John Maynard Keynes

G-20 nations abandon Keynesian economics

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” - John Maynard Keynes

Could it be that Keynesianism is dead? From the look of the G-20 meeting in Canada, that just may be the case:

Like many bad ideas, the current Keynesian revival began under George W. Bush. Larry Summers, then a private economist, told Congress that a “timely, targeted and temporary” spending program of $150 billion was urgently needed to boost consumer “demand.” Democrats who had retaken Congress adopted the idea—they love an excuse to spend—and the politically tapped-out Mr. Bush went along with $168 billion in spending and one-time tax rebates.

The cash did produce a statistical blip in GDP growth in mid-2008, but it didn’t stop the financial panic and second phase of recession. So enter Stimulus II, with Mr. Summers again leading the intellectual charge, this time as President Obama’s adviser and this time suggesting upwards of $500 billion. When Congress was done two months later, in February 2009, the amount was $862 billion. A pair of White House economists famously promised that this spending would keep the unemployment rate below 8%.

Barack Obama: Believer in Free Markets? (cue the laughter)

Hoping to deflect accusations that he is a socialist, President Barack Obama told reporters that he believes in the free market:

Speaking to the Business Roundtable, which groups some of the country’s top chief executives, Obama called for support of his administration’s efforts to overhaul financial regulation and create jobs.

Obama’s remarks were set against a backdrop of unease in the business community about his economic and budget policies as well as his legislative drive for healthcare, energy and financial regulatory reform.

“Contrary to the claims of some of my critics, I am an ardent believer in the free market,” Obama said in prepared remarks.

Obama said his efforts to enact sweeping legislation to overhaul financial regulations and set caps on carbon emissions to fight climate change were not aimed at thwarting businesses.

“We have arrived at a juncture in our politics where reasonable efforts to update our regulations, or make basic investments in our future, are too often greeted with cries of ‘government takeover’ or even ‘socialism’,” Obama said.

Americans Reject Keyensian Economics

Once again, there is more common sense on Main Street than Pennsylvania Avenue:

While influential 20th Century economist John Maynard Keynes would say it’s best to increase deficit spending in tough economic times, only 11% of American adults agree and think the nation needs to increase its deficit spending at this time. A new Rasmussen Reports national telephone survey finds that 70% disagree and say it would be better to cut the deficit.

In fact, 59% think Keynes had it backwards and that increasing the deficit at this time would hurt the economy rather than help.

To help the economy, most Americans (56%) believe that cutting the deficit is the way to go.

Eighty-three percent (83%) of Americans, in fact, say the size of the federal budget deficit is due more to the unwillingness of politicians to cut government spending than to the reluctance of taxpayers to pay more in taxes.

Now if we could only get some of that wisdom to Washington.

Fear the Boom and Bust: Hayek vs. Keynes

Russ Roberts and John Papola finally released their video, “Fear the Boom and Bust.” The story of the song is based on F.A. Hayek and John Maynard Keynes coming back to life and spending a night on the town the evening before an economic conference on the economic crisis.

You can download the song and read the lyrics here.

Majority of Americans believe stimulus bill was a bad idea

My apologies for posting so much about polls the last few days, but much of what is coming out is showing voters’ contempt for much of what has come out of since President Barack Obama took off last year.

Last year during the Obama Administration’s push for a Keynesian-style “stimulus” package, Americans were told that unemployment would not rise above 8% with the stimulus and would surpass 9% without it (see page 5 of the administration’s report, The Job Impact of the American Recovery and Reinvestment Program).

Unemployment is 10% today and jobs are still being lost, so it’s no wonder Americans believe the “stimulus” bill was a bad idea:

Fifty-six percent of people questioned in a CNN/Opinion Research Corporation survey released Sunday say they oppose the stimulus package, with 42 percent supporting it.

Last March, just weeks after the stimulus bill was signed into law by President Barack Obama, a CNN poll indicated that 54 percent of the public supported the program, with 44 percent opposed.

The program, formally known as the American Recovery and Reinvestment Act of 2009, attempts to stimulate the country’s economy by increasing federal government spending and cutting taxes at a total cost to the government of $787 billion. No Republicans in the House and only three in the Senate voted in favor of the bill.

Earlier this month the Associated Press reported that spending on transportation had no measurable impact on the economy, noting “spend a lot or spend nothing at all, it didn’t matter.”

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Taxpayers slapped in the face three times in one day

Taxpayers were got slapped in the face three times yesterday by President Barack Obama and the Democrat-controlled Congress.

The first was the president signing a bloated $1.1 trillion spending bill, which passed Congress over the weekend:

President Barack Obama has signed into law a $1.1 trillion bill that increases the budgets in many areas of the government by about 10 percent, including health, law enforcement and veterans’ programs.

Obama signed the bill privately at the White House on Wednesday after receiving the bill from Congress on Sunday.

The bill lumps together six of the 12 annual appropriations bills for the 2010 budget year that began Oct. 1.

The second was the expected increase in the debt ceiling by $290 billion, which passed 218 to 214, punting another, much larger increase to next year:

The House on Wednesday narrowly passed a $290 billion increase to the amount of debt the Treasury is allowed to have. Currently, the debt ceiling is set at $12.104 trillion, and if the Senate passes the House-approved increase, it would rise to $12.394 trillion.

The increase would cover Treasury’s borrowing needs through Feb. 11, 2010. That is a far cry from the $1.9 trillion increase that lawmakers last week said they wanted to pass.

Where Are The Fake “Stimulus” Jobs?

The Democrats’ government-growth-disguised-as-Keynesian-“stimulus” bill has done anything but stimulate the economy.  Unemployment is at 10.2%, About 3 million jobs have been destroyed in the private sector since the bill became law, and as has been noted, fake jobs have been “created or saved” in places that don’t even exist.  We should be paying attention to where the so-called “created or saved” jobs are.

Thanks to www.recovery.gov, it is possible to find where the dollars and jobs are by both Congressional district and by zip code.  I have looked at both for my home state of Georgia.

First, looking at the money and jobs by Congressional district, over one-third of the dollars awarded and nearly 90% of the jobs are in one district, the 5th District.  The 5th District includes most of the city of Atlanta and southern Fulton County, the largest county by population in the state.  Also in the 5th District are the headquarters for the Georgia State, Fulton County, and Atlanta City Governments.

The trend becomes clearer when looking at zip codes.  The top recipient by dollars is zip code 30303, which is home to both Fulton County and Atlanta City Governments.  This zip code was also responsible for about one-eighth of the state’s stimulus jobs.  The second largest recipent of federal “stimulus” dollars was zip code 30334, which was also responsible for over two-thirds of the jobs reported for the state of Georgia.  What is in 30334 that could produce so many jobs?  Why, I’m glad you asked!  A quick search around the website of the State Senate, State House, and the office of the Governor are all located in 30334.  The state of Georgia received the money, and the state of Georgia reported the jobs.

More Liberty is Needed in the Media

Where is a person of a classically liberal inclination to go in today’s political media jungle?

The last four years have been somewhat of a storm for people like us. The unpopularity of George W. Bush tainted conservatism for at best a couple years and at worst a generation. Ron Paul only got a fraction of the Republican primary vote in 2008, not enough to bite into the doomed-to-fail John McCain. William F. Buckley died, as did Milton Friedman.

Glenn Beck, a pseudo-libertarian-inclined talk radio and cable news personality who showed promise by giving airtime to libertarian activists and having constructive dialogues with disagreeable people like Rev. Al Sharpton, has gone completely bat-sh!+ crazy in exchange for good ratings.

The Origin of This Financial Crisis: 1913

Part I

Economists disagree on the identity of the true culprit behind our current crisis. Some blame Wall Street; some blame the progressive politics that pushed Freddie Mac and Fannie Mae beyond their capacity; some blame the profiteering loan brokers, the foxy house flippers, and the naive subprime home buyers in their rush for quick profits. Some blame the Federal Reserve, including me from time to time.

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In reality, all of the above had their role, but they are just players in a game, the rules of which are defined by politicians. The origin of the problem lies in the rule changes that caused the demise of sound commercial banking back in 1913.

Obama’s Presidential Address to Congress

Not because I believe in bigger government, I don’t. -Obama

 

Many of you watched Obama make his first address to Congress tonight. His speech was concentrated nearly entirely on the economy. He started out by talking about the pitiful state of our economy, and how it is affecting everyone either directly or indirectly. He reiterated the point that America will prevail and recover. I don’t doubt that we will prevail and recover, but not because of Keynesian economic policies that the Democratic Party and Neocons are implementing. Not because of the spending, bailing out, and intervention of the Federal Government.


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