Sunday, June 12, 2011

The Insanity of government spending

In my previous post regarding Obama and the Keynesian Grail, I offered real life examples that all Keynesians must address if digging ditches with government money actually stimulates 'aggregate demand,' whatever that is.

Now, the Cato Institute offers even more detail to one of my examples, as well as an absolutely devastating graph on the current 'stimulus.'

click to enlarge, double click to reduce
Employment vs government spending
US Employment vs government spending or, the great Keynesian fallacy

The subtlety of multi-variate regressions aside, all Keynesians must explain this graph.

We do not pre-suppose causality. But we do contend that in the virtually incomprehensible complexity of a $15 trillion economy, that trillion dollar stimulus argued by macro-economic theory actually produce some significant gain beyond that of enterprising academics searching for evidence in the hidey-holes of economic data analysis.

If Keynesian stimulus actually works, let us see the obvious outcomes.

Democrats' Tax-And-Spend Insanity -

And in a more detailed inspection of WWII and economist failure, wherein government spending and regulation was slashed in one year and jobs exploded contrary to all Keynesian thought, Government spending and job creation.

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