The Keynesian FAIL

Apparently either Paul Krugman or someone pretending to be Paul Krugman commented that “People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.” Even if it wasn’t Paul Krugman, that’s exactly the kind of thing he has been advocating.

The Krugmanites – neo-Keynesians – have been blaming the lack of growth in the economy on the “Tea Party” and its austerity program. Of course, this is an utter lie because none of the cuts advocated by the Tea Party have gone into effect, and even when they do, in 2012, they amount to $21 billion and are cuts in planned increases only. No actual spending reductions are planned or even envisaged by either party, we’re only talking about (slightly) slowing the rate of growth. The problem is that government spending is ruining the private economy that is the only generator of value and wealth. As Jim Quinn points out:

The Keynesians had their chance. They controlled the Presidency and both houses of Congress. A Keynesian runs the Federal Reserve. They implemented everything they proposed. The $862 billion porkulus program, the $700 billion TARP program, home buyer tax credits, energy efficiency credits, loan modification programs, zero interest rates, QE1 and QE2. They increased social welfare transfers for Social Security, Unemployment Compensation, food stamps, Medicare, Medicaid, and Veterans by $600 billion since 2007, a 35% increase in four years. No one has foiled their plans. The Tea Party didn’t really exist until 2010. They didn’t lose the House until November 2010. They cannot blame the Tea Party extremists, but they do.

The Keynesians have successfully increased Federal spending by $1.1 trillion, or 41% since 2007, and are running deficits exceeding 10% of GDP, but they call the Tea Party extremists. Domestic investment is still 9% below 2008 levels as the Federal government has crowded out the small businesses that create the jobs in this country. And now the Keynesians declare we need more stimulus, more programs, more debt, more quantitative easing and lower interest rates. It just wasn’t enough the first time. You have to give the Keynesians credit. Despite the utter absolute failure of every scheme they have implemented, they will worship their models and theories until they successfully collapse our economic system. Then they’ll blame the Tea Party terrorists who foiled their plans.

In any event, thanks to Macro Man, we are able to bring a report from the front, as he vacations in the Greek islands on an Athenian public sector employee’s new yacht. In short, prices have doubled (lobster pasta is 90 euros at the tavernas) while inferior imported products have been substituted for local quality goods. Why am I not surprised? Under austerity, the public sector will still be living it up while the rest of us are getting hammered.

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