Saturday, September 4, 2010

Keynesians need a Class in Common Sense

I read Paul Krugman’s blog once in a while just to find out what the other half is thinking. Presently he is harping on the need to save our country from another Great Depression with more government stimulus.

So far we have been saved three times from big Great Depressions in the last 8 years.

The first time was when Greenspan and Bush saved us in 2002. The second time was when Bernanke saved us two years ago with 0% interest rates. And the third time was the bailout bonus for bankers.

There have also been little mini rescues such as the housing credit and cash for clunkers to name a few.

Also the government is planning to fund deficits of $1 trillion a year for the next ten years to continuously prevent various other great depressions that might come along.

It seems like preventing great depressions is the major government activity of late.

But Paul Krugman is adamant that this one is for real and we must borrow more money to prevent economic collapse. I assume that along with incurring this monstrous debt, he wants the government to waste the money just like they have done in all the previous rescue attempts.

Paul Krugman sees this as the end of the world but I see it as an opportunity.

I would like to suggest that we end this once and for all.

Let’s decide how much stimulus will stop great depressions for the next 10 years. Let's suppose it is $5 trillion. Then we divide $5 trillion 300 million ways and give $16,000 to everyone.

But for that $5 trillion I would need Dr. Krugman to sign a contract saying that he can’t ask for any more stimulus money for 10 years.

So Dr.Krugman will fund the biggest stimulus of all time.

It will be the most expensive economics class anyone has ever attended.

But he will get a lesson in real world economics. He will learn that:

  • Destroying a currency can't create long term prosperity.
  • Debt can't be eliminated with more debt.
  • Wasteful government spending doesn't create long term private sector job growth.
Some might say that spending $5 trillion to give Keynesian economists a class in common sense is ridiculous.

I say it is money well spent.

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