Steve Hanke writes on the Keynesian fiscal factoid
According to the Oxford English Dictionary, a factoid is “an item of unreliable information that is reported and repeated so often that it becomes accepted as fact.” The standard Keynesian fiscal policy prescription for the maintenance of non-inflationary full employment is a fiscal factoid. The chattering classes can repeat this factoid on cue: to stimulate the economy, expand the government’s deficit (or shrink its surplus); and to rein in an overheated economy, shrink the government’s deficit (or expand its surplus).
Hanke explains in detail why the facts are different from the factoid, and concludes,
If monetary, not fiscal, policy dominates — as Prof. Friedman concluded — just what is monetary policy telling us? First, the dramatic collapse in the broad measure of money in the U.S. (see the accompanying chart) explains why President Obama’s massive fiscal stimulus packages haven’t worked as advertised. Second, the broad measures of money also indicate that a growth recession — below trend growth rates — will continue.
Go read the whole thing.
Meanwhile, here in New Jersey the governor points out “you are not the money tree”,
You and I, taxpayers all, are the ones stuck with the bill for all the government spending.
