Jan 29 2009
Obama is “Bush On Steroids”
According to The Cato Institute, most government officials have bought into the “Keynesian” economic ideology. According to Keynes, consumers become “spooked”, wary of buying and spending, for no apparent reason, and this is the cause for the recession. John Maynard Keynes is, of course, an economist famous for his policy of deficit spending. You can read more about him here
However, “in reality, excessive money growth drove asset prices up and drove interest rates down, making people feel richer than they really were and lowering the cost of borrowing money to facilitate more spending.” The remedy is to allow asset prices to fall, so that people thus have a more realistic evaluation of what their worth is, sort of letting devaluation work its course to normative levels. Actually, I believe I heard Donald Trump say the same thing a few months ago.
250 prominent economists and Nobel laureates have signed a statement that will be appearing in newspapers, including the New York Times, all over the country tomorrow. It is not a “do nothing” platform, but one that encourages lowering the tax rate and the “burden of big government.”
In fact, according to most economists, the big spending of FDR did not solve the Depression, but it was actually, the United States entry into WW II that marked the beginning of upward economic stabilization.
So, now, we wonder, will #44 listen to the scholars? In fact, in the video, you will see that Daniel Mitchell, senior fellow at Cato describes that #44 will be “Bush on steroids.” Now, on the other hand, Keynesians criticize Andrew Mellon’s advice to Herbert Hoover to basically let the markets “self-correct.” According to Roger Kerr, Keynesian economics is out-dated and does not work in a global economy, but rather in a closed economical model only.
