A cogent case for the end of Keynesianism...

[Lukey]

By the immensely astute Jeffrey Snider:

It's an amazing state of affairs, that seven full years after the official end of the Great Recession we can't move beyond "stimulus." Some economists and policymakers prefer instead to marvel at only that length of time, an unusually long period of expansion without cyclical interruption. Recessions before the 1990's used to be more frequent, so the lack of one since 2009 is for these people success. The problem is the word "expansion"; though the NBER hasn't declared a cyclical peak during all that time what did occur wasn't in any way like a recovery or even modest growth. Thus, there continues to be great angst about "stimulus" and its more recent and more appropriate twin - stagnation...

If the problem is money, and the credit and funding markets curves prove without doubt that it is, then the answer is stable money. The eurodollar system, as if the past ten years hasn't already shown, is no longer workable. "Stimulus" by its very nature is a status quo option, a temporary injection meant to buy time until likewise temporary negative factors dissipate. Again, the fact that seven years later authorities all over the world are still talking about, and actively experimenting with, more "stimulus" shows that temporary doesn't apply and never did. The answer to the world's economic problem is in the eurodollar's replacement.

There is enormous potential if it were ever done and done correctly. Having been suppressed by financial and monetary irregularity for so long, there is pent up demand that would be, in my view, unleashed should monetary stability ever return; a real recovery that might even make the Reagan recovery of the early 1980's look small. The primary impediment is policymakers and the governments that support them no matter what. That is what the bond and funding markets are saying; that governments will never change, and that "stimulus" is all that will ever be allowed, over and over and over again. Hope is being squeezed out of every curve by an ideology that immorally refuses to wake up.

http://www.realclearmarkets.com/art...on_to_follow_prolonged_stagnation_102264.html

 

[Arkady]

By the immensely astute Jeffrey Snider:

It's an amazing state of affairs, that seven full years after the official end of the Great Recession we can't move beyond "stimulus." Some economists and policymakers prefer instead to marvel at only that length of time, an unusually long period of expansion without cyclical interruption. Recessions before the 1990's used to be more frequent, so the lack of one since 2009 is for these people success. The problem is the word "expansion"; though the NBER hasn't declared a cyclical peak during all that time what did occur wasn't in any way like a recovery or even modest growth. Thus, there continues to be great angst about "stimulus" and its more recent and more appropriate twin - stagnation...

If the problem is money, and the credit and funding markets curves prove without doubt that it is, then the answer is stable money. The eurodollar system, as if the past ten years hasn't already shown, is no longer workable. "Stimulus" by its very nature is a status quo option, a temporary injection meant to buy time until likewise temporary negative factors dissipate. Again, the fact that seven years later authorities all over the world are still talking about, and actively experimenting with, more "stimulus" shows that temporary doesn't apply and never did. The answer to the world's economic problem is in the eurodollar's replacement.

There is enormous potential if it were ever done and done correctly. Having been suppressed by financial and monetary irregularity for so long, there is pent up demand that would be, in my view, unleashed should monetary stability ever return; a real recovery that might even make the Reagan recovery of the early 1980's look small. The primary impediment is policymakers and the governments that support them no matter what. That is what the bond and funding markets are saying; that governments will never change, and that "stimulus" is all that will ever be allowed, over and over and over again. Hope is being squeezed out of every curve by an ideology that immorally refuses to wake up.

http://www.realclearmarkets.com/art...on_to_follow_prolonged_stagnation_102264.html

Unfortunately, as you know, we've endured what is possibly the longest period of government shrinkage in history, in real per capita terms. That was at the exact time that all our best economists were saying we should grow government spending to compensate for the collapse in aggregate demand. We instead listened to the supply-side dimwits, with predictably mediocre results.

 

[Lukey]

Unfortunately, as you know, we've endured what is possibly the longest period of government shrinkage in history, in real per capita terms. That was at the exact time that all our best economists were saying we should grow government spending to compensate for the collapse in aggregate demand. We instead listened to the supply-side dimwits, with predictably mediocre results.

As Snider adroitly points out - eight years of ZIRP and $10 trillion in deficit spending is an immense (and ongoing) economic "stimulus" (by all traditional measures). The idea that the US is operating under anything even resembling budgetary "austerity" is such sheer lunacy (which tells us all we need to know about you and "all our best economists") that is effectively renders you unserious on the topic.