Krugman's "FOO Theory of Investment"

This is quite funny. But it brings tears to your eyes because, sadly, it is so true. Politics in America is this messed up because right wing politicians and commentators are either this ignorant of economic theory or this willful in ignoring basic facts about the economy...

From Paul Krugman's NY Times blog site:

The FOO Theory of Investment

It is now a firm article of faith, not just on the hard right, but among many Serious People, that business investment is depressed because of FOO — Fear of Obama.

But it just ain’t so. Investment has been growing quite fast since the economy bottomed out; it’s still low, but that’s what you’d expect given the fact that the economy is still depressed and awash in excess capacity. Brad DeLong has a good chart:


FOO is, of course, sort of the dark side of the Confidence Fairy.