What We Need Is A Fresh Round of STIMULUS and QE
- Posted by Jeff Carter
- on June 1st, 2012
Jobs report really negative today. I was paging through the Wall Street Journal and looked at all the headlines. I didn’t see one positive one on any economic front from anywhere in the world. The only person in any photo smiling was John Edwards.
How’s that stimulus working now? QE? Hey, I know, it’s the Federal Reserve’s “twist” that will save us.
Back in the 1930′s, the federal response to the poor economic situation was to create a huge federal bureaucracy that we are stuck with today. It was the first attempt at Keynesian policies. It didn’t work then, and it is not working today.
The stock market began to fall out of bed in 1937. The evidence was that the stock market was only good as long as the government was going to buy it. Then, World War Two started and factories that were idle were pushed into production.
This leads people to think that wars are good for economic outcomes, and further leads them down the logical path that lots of defense spending is good for economic output. That logic is terribly flawed.
Even the great Paul Krugman penned an article wishing that aliens would invade Earth so we could come together and fight something. Amazingly dense.
The broken window theory of economics never works. We are always better off without wars or huge cataclysmic events.
So, what is the real answer in this case? It’s not stimulus or more quantitative ease. It’s not twisting. The answer is counter intuitive.
The American government needs to stop spending so much money. It needs to drastically shrink in size. That’s good “austerity”. Then, it needs to tax less. The private sector will fill the voids.
Instead, we get Luddite’s like Tom Harkin proposing a 220% increase in minimum wages for workers that get tips.
Can’t anyone think out of the box anymore? I know a gazillion entrepreneurs that can. Please turn over the reins of the economy to them. Then, get out of the way.
tip of the hat to The Daily Crux
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)
Tags Cloud$100 billion $GS Angel Funding Ann Althouse Bail outs Basketball Bond Yields Butter Catholic Chicago Humanities Festival Code Pink Davidson Detroit Due process Economic surplus Emanuel Floor trading Free society Funding GM Golden Rule HES Hillary Clinton IEX Kitchen Liberty Island Lieutenant Lou Market clearing Mayor Rahm Emmanuel Mission Bay MS Ohio Optimism Price Limits Pro-Life ProFlowers Quillan race Siskel speculation Takaful taxes Van Gogh Wisconsin Judge Race
Becker Posner Blog
Ben Horowitz Blog
Betting the Business
Black Line Review
Blue Sky Innovation
Both Sides of the Table
Business News Network
Chicago Booth Graduate School of Business
Cooler By The Lake
Daily Economic Release Calendar
Doug Ross @ Journal
Economics of a POW Camp
Foundation for Families
Garden and Gun
George Stigler Institute
Good Beer Hunting
Great Food In Chicago-Steve Dolinsky
Hyde Park Angels
Illinois College of Business
John Taylor's Blog
Legal Issues in Angel Funding
Macroblog-Federal Reserve Bank of Atlanta
Microbrews in Chicago
Mike And G
Milton Friedman Institute
National World War Two Museum
Notes From Underground
Ronald Coase Institute
Senate Banking Committee
The Alpha Pages
The Big Picture
The Clubber Fund
The Daily Crux
The Grumpy Economist
The Jack B Show
The Minimalist Trader
The Musings of The Big Red Car
The Polsky Center
The Streetwise Professor
Tough Love Marketing
US Federal Reserve Bank
US House Financial Services Committee
World War Two Blog