Economic Ignorance

Here is the introductory bit from the latest Paul Krugman op-ed in the NY Times:

The good news is that the American Recovery and Reinvestment Act, a k a the Obama stimulus plan, is working just about the way textbook macroeconomics said it would. But that’s also the bad news — because the same textbook analysis says that the stimulus was far too small given the scale of our economic problems. Unless something changes drastically, we’re looking at many years of high unemployment.

And the really bad news is that “centrists” in Congress aren’t able or willing to draw the obvious conclusion, which is that we need a lot more federal spending on job creation.

About that good news: not that long ago the U.S. economy was in free fall. Without the recovery act, the free fall would probably have continued, as unemployed workers slashed their spending, cash-strapped state and local governments engaged in mass layoffs, and more.

The stimulus didn’t completely eliminate these effects, but it was enough to break the vicious circle of economic decline.

So... who does the American public believe, the talking heads with no background in economics -- the one's shouting 'socialism' and 'the deficit is too big' and 'I see inflation coming!' or the Nobel prize winning economist Paul Krugman. Obviously they believe the talking heads.

It is tragic that under-educated Congress men strangled the stimulus. It is even more tragic that Obama, after winning a very substantial mandate, chose to be timid and not call for a bigger stimulus bill. He let his Wall Street paid advisors -- you know, the companies that got nearly a trillion dollars of tax payer money -- to tell him that it wouldn't be 'politically appropriate' to ask for more money to stimulate the economy, oh and by the way, we need to hurry up the next hundred billion dollar bailout for Wall Street. Right, why waste money simply reviving the economy after Wall Street knocked it out? Put that money where it is really needed, put it into the billion dollar bonuses on Wall Street.

This is all so tragic. If you had told me 2 years ago that this would have occurred I would have told you that you were crazy. Sadly, I'm the one looking on gaga-eyed and bewildered. Life is even more bizarre than fiction.