Don't b.s. me, bro

CNBC legend Rick Santelli — who understands how capitalism and free markets work better than 90% of Congress and probably every single person in today’s White House — takes precocious blowhard Ezra Klein to school on live TV.

Unfortunately, the idea that government creates jobs and economic growth is believed not just by Klein but by millions of people who read these same incorrect analyses from him and others, day after day after day.

Now that I have lulled you into a false sense of security with my various unemployment, GDP, and other economic indicator summaries, it is time to alienate my 80% Democrat and 19% Republican readers and pander to my 1% Libertarian reader(s?). Heck, we’ll see if I can’t alienate him (them?) as…

Long, but good. You should read it.

(via nomosshere)

This link is really interesting for fans of Economics. Keynes apparently said that stimulus should be used to encourage “private investment, as opposed to big government spending, as the source of durable job creation”.

So it’s not just about throwing money at well-connected business interests, like clean energy. Those industries can’t take off until the market is there for them, anyway. And the market isn’t there because our usual energy source are still affordable and plentiful.

Quoting:

Didn’t Keynes advocate temporary deficit spending in a recession?

Keynes wanted deficits to be cyclical and temporary. He wouldn’t have been in favor of efforts to raise tax rates in a recession to eliminate deficits. He viewed that as suicidal. He was opposed to the idea that governments should balance the budget during a downturn, and advocated running short-term deficits to spur the economy.

The type of stimulus he advocated was very specific. He said it should be geared towards increasing private investment. He viewed private investment, as opposed to big government spending, as the source of durable job creation. He also said that the deficits should be self-liquidating, so that the increased economic activity caused by the stimulus inevitably generated a combination of extra tax revenues and lower unemployment payments. With higher revenues and lower outlays, the deficit would disappear.

The Obama administration’s main objective, in the name of Keynes, is boosting consumption. That sounds very different from the focus on investment that you say Keynes advocated.

Keynes didn’t favor at any time that I know spending to increase consumption. He didn’t want that, and in fact he believed that was taken care of by the marketplace.

Keynes wanted to increase employment by smoothing the amount of investment through the up and down parts of the business cycle. He knew that recessions cause a decline in investment, and that the fall in investment caused unemployment to rise. So he wanted the government to stabilize investment through a recession.