The Fed’s Secret Loans, Europe’s Crisis, and the Boring Patterns of Statist Propaganda

November 29, 2011 · Posted in General Economics · Comment

In response to recently published information about the Fed’s emergency loans, Bloomberg’s Felix Salmon was promptly ready to perpetrate this piece of grade A scumbaggery:

Ladies and Gentlemen, this is what a lender of last resort looks like. What you’re looking at here are three lines. The black line is Morgan Stanley’s market capitalization, which tends to hover in the $40 billion range but which fell as low as $9.8 billion in November 2008. The orange line is the amount that Morgan Stanley owed to the Federal Reserve on any given day — an amount which peaked at $107 billion on September 29, 2008. And the red line is the ratio between the two: Morgan Stanley’s debt to the Federal Reserve, expressed as a percentage of its market value.That ratio, it turns out, peaked at some point in October, at somewhere north of 750%.

Many congratulations are due to Bloomberg, for extracting this information from the Fed after a long and arduous fight. It couldn’t have come at a timelier moment: if the ECB wants to avert a liquidity crisis, charts like this give a sobering indication of just how far it might have to go, and how quickly it might have to act.

The Euromess has everything to do with the fact that the ECB exists in the first place, and the fact that it enabled irresponsible bureaucrats to hide behind relatively responsible ones and borrow beyond their respective taxpayers’ means.

Almost 3 years ago I already said that if European government bureaucrats don’t quit the centralization of power which enables the above, things would only get worse and worse.

Then about 2 years ago I wrote:

The truth is very simple: The best that can be done for the people of Greece is to not provide one cent of assistance to its corrupt, bloated, and union-controlled government apparatus. A country’s bailout is like a corporate bailout, only many times worse! From this logically follows that the absolute worst Europe could do to the people of Greece would be to give their rulers any more means to continue their irresponsible policies.

The European Currency Union and the European Union itself are both such gigantic failures that it is already pre-ordained that the entire experiment will go down in flames sooner or later. Now is certainly not that time yet. What we are seeing are just a few more cracks emerging in the structure of the system. The European bureaucrats will come up with some sort of pseudo solution to paper over and patch the Greek problem for now.

Even if the Greek government were saved to the detriment of the people it tyrannizes, this won’t be the last time we’ll be having this discussion, and it sure as hell won’t get any better!

We’re having that discussion again now, and the time has run out for patchwork and pseudo solutions. The system is going down as predicted.

To say that the Euromess is caused by a lack of even more ECB intervention is to say that the heroin addict’s withdrawal pains are to be imputed upon a lack of an increase in his dosage.

I think that’s pretty lazy and irresponsible stuff to put out there and it genuinely hurts reading it.

Wouldn’t it make sense at some point to stop and think a little more carefully and precisely about the things we say in public discourse?

Bank of England governor King pointed out a few weeks ago: “This phrase ‘lender of last resort’ has been bandied around by people who, it seems to me, have no idea what lender of last resort actually means, to be perfectly honest. It is very clear from its origin that lender of last resort by a central bank is intended to be lending to individual banking institutions and to institutions that are clearly regarded as solvent. And it is done against good collateral, and at a penalty rate. That’s what lender of last resort means.”

And about the Fed having solved any problems in the US … are you going to say the same thing when the public debt burden, subsidized by QE1,2,3,4,5…, will have reached an amount where the government’s automatic spending cuts start to kick in and begin to impoverish more and more of the millions of people who have been made dependent upon government handouts?

Or better yet, are people going to be asking for the Fed and government to step in, grab more power, and regulate all these banks’ irresponsible speculation binges, because for some inexplicable, magical reason they don’t seem to have much of an incentive to conduct business prudently, to pay themselves reasonable salaries, or to lend responsibly, and not, say … invest in Greek bonds for example?

The pattern is simple and boring: Keynesian and other statist clowns out there will continue doing what they’re paid for. They will support one stupid ass government spending and expansion program after another, applaud one newly created government institution after another, be completely incapable of predicting the long term effects of those unsustainable policies, ignore or even ridicule those who are capable, and then when the inevitable crisis hits they will boldly “predict” that a tragic crisis is going to hit, should all those unsustainable programs not be sustained.

This is truly embarrassing to watch.

But at the same time it’s encouraging to see other people around the world wake up to the truth, and ditch the repetitive dronings and platitudes of entitled and state tenured ivory tower academics whose cumulative output will supply plenty of instructive and awe-inspiring entertainment for future generations.

Tags: ecb, europe, european central bank, federal reserve bank, keynesian, lender of last resort

The (Nut-)Case for More Aggression

August 8, 2011 · Posted in Government · Comment

In The Great Depression 2.0 I wrote:

Once existing stimulus programs and credit expansion attempts subside, there won’t be much left to pick up the slack. The consumer won’t be able to go back to business as usual unless he goes through a long period of reduced consumption, deleveraging, and savings, a period during which the majority of production and spending inside the US will have to be focused on capital goods, so as to restore a balanced ratio between the production of consumer goods and the production of capital goods.

At the point when these government stimuli wind down, Keynesian clowns will be jumping out of the bushes left and right, and demand that the government take on more debt and spend more money.

I would like to submit this beautiful specimen as further evidence for my theory above:

I further said in that article:

But at some point their mindless tirades will no longer appeal to an overtaxed and overleveraged populace. Their ivory tower nonsense will be way too far detached from simple realities.

The Yahoo finance contributor commenting on the clown above writes:

And even though we have very little to show for all that spending, this PhD in economics from the University of Michigan thinks we have no choice but to spend even more.

… attitudes are changing. People are beginning recognize insane behavior for what it is: Doing the same thing over and over while expecting different outcomes.

Government is aggression. Whoever asks for more government spending in reality asks for one thing and one thing only: more aggression.

Aggression solves no problems. It only aggravates and prolongs them.

I further said in that article I wrote about 2 years ago:

Any temporary recovery we witness now, is likely to be remembered as just that, a temporary phenomenon. All actions taken so far have set the perfect stage for a double dip recession of enormous proportions, the worst possible prolongation of the necessary correction.

Be my guest to compare that prediction with the events as they unfold in the coming years.

Tags: aggression, government spending, keynesian

Mountains of Debt – The Keynesian Legacy

February 1, 2011 · Posted in Government · Comment

To follow up on Keynesianism’s Depredations and Futility in Action.

Not too long ago it was reported that Japan’s debt rating is cut as deficits pile up:

In another reminder of the worsening debt loads of developed nations, Standard & Poor’s on Thursday cut Japan’s credit rating one notch, citing the country’s continuing large budget deficits and the burden of an aging population.

Japan’s rating was trimmed to AA-minus from the AA rating it had held since 2007. The country lost its top AAA rating from S&P in 2001 after more than a decade of economic malaise.

Japan’s total public debt is about 200% of gross domestic product, the highest of any developed country and more than double the U.S. ratio.

S&P said the downgrade reflected its concern that Japan’s debt ratio would continue to rise as annual budget deficits piled up. It forecasts a deficit of 9.1% of GDP in the current fiscal year, and expects that to decline “only modestly” to 8% in fiscal 2013.

This is what’s in store for the western world thanks to the “cures” proscribed by Keynesian clowns around the globe. Their inevitable legacy will be mountains of debt, deficits, broken promises, and ongoing instabilities and depressions.

Tags: keynesian, public debt

Krugman Responds With More Nonsense

October 12, 2010 · Posted in General Economics · Comment

OK, folks. I will make this quick and easy, just because I prefer to spend my time dealing with interesting, intelligent, curious, and unbiased people.

As I wrote yesterday, Krugman said that government spending hasn’t surged. I presented numbers that show government spending in relation to all other spending, in other words, how much government involvement in all our activities has increased and it shows that it has posted the biggest rise since WW2.

Then he writes a response saying that relative numbers don’t matter and that we have to look at absolute numbers. Why that is the case of course he doesn’t bother to explain. It is because he says so. Fine, that’s nothing new from the guy. So kudos for being consistently pathetic.

So let’s make this argument as easy as possible for him. Let’s assume relative numbers don’t matter and all that is relevant is absolute numbers, completely disregarding everything else that happens in the economy. He goes on to say:

What’s going on? Yes, that’s right: it’s what happens when you divide by GDP in a time of terrible economic performance. Spending hasn’t surged; in fact, it grew more slowly in the two years after Lehman collapsed than in the two previous years, despite a sharp rise in spending on safety-net programs. Instead, GDP growth has plunged.

OK, so let’s look at absolute government spending YoY growth figures over the past 24 years:

1986 6.08%
1987 4.01%
1988 6.43%
1989 7.40%
1990 9.59%
1991 6.54%
1992 4.99%
1993 2.61%
1994 3.90%
1995 4.39%
1996 3.15%
1997 3.53%
1998 3.34%
1999 4.43%
2000 5.96%
2001 5.38%
2002 7.56%
2003 6.99%
2004 5.17%
2005 6.93%
2006 6.69%
2007 4.15%
2008 8.83%
2009 10.11%

In particular I would like you to take a look at the 2009 number, the year after the Lehman collapse. An increase larger than any during the past 24 years. Also, have a look at the two years prior to the Lehman collapse: 6.69% and 4.15%.

I repeat what Krugman said:

Spending hasn’t surged; in fact, it grew more slowly in the two years after Lehman collapsed than in the two previous years.

Naturally, he’s now gonna write a response apologizing for his mistake, as he always does when reality proves him wrong.

Haha :) Just kidding …

Addendum:

I hope that people don’t think I am trying to say that economic policy under President Obama is exceptionally bad. Some people seem to think that it destroys my case when they say that government spending in the past has also grown and that we are just on the normal trend.

I say: So what? All that shows is that economic policy has been consistently bad under all past presidents. I have never lauded the US’s economic policies under ueber-tards like G.W. Bush or Bill Clinton, now have I?? Whether spending grows by 10% this year, 8% that year, etc., these are all petty little minutiae, dwelled on by petty little people. I don’t even believe the President has very much pull in this whole process.

A small number of people each individually have a huge marginal interest in the growth of specific programs, while the majority of people who fund this growth, each of them at a marginally small percentage, have very little vested interest in the elimination of particular individual programs. This creates a mismatch in incentives that brings about the inevitable.

It’s the natural and predictable progression of things so long as people believe in the necessity of a government. There is nothing new, unknown, or surprising about this. There is nothing different under a black, an illiterate, or a horny president. We are being fed the same shit sandwich year after year, only that the turd gets bigger and bigger.

To see people chow down on that thing while discussing minutiae, while debating this program or that law, while factoring out TARP and adding up numbers as they see fit, while lauding this master and condemning that master …

Come on, people. It really makes you look small, silly, petty, and bigoted. Get the big picture. To hell with smallness and pettiness! Life is short and you shouldn’t waste it being a cogwheel in a machine that is bound to blow up. You owe it to your children and their progeny. Because I guarantee you, they will have a lot of questions looking back at an era that is ending ….

Tags: government spending, keynesian, krugman

Krugman’s Nonsense on US Government Growth

October 12, 2010 · Posted in General Economics · 10 Comments

Government spending has grown hugely over the past 2 years (well, it also has over the past 10 years and over the past 50 years and over the past 100 years, but I’m not even gonna go there for the sake of this particular topic.)

Meanwhile unemployment keeps rising, growth remains sluggish, and the Great Depression 2.0 is in full swing.

Keynesians, at a loss to explain how the two phenomena can possibly co-exist, have to do what is completely inevitable: They need to make up an alternate reality. A fantasy world, in which their prescriptions of more government spending as the magical panacea to recessions where never tried.

In his never ceasing quest against reality, Paul Krugman joyfully continues to make fact free assertions, while at the same time accusing others of … yes … making fact-free assertions. :)

The answer to the second question — why there’s a widespread perception that government spending has surged, when it hasn’t — is that there has been a disinformation campaign from the right, based on the usual combination of fact-free assertions and cooked numbers. And this campaign has been effective in part because the Obama administration hasn’t offered an effective reply.

Actually, the administration has had a messaging problem on economic policy ever since its first months in office, when it went for a stimulus plan that many of us warned from the beginning was inadequate given the size of the economy’s troubles. You can argue that Mr. Obama got all he could — that a larger plan wouldn’t have made it through Congress (which is questionable), and that an inadequate stimulus was much better than none at all (which it was). But that’s not an argument the administration ever made. Instead, it has insisted throughout that its original plan was just right, a position that has become increasingly awkward as the recovery stalls.

And a side consequence of this awkward positioning is that officials can’t easily offer the obvious rebuttal to claims that big spending failed to fix the economy — namely, that thanks to the inadequate scale of the Recovery Act, big spending never happened in the first place.

But if they won’t say it, I will: if job-creating government spending has failed to bring down unemployment in the Obama era, it’s not because it doesn’t work; it’s because it wasn’t tried.

OK, Krugie. How about we have a look at some … you know … facts? Because, you’re absolutely right, making fact-free assertions is a bad bad bad! Here is the latest chart on total US government spending as % of GDP, that is all federal, all state, and all local expenses, even including federal grants. This chart does not include any estimates except numbers before 1948. All recent numbers are 100% finalized:

government-expenses-growth-1930-2009-b2

Just for the sake of 100% certainty, I am not including the projections for 2010 and the following years, but only confirmed and finalized data!

I mean, this stuff is out there, at the click of a Search button, readily available to anyone who is unbiased, curious and interested in truth and objective analysis. So why is it that a Paul Krugman would ignore it? Hmmmmmm … really really I wonder … :)

Luckily there is a very simple and uncomplicated solution … tune out from such clowns.

Update:

I will below list the most popular counter “arguments” to what I wrote above:

1. Absolute vs. Relative Figures

This is almost a given for bigots. When they see relative numbers they will tell you that spending only went up as % of GDP because GDP fell, because, you see, we are in a recession and so all the stuff I wrote above doesn’t count!!

OK, then let’s have a look at the absolute numbers, in $ billions:

2000 2,830.5
2001 2,982.8
2002 3,208.4
2003 3,432.6
2004 3,610.1
2005 3,860.1
2006 4,118.5
2007 4,289.4
2008 4,668.0
2009 5,139.9

Absolute numbers, anyone?

2. TARP doesn’t count!

Once people see that their assertion is completely wrong they will have to adjust the numbers to their liking. When reality doesn’t conform with bigoted ideas, then reality has to be modified. The inevitable outcome is that they will start excluding certain categories of government spending, with the objective of finally arriving at an adjusted number that fits in their small mental box.

TARP is a popular one because, you see, it will be paid back!

To that I can only say: That’s great! So then once it does get paid back, and Congress, in its almost infinite wisdom and fiscal prudence, decides to pay it back to the people without borrowing any more money, then I will gladly review the budget numbers at that time and be impressed by how much the budget declines in that year.

But as it stands currently, the money has been spent and pumped into circulation. So how about we observe actual, current numbers that we know of, and don’t make up an alternate reality or pretend to know the future?

I have my own predictions: I say none of this money will be paid back to the people, it will all be spent on other programs. But am I using that as part of my current argument? No. Because it is a guess, albeit one that I believe is a bit more accurate and a bit more based on economic history of, say, the past 5000 years of public finances. But I may be wrong and I would gladly stand corrected.

At any rate, such guesswork is completely misplaced when it comes to observing actual numbers.

But the good thing about a logical and consistent position is that it doesn’t matter what you throw at it. It stands on a firm and unassailable structure.

So let’s say TARP is completely irrelevant and the money is magically to be excluded from the calculation. The total actually handed out under TARP at this point is $356 billion. So let’s deduct that number, in equal proportions from the budget of 2008 and 2009, just for the sake of these people’s argument, just to try to make it as easy as possible for them:

That gives us $4,490 billion for 2008 and $4,961 billion for 2009, or 31% and 34.8% of GDP respectively.

Tags: keynesian, krugman

Endless Nonsense From Keynesian Clowns …

October 3, 2010 · Posted in General Economics · Comment

And the saga continues, as Nobel Prize-winning economist Joseph Stiglitz calls for second federal stimulus …

Nobel Prize-winning economist Joseph Stiglitz called for another round of federal stimulus dollars to spur the economy. He spoke Sept. 30 to the Society of American Business Editors and Writers (SABEW) at its Fall Workshop.

“We will see in the next two years the real cost of there not being a second round of stimulus,” he said. “We will see the economy slow down at a very high economic cost.”

The Columbia University professor also said that the “new normal” as far as the unemployment rate is concerned may not be the 4 to 5 percent that existed before the financial crisis in 2008, but more like 7 to 8 percent.

Unemployment is about 9.5 to 9.6 percent officially, he said, but many people who are working part-time involuntarily or who have stopped looking but want work are not counted in the official rate.

Congress passed the first stimulus on Feb. 11, 2009, approving a $787 billion bill, the American Recovery and Reinvestment Act.

He said one reason that stimulus has not had more effect is that state and local governments have cut spending, undoing about one-half of the impact of the money that the feds have injected.

He said the stimulus also could have had more effect if more money had been put into making up for the shortfalls of state budgets, stopping layoffs; if less had been put into tax cuts that wary consumers just ended up saving; and if safeguards to prevent waste had not slowed the money from being spent.

Still, he said, “The stimulus absolutely worked.” Without it, unemployment could have peaked at more than 12 percent.

He said that one-fourth of Americans have negative equity in their homes, meaning that they can’t draw on their homes as a piggybank to borrow and live beyond their means. In fact, they are going to have to live below their means to pay off debt accumulated during better times.

“We likely face a marked reduction in standard of living,” he said.

It is truly amazing how the people who didn’t see any of the root problems and were completely unable to predict how an overly crushing debt load would wreck this economy, how the business cycle would inevitably turn south due to a deliberate policy of credit expansion and who don’t bother to seriously identify the root causes of the financial crisis, now boldly step forward to make the most obvious of predictions and think that they are contributing to the debate.

“We likely face a marked reduction in standard of living”

Wow, no shit Sherlock! Did it take all the decades of accumulated economic wisdom to figure that one out when it’s already happening??

And if I got a penny every time these people make up an alternate reality in order to justify their programs … oh well …

“The situation would be worse had it not been for more government spending …”, “the unemployment rate would have been even higher than it is now …” … bla bla bla.

This is perfectly natural. If their policies aren’t defensible in reality, if they can’t specifically explain how more budget deficits and bailouts have actually helped us, then of course they will have to make up a fantasy world.

I mean, they look completely silly doing that, and it’s funny watching it … but please don’t expect me to actually buy that nonsense!

Here’s the statement I made that you always need to keep in mind when you hear people like this guy talk:

Once existing stimulus programs and credit expansion attempts subside, there won’t be much left to pick up the slack. The consumer won’t be able to go back to business as usual unless he goes through a long period of reduced consumption, deleveraging, and savings, a period during which the majority of production and spending inside the US will have to be focused on capital goods, so as to restore a balanced ratio between the production of consumer goods and the production of capital goods.

At the point when these government stimuli wind down, Keynesian clowns will be jumping out of the bushes left and right, and demand that the government take on more debt and spend more money. But at some point their mindless tirades will no longer appeal to an overtaxed and overleveraged populace. Their ivory tower nonsense will be way too far detached from simple realities.

Any temporary recovery we witness now, is likely to be remembered as just that, a temporary phenomenon. All actions taken so far have set the perfect stage for a double dip recession of enormous proportions, the worst possible prolongation of the necessary correction.

If it was our dear government’s objective to repeat the playbook from the Great Depression one by one, then they have indeed succeeded phenomenally.

And here’s of course the long term outlook which you can look back to 10 years from now if you like:

From 1989 on, the Japanese government has launched one stimulus after another to no avail, leaving Japanese taxpayers with the largest public debt per capita of all industrialized nations.

A burden that the US government seems to be more than willing to have its taxpayers shoulder over the years to come unless someone picks up a history book and tries not to feverishly repeat mistakes others made in the past.

Thus the long term outlook for the US economy is the fate Japan took: A long lasting correction supercycle with one failing “stimulus” program after another, and with on and off periods where the economy slips out of and back into recessions from time to time.

Tags: keynesian, stiglitz

Paul Krugman, You Need Help!

June 8, 2010 · Posted in General Economics · Comment

Here is a nice takedown of Chief Keynesian Clown Paul K. written by Mish today:

Krugman’s Magic Mirror

Clearly one of us is wrong. But whom? Perhaps this image can help.

Throwing money at problems never works in the long run.

Japan tried that and now has debt to GDP of 200%. Because of its aging demographics, Japan is in serious trouble as soon as interest rates rise. Japan will not be able to finance its monstrous debt nor will it be able to grow its way out of the problem. Such is the nature of compound interest and unsustainable levels of debt.

Likewise, the US tried to spend its way out of the 2000-2001 recession.

Greenspan’s policies seemed to work, but it was nothing but an illusion. The real economy was taking a nosedive even as financial assets soared. It was a nice party, as all Keynesian parties are, but in the final analysis all Greenspan and Bernanke accomplished was to dig the deepest debt hole mankind has ever seen. The housing and debt implosion of 2007-2008 was the direct result.

Now Paul Krugman thinks it’s too early to shut off stimulus.

Hello Paul!

It will always be too early for you. There is no recovery nor will there ever be a recovery until there is genuine demand for goods and services at prices set by the free market not the government.

When the problem is debt, going deeper in debt cannot possibly be the solution.

Yes, Paul, we lost a decade. Yes, Paul, we are going to lose another, not because we failed to follow your recommendations, but precisely because we did!

We had a chance to write off the debt and to let the insolvent banks go under. Instead we wasted over a trillion dollars bailing out banks that still are not lending (and wisely will not lend) because we never purged the debts that needed to be purged nor did we reduce rampant overcapacity.

We could have and should have forced the bondholders of Citigroup and Fannie Mae to take a hit. Instead, taxpayers who cannot possibly afford it, bailed out wealthy bondholders.

In addition, we tried all sorts of Keynesian nonsense like cash-for-clunkers and an$8,000 tax credits for houses. As soon as the tax credit expired housing went in the gutter. It is about to do so for the second time.

Bernanke will not know what hit him even though it is point blank foolish to stimulate housing when there is an ocean of housing oversupply already.

By the way, how many roads can you pave? We paved roads in our area that did not even need to be paved. Now fooking what?

This is exactly the mistake Japan made. Yet you want to repeat it with more absurd makeshift work.

The stimulus money is nearly out and you want more. You will always want more for the simple reason there is no real demand for goods and services, only an illusion of a recovery that comes from passing out “free money”.

When you look in a mirror you see the illusion, what you should see is a Keynesian warthog. Substitute the words “Keynesian Economics” for “Real Economy” on that hag, and the picture is perfect.

As Europe found out, the will and the means to pass out “free money” is 100% guaranteed to end before a lasting recovery can take hold.

That dear Paul, whether you like it or not, is the mechanics of peak debt, compound interest, global wage arbitrage, and something you desperately need to learn: Austrian economics.

Recommended Reading List

Paul, you need help. I suggest a few books on my recommended reading list.

Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics by Henry Hazlit

Economics for Real People by Gene Callahan

What Has Government Done to Our Money? and The Case for a 100 Percent Gold Dollar by Murray N. Rothbard

I couldn’t agree more, those are excellent reads indeed.

Paul, you need help!

Tags: keynesian, krugman

Keynesian Academics Unhappy About Record Deficits; They Want More!

November 18, 2009 · Posted in General Economics · Comment

Brad Delong seems to be coming to the realization that we are in a depression:

For 2 1/4 years now I have been saying that there is no chance of a repeat of the Great Depression or anything like it–that we know what to do and how to do it and will do it if things turn south.

I don’t think I can say that anymore. In my estimation the chances of another big downward shock to the U.S. economy–a shock that would carry us from the 1/3-of-a-Great-Depression we have now to 2/3 or more–are about 5%. And it now looks very much as if if such a shock hits the U.S. government will be unable to do a d—– thing about it.

We could cushion the impact of another big downward shock by a lot more deficit spending–unemployment, after all, goes down whenever anybody spends more (even though sometimes falling unemployment comes at too-high a price in rising inflation), and the government’s money is as good as anybody else’s. But the centrist Democratic legislative caucus has now dug in its heels behind the position that we cannot undertake more deficit spending right now because we have a dire structural health-care financing proble afrer 2030. The Republican legislative causes has now dug in its heels behind the position that the fact that unemployment is 10% shows not that policy earlier this year was too cautious but rather that it was ineffective. And the Obama administration has not been able or has not tried to move either of those groups out of their current entrenchments.

… unfortunately he also deems it necessary to draw precisely that conclusion which is farthest from the truth. He is yet another sad casualty of the phenomenon I expected to occur sooner or later, as I outlined in The Great Depression 2.0:

Once existing stimulus programs and credit expansion attempts subside, there won’t be much left to pick up the slack. The consumer won’t be able to go back to business as usual unless he goes through a long period of reduced consumption, deleveraging, and savings, a period during which the majority of production and spending inside the US will have to be focused on capital goods, so as to restore a balanced ratio between the production of consumer goods and the production of capital goods.

At the point when these government stimuli wind down, Keynesian clowns will be jumping out of the bushes left and right, and demand that the government take on more debt and spend more money. But at some point their mindless tirades will no longer appeal to an overtaxed and overleveraged populace. Their ivory tower nonsense will be way too far detached from simple realities.

I would submit that precisely this is the case now. Deficits are larger than ever and are likely to get higher. People are sick and tired of it.

I would like people like Krugman and Delong to answer some simple questions: How much more until you’re happy? Which sum of money borrowed from foreigners and banks, owed by taxpayers, and spent by bureaucrats on goods and services (and your salaries of course) will be our salvation? What’s the magic mark?

The truth is: there is no such number. In fact, every single dollar more is a dollar too many spent by government. There is nothing new to this development. Government spending has been on the rise for at least half a century. The direction couldn’t be more false. The path could hardly be more disastrous. The repetition of past mistakes couldn’t be more appalling. The apathy and ignorance of academia, media and politics couldn’t be more mind boggling, the gulf between illusion and reality more severe.

Tags: deficits, government spending in the US, keynesian