Spent $1B for the last 2000 years? You’d not reach 90% of what the gov’t spent in the last 3!


Government Spending Works!  The Proof Is The Economy – $22,000,000,000,000 Spent, Debt Ceiling Reached, Unemployment Up, Housing Down

I may not have a Nobel Prize in Economics but reading Paul Krugman's opinion pieces in the New York Times is just aggravating.  Take this piece today, for example:  http://www.nytimes.com/2011/08/01/opinion/the-president-surrenders-on-debt-ceiling.html?_r=2  He has two main points in the article.  The first is that Obama caved to the Republicans, and has shown basically no leadership as President.  On this point, we agree.  I never understood why people thought that "Hope and Change" would really come from anyone who worked as a politician, but a fair amount of people were hoodwinked, and now, hopefully, they're learning the lesson they didn't learn three years ago.

His second point, though, is that the debt ceiling compromise will effectively sink the economy even further because it cuts government spending, and that we should be increasing government spending to keep the economy going.  It's straight off page one of the "Keynesian Guide to Talking Points", and quite frankly, flies in the face of all logic.  Forget for a moment that I tend towards market anarchy.  Forget for a moment that I think that the markets are a better judge of how to set prices and rates better than Krugman or Bernanke or Geithner.  Forget all that, and forget even that any other school of economics even exists.  Examine his own statements in the light of the facts: that the government has been spending like gangbusters and that the Fed has lent out 16 TRILLION DOLLARS and the economy is WORSE now than it was even just a few months ago.

Paul Krugman thinks that the government is not spending enough.  We have a 1.65 TRILLION dollar deficit this year, after a 1.3 TRILLION dollar deficit last year, and a 1.5 TRILLION dollar deficit the year before.  In the last three years, the government has spent 4.4 TRILLION dollars more than it has taken in.  Add to that the 2 TRILLION dollars that Bush spent over what his government collected, and in the last ten years, the government has outspent its revenues by 6.4 TRILLION dollars.  Now add the 16 TRILLION dollars the Federal Reserve lent out (http://www.rawstory.com/rs/2011/07/21/audit-fed-gave-16-trillion-in-emergency…) and you come up with a number that is north of 22 TRILLION dollars in spending and loans by the government.  Think about that number.  That's 22,000,000,000,000 dollars.  If you spent 1 billion dollars a year for the last 2000 years, you would only get to 2 trillion.  The government has spent and/or loaned ELEVEN TIMES that in the last ten years, of which TEN TIMES that amount was spent or loaned in the last three.  22 TRILLION dollars is enough to have given every man, woman, and child (assuming a US population of 307 million) more than 71,000 dollars.  I don't think the government should be giving money away at all, but I think it would have been an infinitely better experiment to have given everyone 71 grand than to have entrusted it to the politicians and pundits who prove time and again that they're not to be trusted with it!

If this isn't spending enough, I can't possibly imagine what Krugman thinks we should be spending.  Furthermore, I don't understand how an obviously intelligent man can continue to call for an action that is not only clearly not working, but actually exacerbating the problem.  Therein lies the inherent contradiction of Keynesian economics; you're forced to continue clamouring for more of the problem in hopes that something will correct or that you'll reach a new (much lower) 'normal' and then you can say you were right.

Comments (1)

  1. Dale Jones 2011-08-01 at 15:58

    Well said Tom, I am reposting!

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