News flash: This is not 1982, and Obama is not Reagan.
The important difference is this: There was a good reason for the Volcker-Reagan recession: defeating inflation. American voters may not be terribly economically sophisticated, but they sure as heck did notice when inflation went from 13.5 percent to 3.2 percent — in two years.
Obvious Failure of Stimulus Becomes Obvious Even To Economists - Tim Cavanaugh
At City Journal, Guy Sorman notes how quickly the managed-market winds have shifted. When the credit unwind started, the papers, the TV and the newsweaklies declared capitalism dead in just a little less time than it took for Kent Brockman to declare his loyalty to the Space Ants. Less than two years later, you can't buy good press for the stimulus; the economy is frozen solid in August; the nation is rediscovering -- despite the herniated efforts of local, state and federal government -- the virtues of thrift; and if you search for Keynes on the interwebs, all you turn up are headlines like "How Dr. Keynes killed the patient."
How Dr. Keynes Will Kill The Patient - Michael Pento
And here's where the arrogance in Washington really kicks in. Scores of millions of American consumers have made a decision; they have decided on an individual basis, that what is best for them at the current time is to reduce their debt burden. But a few hundred individuals in government believe they know better than the collective wisdom of the entire free market. They have the power to confiscate our savings by leveraging up the public sector. In essence, they are preventing the healing process of de-leveraging from taking place by increasing government borrowing and spending.
It should be stressed that modern-day Keynesians do not argue for simply slowing down the rate of de-leveraging. They clearly seek to--at least in the short term--significantly increase the amount of debt in an effort to boost the aggregate demand in the economy. Then, once the mythical recovery takes hold from government spending, printing and borrowing, they concede it may be time to bring deficits under control. The only problem with this theory is that there is now a significant risk of suffering through a U.S. dollar and bond market crisis in the very near future.
