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Denver Post Editorial: Stop the insanity - no more Keynesian economics

The newest economic numbers are far worse than anyone - meaning the brilliant economists who called for massive government spending in the face of the recession - ever anticipated. New home sales and existing home sales fell dramatically in July. And now the 3.7 percent economic growth in the second quarter that the White House hailed as proof that the stimulus worked was revised down to a sickly 1.6 percent. The folks at the Denver Post are not happy and they published an editorial that said it's time to stop this insanity: it's time to scrap the Keynesian economics:

It looks like the Keynesian theory of infusing massive amounts of government cash into the economy has fizzled. And while many other factors also explain the lack of economic energy, the bottom line is that nearly everyone -- from consumers to business owners to government decision-makers -- faces tremendous unknowns.

Worries about maintaining jobs and salaries stymie consumers. Businesses are holding back money. Economists also say that likely changes to tax laws and new regulatory environments are having a chilling effect.

And that uncertainty continues to hobble our consumer-generated economy.

The news is dire and the message -- we hope -- is simple: We need clear-eyed action going forward. Kicking around political footballs when there is a chance the country could slip back into recession cannot be tolerated...

We need our lawmakers in Colorado, and those who represent us in Washington, to start articulating specific proposals meant to restructure government to something we can afford.


You can read the entire editorial here.

Thanks to Ed Morrissey at Hot Air for bringing this editorial to my attention because what it says is indeed true. Our economy is not just anemic, though. It's limping along so weakly that it looks like it's going to slide backward. For example, this post provides a collection of charts that illustrates exactly how bad our housing market is. Last week, we heard that both new and existing homes sales were way off, but one look at the charts shows that the housing market is far worse than even those numbers show.

Yes, we need homes sales to find their equilibrium between real supply and demand, but it looks like home values will have to fall far more than anyone originally anticipated before we hit the bottom. And no matter how far they fall, if people don't have jobs or if they don't have any confidence that the economy will begin to grow soon, we will continue to have fewer and fewer people buying homes in the coming months.

So, how do we do get the economy to turn around? We need to unleash the free market by reducing government spending, regulation, and onerous taxes so entrepreneurs are empowered to create jobs. But you won't hear the White House advocate policies that will do that for two main reasons:

One, President Obama isn't interested in helping the economy. He's interested in controlling the economy. Remember when he said he wanted to eliminate the boom and bust cycles our economy experiences? There is only one possible way to do that. Get rid of the free market and implement a command economy, otherwise known as a centrally planned economy. In a command economy the government controls all aspects of production and plans what will be produced, how much, and when. The problem is that command economies don't account for demand, only supply. If the population's demand is for vast quantities of meat, vegetables, and milk, but the government planned out its economy with a priority on producing bullets, guns, and tanks, well, you can imagine the problems that can occur. The Soviet Union utilized this kind of economy. It eliminated all the boom and bust cycles, that's for sure. The problem was the only thing the Soviet Union's economy did was bust and bust some more.

Two, the historians and economists who have the president's ear insist we should use the policies that FDR applied during the Great Depression to guide us out of any recession or depression. These same historians and economists, however, refuse to discuss whether those policies were actually effective in getting us out of the Great Depression considering that it lasted a decade. They also refuse to explain why Warren Harding's reaction to the 1920 depression, which consisted of dialing back government spending and reducing the deficit, limited the 1920 depression to one year, after which the economy thrived and grew under Calvin Coolidge's leadership until the next cyclic economic downturn happened ten years later (recessions/depressions work on 10 year cycles, generally).

Since many historians and economists are silent when it comes to contrasting the 1920-21 depression with the Great Depression (because many of them are liberals and analyze economics through a political lens), I invite you to watch this video of Thomas E. Woods from the Mises Institute who does a great job contrasting these two economic theories on recessions/depressions. This is information every American should know:

Originally posted at KimPriestap


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Comments (28)

Yes, stop all of this kenya... (Below threshold)
Nine Fourteen:

Yes, stop all of this kenyanesian economics. I bet Barry doesn't throw his personal cash like he does ours.

Wow - I looked all through ... (Below threshold)
Dane:

Wow - I looked all through the Denver editorial and didn't find the word "insanity" or anything close to it.

So your headline "Denver Post Editorial: Stop the insanity - no more Keynesian economics" is just more right wing bullshit.

Like the post earlier today suggesting that three aid workers were killed because they were Christians. There's no evidence that was the case, just as there is no evidence that the Denver Post editorial board considers the current economic policies "insanity".

Is the truth just not going your way? Is that why you have to lie in your headlines and mis-characterize facts in order to form a hate-filled reality that matches more closely the rage you feel inside?

Just curious.

The editorial is critical, no question. But your over-the-top lying headlines are no where close to representing the truth or the facts.

Hate-filled rage relies on lies and over-the-top bullshit. I guess the right wing is succeeding in that regard.

Cheers! Have a nice Sunday!

Wow - I looked all... (Below threshold)
Wow - I looked all through the Denver editorial and didn't find the word "insanity" or anything close to it.

So your headline "Denver Post Editorial: Stop the insanity - no more Keynesian economics" is just more right wing bullshit.

Clearly you do not understand something. I DID NOT quote the source, which was why there weren't any quotation marks around the word insanity. I was interpreting what the editorial was saying.

I'm really getting tired of explaining such elementary concepts.

Shorter Dane: The economy i... (Below threshold)
Drago:

Shorter Dane: The economy is going gang-busters!! 10% unemployment (with actual unemployment numbers approaching 18% for the long-term unemployed and those who have given up) is actually "Funemployment"!! Woohoo. Happy days are here again!

Things would be even better if those Republicans (who had no power to stop anything) hadn't stopped all those bills that were not stopped!!!


Li'l obambi told us the stimulus bill he demanded, if passed, would rescue the economy and keep unemployment under 8%. Hilariously nicknamed "sheriff joe" (by none other than our fab-u-lous CIC) told us that the stimulus had worked better than anyone dreamed!

Heckuva job obambi/sheriff joe/dane et al!

Heckuva job!

It's becoming evident that ... (Below threshold)
LeBron Steinman:

It's becoming evident that dense "Dane" must be a Lee Ward sock. No one else could exhibit such single minded stupidity and reflexive, ,thoughtless contrariety.

"Economists also say that l... (Below threshold)
GarandFan:

"Economists also say that likely changes to tax laws and new regulatory environments are having a chilling effect."

THEY LIE! At least according to our resident master economist Dane. After all, we shouldn't wet our pants. Barry will get around to fixing the economy, just you wait. Why he's gonna pour BILLIONS into small businesses and get them up and running! Yep! According to Dane we'll be up and running before the November elections. You'll never know there was a recession. Just like Cash For Clunkers and the 1st Time Homebuyers Programs. Man, did they ever turn around those markets. Barry is a fucking economic genius.

Just listen to Dane. Right Dane?

It is more than a little di... (Below threshold)
Rick Caird:

It is more than a little difficult to understand Danes' complaint and accusation of "right wing bullshit".

The editorial was quite clear:

"It looks like the Keynesian theory of infusing massive amounts of government cash into the economy has fizzled."

"The debt has reached a level that's endangering national security"

"We need our lawmakers in Colorado, and those who represent us in Washington, to start articulating specific proposals meant to restructure government to something we can afford."

"In Colorado, that means ideas for balancing the budget without decimating K-12 education, higher ed and social services; and in Washington, that means deficit reduction plans"

I suppose Dane could make a weak argument, the editorial is not calling continuing the Keynesian economics to be insanity. Would Dane accept "grave error". Or, has Dane simply read the editorial only looking for the word "insanity" and missed the whole meaning of the editorial. I suspect that is the explanation.

Back during the "bad old da... (Below threshold)
cirby:

Back during the "bad old days" of the Bush economy, growth figures were some times revised downwards, some times upwards - but always by much smaller amounts (5.8% to 5.0%, or 1.6% to 1.8%). The Obama folks have been missing by one hundred percent or more (1.6% actual, 3.7% predicted). They're always "surprised" by the always lower growth numbers - and the higher unemployment numbers.

"Surprised" should happen once or twice. But on a monthly basis, for a year and a half, when you have full control of both houses of Congress, plus a President who will sign pretty much anything?

Someone needs to fire the people making those estimates - they're obviously idiots. Then, they need to fire the people who keep believing them.

No cirby, the word most oft... (Below threshold)
GarandFan:

No cirby, the word most often used by the MSM and Al-Reuters is "unexpected".

The freaking liberal idiots dream up a number to sell to the proles, then when that number misses by a wide margin (as you point out), the end results are "unexpected".

Private business would have fired the "economists" the liberals have been using long ago. Guess it's hard for them to locate other Kool Aid drinkers to take their place.

But don't worry, Dane says Barry is going to make everything better. Any time now. Just wait. Any time.

Obviously, a more accurate ... (Below threshold)
Sky Captain:

Obviously, a more accurate headline would be "In Which Dane Picks Nits And Plays The 'Hate' Card."

Better yet, the actual headline of the editorial would be enough to cause Dane to go ballistic. :-)

Of course, Dane is only one playing of the race card away from Lee-Who-Must-Not-Be-Named as it is....

"And now the 3.7 percent ec... (Below threshold)
Les Nessman:

"And now the 3.7 percent economic growth in the second quarter that the White House hailed as proof that the stimulus worked was revised down to a sickly 1.6 percent."


B..b..but Dane said this:
" Of coure, you guys watch Fox News. Of course you don't know what's really going on.

The massive stimulus package boosted real GDP by up to 4.5 percent in the second quarter of 2010...

19. Posted by Dane | August 24, 2010 5:13 PM |"

Whoopsie Dane! Guess you have to revise down your talking points.

Dane doesn't let 'real' fac... (Below threshold)
GarandFan:

Dane doesn't let 'real' facts bother him. The only 'facts' Dane is concerned with are those uttered by his Obamassiah.

What Obama says, therefore IS! Right Dane?

Your economic analysis is a... (Below threshold)
ryan a:

Your economic analysis is a travesty. Pure reactionary nonsense, as usual.

"So, how do we do get the economy to turn around? We need to unleash the free market by reducing government spending, regulation, and onerous taxes so entrepreneurs are empowered to create jobs."

The "free-market" isn't some magical force that fixes all social, political, and economic problems. It's an idea--and one that doesn't exactly have a lot of empirical basis behind it. Seriously, you might try reading a little beyond Hayek, Mises, and Friedman (if you have even read them).

Feel free to point out a historical example of ANY society with a pure free-market system. Oh that's right, you can't because there is none.

So, how do you propose to "unleash the free-market," Kim? Seriously. How do you propose to fix the entire economy? By getting rid of all regulation? By stripping away all government involvement? By getting rid of all financial institutions? By just letting the private sector self-regulate? Really? You have no idea what you're talking about.

Do you really think that the free market will take care of of all coercion, exploitation, corruption, and inefficiency? How? You don't think that there are ANY problems with the private sector? You think that they're all a bunch of perfect angels who act out of good faith and fairness?

State-led economies (read socialism) and capitalistic economies BOTH face problems with inequality, corruption, coercion, inefficiency, and exploitation. Having faith in free-markets does not simply absolve capitalism of its faults. On the flip side, a blind faith in the some supposed benevolent state economy is just as ridiculous.

The real problem that we face is the concentration of too much power in either the hands of government OR private enterprise. The idea that capitalists regulate themselves due to a magical free-market is about as politically naive as it gets. This kind of thinking requires and almost religious belief in market forces. It's funny how you rant about the ideological nature of "liberals," but your views are as polemic and ideological as anything out there (just from a different perspective).

"Remember when he said he wanted to eliminate the boom and bust cycles our economy experiences? There is only one possible way to do that. Get rid of the free market and implement a command economy, otherwise known as a centrally planned economy."

Now you're really reaching. You REALLY think that the current administration is trying to recreate the economic system of the former USSR? You can't be serious.

Yes, some people are pushing for Keynesian measures. Other economists disagree. But you have to be able to differentiate between these different positions without overreacting and screaming about socialism. But then again, you are parroting the logic of the Mises folks, who think that anyone to the left of Milton Friedman must have a Che Guevara poster hidden in their house somewhere.

"Since many historians and economists are silent when it comes to contrasting the 1920-21 depression with the Great Depression (because many of them are liberals and analyze economics through a political lens), I invite you to watch this video of Thomas E. Woods from the Mises Institute who does a great job contrasting these two economic theories on recessions/depressions."

LOL

That's the funniest sentence on this whole post!!! You argue that some economists look at these issues through a political lens (GASP), and then you refer your readers to a video from the Mises Institute, that bastion of objective thinking!!! Irony abounds.

I sense a trend here. You already tried to cite Forbes as some kind of objective observer on one of your last posts, and now this guy. I can't wait to see what's next.

Ryan A -After a wh... (Below threshold)
JLawson:

Ryan A -

After a while, it comes down to "Is this going to work, or isn't it?" All the rhetoric, all the handwaving bullshit, all the rah-rah cheerleading, isn't going to take a concept that visibly isn't working anywhere near how it was supposed to and make it perform above expectations.

People loved complaing how bad the economy was under Bush. After going through the Carter admin (which was a hell of a lot worse than anything under Bush) I'm HOPING things will get as good as they were under Carter.

I don't give a damn where the idea comes from - as long as it has a chance of working, and doesn't make the situation worse. The 'stimulus' didn't work as it was supposed to. Cash 4 Clunkers didn't help the auto industry long-term. Now Biden wants to throw more money out as a second stimulus package. Never mind the fact that we're $14 tril in the hole, going to add another $1.6 tril this year, and have trillion dollar deficits programmed for the next decade - it's hard to argue that what the Dems are doing now is actually working.

Well, working to make things better. If you're looking to fubar an economy, it's working just fine...

JLawson,"After a w... (Below threshold)
ryan a:

JLawson,

"After a while, it comes down to "Is this going to work, or isn't it?" All the rhetoric, all the handwaving bullshit, all the rah-rah cheerleading, isn't going to take a concept that visibly isn't working anywhere near how it was supposed to and make it perform above expectations."

Look, I am by no means saying that what the current administration is doing is just dandy. I think that a LOT of economists are scrambling to figure out what to do, and they have been for the last couple of years. Most economists THOUGHT they had the system fairly wired until this recent crash came around, after all.

What I am arguing is that putting blind faith in the free market ideology of people like Thomas Woods. Why? Because markets don't automatically fix all social problems, and they certainly do not eliminate the possibility of coercion, manipulation, and corruption.

"People loved complaing how bad the economy was under Bush. After going through the Carter admin (which was a hell of a lot worse than anything under Bush) I'm HOPING things will get as good as they were under Carter."

People from one side of the spectrum blamed Bush for EVERYTHING. Now, we have the reverse happening--and to me the rhetoric looks about the same. Now it's ALL Obama's fault. Right. That's a convenient political line to toe, but in my opinion there are a lot more hands in this, and the responsibility for what we are dealing with certainly spreads across party lines.

But here's what I think: the economic problems that we are facing now have been building for a LONG TIME, and blaming just one side out of political expediency misses that point. Yes, the current administration is pushing for more Keynesian economics...but don't forget the fact that Bush wasn't exactly reducing the size of government either. Despite people like Kim screaming "socialism" all the time, the difference between the last admin and this one is a matter of degrees. The first stimulus came under Bush's watch, and Obama ratcheted that up (under the advice from certain economists).

Kim also has to do a little more reading outside of Hayek and Friedman so that she realizes there is a lot more to the story than what they tell. And simply equating Keynesian economics with soviet era socialism is just stupid.

"I don't give a damn where the idea comes from - as long as it has a chance of working, and doesn't make the situation worse."

Ya, I agree with you. But that doesn't mean it makes sense to just blindly accept the wishful ideas of free markets ideologues like Thomas Woods (as Kim is doing). I think we all have to be open to different ideas. At the same time, I really think that when it comes to macroeconomics, many of the "experts" are kind of at a loss--and people are trying to figure out ways of dealing with this situation. Scary, but that's what seems to be the case.

"Never mind the fact that we're $14 tril in the hole, going to add another $1.6 tril this year, and have trillion dollar deficits programmed for the next decade - it's hard to argue that what the Dems are doing now is actually working."

Agreed. Things are not going well, and it doesn't look like we're pulling out of this anytime soon. But I'm not going to just pretend that this is something that we can all blame on Democrats. There are a LOT of hands in this. In many ways we have been building toward this FUBAR economy for a few decades. Pinning all of this on one administration is really pretty silly.

"Well, working to make things better. If you're looking to fubar an economy, it's working just fine..."

The sh*t hit the fan under the Bush administration, but by no means do I think it makes sense to simply blame Bush for everything. That would require ignoring everything that happened BEFORE Bush. You see, economic systems don't just work on convenient four year cycles.

Things haven't gotten any better under Obama--and just blaming Obama for everything is really simplistic as well. There are some serious problems with our economic system, that's what we all know. And they are problems that extend at least back to the 1970s. What we don't know is how they can be fixed.

My main point is that more of this partisan "my team is better than your team" crap doesn't really help. We're basically going to be in political gridlock if this keeps up through the midterms. More people need to realize that economics isn't a religion, and just placing blind faith in the words of certain experts isn't going to help anything.

Correction. This:... (Below threshold)
ryan a:

Correction. This:

"What I am arguing is that putting blind faith in the free market ideology of people like Thomas Woods."

Should read:

"What I am arguing is that putting blind faith in the free market ideology of people like Thomas Woods makes no sense.

Bush screwed up big time no... (Below threshold)
JustRuss (mobile forgive mistakes please):

Bush screwed up big time no doubt, but many many of the contributing factors which led to the housing bubble are democrat ideas and weak republicans putting "bipartisanship" above doing what's best for this country.

Bush Sr AND jr are milquetoast conservatives who put us in danger. Part of that may have been due to spending their political capitol on middle eastern wars rather than economic and social issues. What it boils down to though is that the auto, banking and housing industries should have been allowed to fail and go bankrupt. It would have hurt

(continued on my stupid pho... (Below threshold)
JustRuss (mobile forgive mistakes please):

(continued on my stupid phone) ...would have hurt more in the short run but those "magical"(/sarc read PROVEN) market forces would have filled the holes and healed the wounds much faster. This keynsian bs is prolonging the agony and making it worse for everyone in the long run. The economy was headed off the cliff either way, all we have done is fixed up the bus and stopped to add more passengers while handing out blindfolds. The bus is still going over but now it hurts many more peoplr.

I like to think BUSH jr wanted to give us time to prepare for the inevitable, Obama put blinders on and ran with bush's mistake.

%? 3$1 1?4 %3 -11;- &'' +1 $&91 4"?1 %-

(grrcont) in the end we spr... (Below threshold)
JustRuss (mobile forgive mistakes please):

(grrcont) in the end we spread the pain over more of the population hoping it would be less. But intead it got worse so it's being masked by medication (unemployment extensions and other, social type programs).

but then liberals are all about socializing everything.

Hey Russ, So you'r... (Below threshold)
ryan a:

Hey Russ,

So you're a believer in the power of the market to cure everything? What do you base your beliefs on? What, in your view, has proven the efficacy of markets to take care of all problems in the economy?

I think it's kind of funny ... (Below threshold)
ryan a:

I think it's kind of funny to all of a sudden see all these new converts to the Austrian School of Economics.

But, I suppose once Greenspan admitted the fact that the "free market" isn't as perfect as Ayn Rand would have everyone believe, people needed a new economic church to join.

"So, how do we do get the e... (Below threshold)
Jeff L:

"So, how do we do get the economy to turn around? We need to unleash the free market by reducing government spending, regulation, and onerous taxes so entrepreneurs are empowered to create jobs."

There is the problem right there. No real solutions from the right. Could you be a teeny bit more specific with your economic fixes. What specific government spending are you going to reduce? What regulations are you going to change? Who's or what taxes are you going to reduce? How are you going to deal with the national debt by cutting more taxes?

It's too bad that nobody on... (Below threshold)
Tsar Nicholas II:

It's too bad that nobody on Main Street actually reads the Denver Post, or for that manner any other legacy newspaper.

I'm not a believer in 100% ... (Below threshold)
JustRuss (mobile forgive mistakes please):

I'm not a believer in 100% free markets being self regulating and solving all the problems. However it is made up of millions of business owners and investors who know better than career politicians what they need to make it work. The current administration has a strangle hold on the market and are not allowing it to self correct.

Russ,"I'm not a be... (Below threshold)
ryan a:

Russ,

"I'm not a believer in 100% free markets being self regulating and solving all the problems."

Then we agree on this point.

"However it is made up of millions of business owners and investors who know better than career politicians what they need to make it work."

That's a good point. And I agree with you that too much power/control in the hands of the state can be a serious problem. History has shown that to be true on many occasions. At the same time, there is no reason to assume that the private sector is free from corruption, coercion, and exploitation--it's not.

One issue to keep in mind is the fact that these "career politicians" often have close connections with people in the business world...so there isn't some clear separation between government and business by any means. And that's where these discussions about the market and government get a little complicated. Some of the free market folks seem to assume that there is some clear separation between the private sector and the government, and that's definitely not always the case.

Ryan A makes the ludicrous ... (Below threshold)
Rick Caird:

Ryan A makes the ludicrous post:

"I think it's kind of funny to all of a sudden see all these new converts to the Austrian School of Economics.

But, I suppose once Greenspan admitted the fact that the "free market" isn't as perfect as Ayn Rand would have everyone believe, people needed a new economic church to join."

Clearly Ryan understands neither Rand nor Mises. Ryan must be a lefty. He just spouts off.

There is insanity afoot in ... (Below threshold)

There is insanity afoot in our our beloved fraternal republic's halls of gummint, that's for sure -- and even more in these columns, manifesting markedly in FasciSSocialist Psychosis suffering lower case scandinavians. But none of the insanity seen here matches that written by the (for decades already slavishly Left-Wing) Denver Post's editorial writer's Keynesian suggestion we -- or anyone else -- has a "consumer-generated economy."

And while you're talking about "command economies" and the so-called "great depression?"

That almost sixteen years long nightmare, at its depth in 1936-37 and relieved only by the death of its principle architect and the retirement of his heir and by the consequentially booming Eisenhower 1950s, should more properly be called the Roosevelt Depression.

The initially effectively German Socialist Workers' Hitler-allied and later absolutely Soviet Union-lapdog Roosevelt's fascistic and as-often Ponzi-Scam-like policies, permanent salting of every bureaucracy with the "Democratic" potty operatives whose successors control them still -- and absolute corruption of our nation's courts -- ensured his depression's endurance, set up the machinations by way of which every treasonous "Democratic" potty "administration" ever since has hastened our nation's spiraling toward totalitarian tyranny -- and that gave birth to the mobbed-up, murtadd-Muslim, Mussolini-modeled modified-Marxist monster, whose apparatchiks are right now besquatting and bemanuring our once most hallowed house.

"Clearly Ryan understands n... (Below threshold)
ryan a:

"Clearly Ryan understands neither Rand nor Mises. Ryan must be a lefty. He just spouts off."

Wow, Rick. What searing, riveting commentary! Bravo! Now, do you have an actual point to make? Or is this all you got?




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