Wednesday, June 17, 2009

Second Verse, Same as the First!

If you ever wondered what the econogeniuses advising the president to feed endless barrels of dollars into the government spending woodchipper were saying years ago, Option Armageddon can give you a clue.

Every financial crisis we've ever had has been met with the same prescription. Spend, spend, spend! Deficits are a long-term problem - we have problems now! Deal with today's problems with everything we've got because tomorrow may never come at all.
In the age of central banking, economists like PK (Paul Krugman) have convinced us they have the power to fight off the business cycle. Like a 19th century street mountebank hawking snake oil, they peddle a miracle elixir that can reverse the symptoms of any recession. Its two magic ingredients—government spending and central bank money-printing—are available in different proportions, depending on the particular recessionary symptoms with which the “victim” is stricken.

The economists show us charts and regressions and other complicated arguments that no one unfamiliar with their argot can follow. Deep down, we all know it’s (nonsense). We know at a gut level that more debt and more inflation won’t actually cure what ails us, that it will just mask the symptoms for a time. Until, well, the next time we face economic difficulties. At which point the economists will come back to sell us a new (better!) variety of snake oil.
Option Armageddon has done the hard work of going through Krugman's articles and found example after example through the decades of him suggesting we need to ignore debt and focus on spending. It reminds me of an old song ...

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