Advancing a Free Society

Keynes Who?

Friday, July 30, 2010

On Forbes.com, Daniel Fisher intreviews Robert Barro about the stimulus:

Sixteen months after the U.S. Congress passed the $787 billion economic stimulus act, unemployment in the U.S. has climbed almost a full percentage point to 9.5%. The ranks of the unemployed include 6.7 million people out for more than 27 weeks, five times the number before the financial crisis started. Home prices in the U.S. are still falling, and foreclosures are running at 300,000 a month.

It's enough to remind some people of 1937, when the Federal Reserve and the Roosevelt Administration rolled back stimulative policies and the economy promptly entered a second nosedive, which lasted until the start of World War II. Nobel Prize-winning economist Paul Krugman has taken the most prominent role advocating this Keynesian view, using his column in the New York Times to warn of a "third depression" if the government follows those who are now "preaching the need for belt-tightening when the real problem is inadequate spending."

Read the rest of Fisher’s interview of Barro on Forbes.com