Friday, October 30, 2015
Hillary and Dems will argue without Barack our economy would be like 1933
What Republicans really need is something simple and absorbable as an attack ad that juxtaposes on the left Barry’s (by then) almost 8-year reality with what might have been, on the right, given what Republicans recommended from early 2009 on.
Obama has been an abject failure when it comes to the economy. He has presided over perhaps the largest stimulus in the history of the West, and it is not just the $800 billion official stimulus.
In economics government deficits by definition stimulate. Since September 2008 the national debt went from $10 to $18.4 trillion, meaning a stimulus of $8.4 trillion.
And the base money supply was quadrupled from $900 billion to over $4 trillion. If that isn't the most massive stimulus in history, I don't know what is, and still growth has been marginal.
This certainly shows that Keynesianism doesn’t work, but it's actually far worse. Any system that is dynamic, including an economy, needs to continuously adjust, and to do that it needs to be flexible.
Indeed, just after the crisis I wrote an article analyzing among other things how distorted the economy became during the 2000s housing boom, and the adjustments that it had to go through, including particularly its banking system. I recommended the reins of regulation be eased so that the economy could adjust.
The Obama administration did the exact opposite, it began introducing some of the most draconian sets of regulation seen in a long time, including in the banking system where adjustment and flexibility were most necessary.
I suspect that with the new regulations since the crisis we've finally reached a condition of complete gridlock, so obviously the economy’s behavior is no longer what the textbooks say it should be.
Instead we've had sluggish growth despite all of the stimulus and new base money.
As I said at the beginning, Obama has been an abject failure when it comes to the economy. Hillary is welcome to it.