to manipulate the economy is what is causing the problem and further action on their part only serves to make it worse.
Perhaps he should be reminded that Keynes said other things too.
For instance, in "The Economic Consequences of the Peace - 1920," Keynes stated:
"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. . . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. . . . (It) does it in a manner which not one man in a million is able to diagnose. . . ."
Such an observation was not confined to Keynes. America's Founders were so opposed to paper money and the tendency for governments to abuse citizens through its manipulation that they required a currency of intrinsic value by their Constitution and barred fiat currency.
Thomas Jefferson: "Paper is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted."
". . . although the other nations of Europe have tried and trodden every path of force or folly in fruitless quest of the same object, yet we still expect to find in juggling tricks and banking dreams, that money can be made out of nothing. . . The misfortune is. . . we shall plunge ourselves in unextinguishable debt, and entail on our posterity an inheritance of external taxes, which will bring our government and people into the condition of those of England, an nation of pikes and gudgeons, the latter bred merely as food for the former."
"Stock dealers and banking companies, by the aid of a paper system [paper money] are enriching themselves to the ruin of our country, and swaying the government by their possession of the printing presses, which their wealth commands, and by other means, not always honorable to the character of our countrymen."
When we can’t pay back the debt we have, borrowing to stimulate an economy that is bad because of debt is lunacy. Even if we were to except Krugman’s premise, we would have to ask how is more government borrowing putting money into the private sector where it counts. It won’t be through loans to green energy frauds, unions, or even to banks that refuse to loan money because of the debt problem. The economy would be better stimulated if every American were simply given $50,000 to spend, no strings attached. Instead, the stimulus will go to paying for more big government. It’s time to downsize government to stop the plundering.
No, both are problems. The whole idea that spending is stimulating - even if it is paid for by taxes - is the greatest falacy of the Keynesians and it keeps rearing its ugly head in a generational cycle. The economy they are trying to inject money into is the same economy they must take the money from. The net result is actually less than zero because of waste.
The 'boom' causes the 'bust'.
Gov't spending is not an answer to anything, cutting taxes and spending is the way to recover from the cause of most 'booms',Government putting money into the economy and keeping interest rates lower then they should be.
The 'boom' causes the 'bust'.
Gov't spending is not an answer to anything, cutting taxes and spending is the way to recover from the cause of most 'booms',Government putting money into the economy and keeping interest rates lower then they should be.
Have they pulled this jackass’s Nobel yet!!? =.=
I read the article twice, and I only found this one valid statement made by Paul K.: “ - - - In Washington, in particular, the failure of the Obama stimulus package to produce an employment boom is generally seen as having proved that government spending can’t create jobs.”
Paul K is a true believer in LIBS, Lovers of Infinite Bolshevik Socialism.
So the fleecing of the taxpayers with a moderate inflation and big increase in the national debt was not enough and what was needed was a humongous increase in both.Yea, that make sense. NOT. Doctors know that when the side effects of a drug are worse than the benefits, that the drug should not be used.
...still wondering why Clinton’s boom economy wasn’t a Bush Republican presidency “lag/effect.”
If that’s not the case, then why isn’t Obama’s crisis economy totally owned by him.
Can’t have it both ways; but we never hear about that do we.
Confusing...
...still wondering why Clinton’s boom economy wasn’t a Bush Republican presidency “lag/effect.”
If that’s not the case, then why isn’t Obama’s crisis economy totally owned by him.
Can’t have it both ways; but we never hear about that, do we.
there hasn’t been any slash in government spending or “austerity”
there has been “passive austerity”
the guy is nuts.
FAIL!
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