When will we learn from history? The Keynesians are still working on learning this principle. The last two paragraphs of the April 27, 2013 Wall Street Journal editorial are scary.
“We are now in year five of what has been one of the great experiments in Keynesian economic policy. We were told that if Congress would spend $830 billion more temporarily, and the Federal Reserve would unleash monetary policy, a recovery would begin and rapid growth would resume. Larry Summers, Alan Krueger, Jared Bernstein and their allies on Wall Street got their policy wishes. Their economy has delivered mediocre growth and declining middle-class incomes—though we will concede that the wealthy have done well as the stock market has recovered.
“So now the same Keynesians say the spending blowout wasn’t large or long enough, taxes still aren’t high enough, and monetary policy hasn’t been easy enough. What this economy really needs is a statute of limitations on intellectual denial.”
This seems eerily reminiscent of the statement of the Great Depression’s Secretary of Treasury Henry Morgenthau. As quoted in this blog previously, he said in 1939:
“We have tried spending money. We are spending more than we have ever spent before and it does not work…We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot.” (Quoted from Morgenthau Diary, May 9, 1939, Franklin Roosevelt Presidential Library.)
Again, I must ask: When will we learn from history? Yes, we need a “statute of limitations on intellectual denial.”
Photo Cred:The Causes of The Great Depression / FDR Memorial SiteTony Fischer (CC by 2.0)