The way to end the current economic crisis, the worst since the Great Depression, is painfully clear by just looking at the graph of government stimulus spending vs. jobs vs. GDP during the Great Depression. The more stimulus spending, the more jobs and more GDP growth. And we have an easy way to do this, as I've repeatedly pointed out, because we lost $4 trillion in asset values due to the real estate crash and are now at 0% inflation and can print at least $4 trillion before we make the inflation rate go up even 1%. What we need now is a real stimulus program -- a BIG one.
First, however, we have to free the President of that neo-Austrian claptrap that surrounds him in the Washington bubble. We can look at the data from the Great Depression and see the economy go up and down with the amount of fiscal stimulus that FDR provided, more stimulus meaning more economic output and more jobs, drawing back and trying to balance the budget meaning less economic output and less jobs… it’s obvious as the nose on your face… but the neo-Austrian lunatics still continue to insist that the way to end a depression is to reduce government spending, despite the fact that what ended the Great Depression was the biggest fiscal stimulus program of all — World War II.
There seems to be two classes of people out there, those of us who live in the real world where a gigantic fiscal stimulus program ended the Great Depression, and those who live in some neo-Austrian fantasy world where unicorns are pink, cotton candy grows on trees, and the Great Depression ended because of… well, they never quite answer that question with anything other than hand-waving and silly walks and an insistence that the parrot isn’t dead, merely sleeping. And unfortunately some of those people appear to be Presidential advisors. Siiiiiiiigh!
-- Badtux the Economics Penguin
"First, however, we have to free the President of that neo-Austrian claptrap that surrounds him in the Washington bubble."
ReplyDeleteIf I didn't know any better I'd say the president has no interest in stimulating the economy. Bank bonuses are back to obscene levels, the insurance industry is about to get a big pile of free money & $700 billion of "defense" spending isn't even debated. Things are just the way Obama wants them.
I would just like to ask him one question, though. Something like "In your old age, how are you going to feel about squandering a great chance to do something positive for the US, when you had a majority of Americans supporting progressive change? Are you fine with your only legacy being that you were the 1st black president & nothing else?"
Something like that.
We need health care reform AND stimulus. Focusing on only one problem isn't getting things done in a timely manner. Mr. President, are you listening? Probably not.
ReplyDeleteOh, and unicorns ARE pink. But the rest of your characterization of fantasy-world is pretty good...