The methods for generating demand are not a mystery. It basically amounts to the government spending more money until the private sector is again in a position to fuel demand.This guy missed the oil shortage, he missed the information revolution and still thinks we suffer from too many houses. Then he advocates doing exactly the wrong thing, spending on things that did not cause the collapse. Government has been spending, the economy is still in the dumps. Europe has spent, peripheral nations are bankrupt. California has spent,. they are bankrupt.
Why should we listen to a guy who got it wrong?
Let me ask this guy, if Keynes was right, then why is it that economies rarely do the Keynes thing as a natural process? Why does a Keynes solution always involve economists lobbying the legislature and pestering the voter?
Economists get it wrong because their profession requires them to get something when often having economist 'get it' is not the problem. Our best bet is for economists like Baker to sit quietly and observe.
And Washington's Blog gets it wrong:
Specifically, they started to admit that the assumption that the economy is inherently stable is false, and that their models were faulty and needed to be adjusted. ..
But now that – on the surface (here’s what you may see if you scratch below the surface) – things seem to be improving, most economists are falling back in their neoclassical stupor.The economy is stable, from the view point of the agents in the economy. Think, if the agent in the economy think we are stable, then what is an economist? An agent in the economy, he is doing what all the agents do, the economist is looking for stability.
What is stability? It is a evolving set of bounds in our brains with which we map the world. If Washington does not have this capability then his words would be gibberish.
What is the solution?
Look for a measure of our imprecision and take a stab at defining our bounds on risk and action.
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