"There are two arguments for more stimulus today. The risk of a double-dip... remains [and[... the economy has a terribly long way to go before it can be considered healthy.... If the next four years were to bring job growth as fast as the job growth during the best four years of the 1990s boom — which isn’t likely — the unemployment rate would still be higher in 2014 than when the recession began in late 2007."That is David Leonhardt speaking in favor of more government spending to boost the economy, doing the Keynesian I guess. Unfortunately, the immediate counter-proof is that we are entering a double dip precisely because of crowding out. The evidence is quite clear, we have had energy shortages since 2001, there has been no appreciable efficiency gains since the stimulus experiment started, and we can watch oil prices, oil imports, and Keynesian spending; and each dollar Keynes spends there is now about 1.2 dollars gone from the economy do to increased oil imports at higher prices.
Why did the European sovereign debt crisis come to a head now? The US Congress drove up oil demand and prices using debt. Look at oil prices, up around $80, gas prices reaching $3.50 for three months. Our oil imports went from a 30% decline over a year, then suddenly shot up by 20% over a month or two as Congress spent. Then the economy double dipped in the face of energy shortages.
These Keynesians are making things up at this point.
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