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