Now normally this would just be more drivel from John Maynard Keynes disciple Paul Krugman that you could just brush aside, but this is from someone who actually has the ear of the Chosen One, Professor Laura Tyson of the Haas School of Business at the UCal, Berkeley and member of Obama’s Economic Recovery Advisory Board.
This my friends is why we are in the trouble we are in today. Professor Tyson's conclusion is that since our (feeble) economic recovery has been based on solely massive amounts of capital pumped into the economy by the government, which will soon end, they should borrow and print more money, putting us further into debt, to further prop up the economy. This, is what my mother used to call throwing good money after bad. The delusion that Prof Tyson has is the same as a gambling addict who thinks that their luck will turn and the big score is right around the corner. Except that gambler does not have the Fed's printing press at their disposal.
Anyone who understands Austrian theory realizes that government intervention only prolongs the downturn and prevents the correction needed through the malinvestmet of capital.
But what else would you expect from a Senior Fellow at the Center for American Progress?
New York Times
The situation would be even worse without the $787 billion fiscal stimulus package passed in 2009. The conventional wisdom about the stimulus package is wrong: it has not failed. It is working as intended. Its spending increases and tax cuts have boosted demand and added about three million more jobs than the economy otherwise would have. Without it, the unemployment rate would be about 11.5 percent. Because about 36 percent of the money remains to be spent, more jobs will be created — about 500,000 by the end of the year.
But by next year, the stimulus will end, and the flip from fiscal support to fiscal contraction could shave one to two percentage points off the growth rate at a time when the unemployment rate is still well above 9 percent. Under these circumstances, the economic case for additional government spending and tax relief is compelling. Sadly, polls indicate that the political case is not.
Two forms of spending with the biggest and quickest bang for the buck are unemployment benefits and aid to state governments. The federal government should pledge generous financing increases for both programs through 2011.
Oy vey, progressives like Prof Tyson need to be stopped before they do any more harm.