Paul Krugman was a False Prophet

Some claim that President Obama sacrificed restoring the economy to get Obamacare through Congress. Others claim that he didn’t sacrifice anything, that he really did not know what to do, and that Obamacare was simply a diversion. Neither have defined this time as it will eventually appear in the history books.

It wasn’t that he didn’t know what to do. It was the he believed so much the theory perpetrated by liberal economists like Paul Krugman that it was the Republicans who got it wrong in the Great Depression. They held back FDR from going BIG and from the ensuing undisputed greatness he would have achieved. The President believed these heathen prophets when they told him to spend trillions and then to hold tight and watch the miracle happen.

A diversion, perhaps….this magical incantation needed time to stew. Give the people bread in the Coliseum. They will be happy with the spectacle, You will be revered in History as the first President to have provided universal coverage, and in the mean time, these sorcerers of classical Keynesian economics will have the time to do what their earlier brethren were kept from accomplishing in history, prove Keynes RIGHT! A pithy seduction indeed….

It just so happens that their concoction was wrong. No stimulus, not even one several trillions large that would indebt America’s grandchildren and their grandchildren, could spend America’s way out of our credit collapse. It was a counterfeit messiah.

The President fervently thought his advisors had it right and that all that was needed was time. We see it all the time on American Idol and X Factor, these singers that come on stage believing to their depths that they can sing. And when the judges simply say no, these would be idols’ faces sink into the shock of disbelief.

QE1 was the initial song. QE2 was the singer begging to have a second shot at glory because he just knows he can do better. Now we have QE3. Its purpose is not to continue the classical effort. No that false dream is long over. Its sole goal now is to hold course until America fights its own way out of our depression in spite of our now $16 trillion-dollar debt. Its purpose is to take over the bread-feeding role and to appease the American public that all is ok through this election cycle. Its job is to somehow hold the West together until another crisis hopefully shocks us out of our stagnation.

So, not surprisingly, the President was caught off guard during the first debate by the weight of this reality. No matter….by round two, both actors were in fighting form and the hopes of America were restored. On to the election…

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Filed under American Governance, American Politics, Economic Crisis, U.S. Monetary Policy

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