Paul Krugman is crying about how we are in the opening stages of a third Great Depression. Well, Paul, as some point out, the idiots in charge were taking a lot of YOUR advice! From Real Clear Markets:
Krugman was among those who encouraged the new Obama administration and the Democratic Congress to spend massive amounts of money early on in a kind of Keynesian frenzy to shock the moribund economy back to life.
It didn't work. With a stimulus - a deficit, that is - of nearly 11% of GDP, our economy is barely growing, while unemployment remains shockingly close to 10% of the adult working population.
This even prompted our nation's vice president, Joe Biden, to admit last weekend: "There's no possibility to restore 8 million jobs lost in the Great Recession."
And he's right - at least with current policy, which is based on massive spending, new tax hikes, trillion-dollar deficits for decades to come and tight government control of vast swaths of our nation's economy, from banking to autos to energy.
Krugman recognizes, too, that it's a "failure of policy."
Only problem is, he completely misdiagnoses the problem: "Around the world - most recently at last weekend's deeply discouraging G-20 meeting - governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending."
I am sensing here a need for a real history lesson for Mr. Krugman. You see, Mr. Krugman, even though he supposedly is a smart guy and got a Nobel Prize and stuff (they are giving them to everybody these days) didn't actually look at the Great Depression and study what happened. No, instead he believes the folks who rewrote the history of the Great Depression and FDR. OK, Paul, once again:
It's an enduring myth that the Great Depression was caused by inadequate government "stimulus," of the sort Lord Keynes and President Obama would have approved. In fact, as a study by economist Randall Holcombe shows, under President Hoover, who served from 1929 to 1933 just as the Depression got under way, real per-capita spending surged 82%. That was even greater than the 74% rise from 1933 to 1940 in FDR's time.
So why did that slump last so long? UCLA economist Lee Ohanian studied that question. His conclusion: "The main culprit appears to be government policies that restricted competition." Indeed, stupid economic policies, including higher taxes, trade protectionism and the government's foolish effort to prop up wages, added seven years to the Depression. But for the government's tinkering, we would have exited that rut in the early 1930s, says Ohanian.
Economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute came to a similar conclusion in their study of Keynesian policies during the 1930s:
"(FDR's) interventionist policies and draconian tax increases delayed full economy recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows."
Gee, that type of fiscal policy sounds familiar. AW, damn, it is Obamanomics and Carternomics all over again! Hell and damnation!
But Paul, we are headed for hell only because of idiotarian Keynesians like you who told these liberal elitists to spend spend spend! So now, welcome to a refresher course on depression history, brought to you by Paul Krugman and Team Obama!
