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"Boneheaded Stimulus Never Works"

Larry Kudlow puts to words what should be patently obvious to every sentient being by now:

With a flamboyant downgrade of the outlook for economic growth, jobs, and profits, Wednesday’s 280 point Dow plunge to launch the so-called June stock swoon is a warning shot across the bow.

[…]

The economy now looks like a Government Motors engine that’s stalling out. Or perhaps, with energy and food inflation, and housing deflation at the same time, the economy is acting like a pinball machine on permanent tilt.

There’s a key message here: Big-government stimulus never works.

First there was the massive Obama stimulus spending. Then QE1. And now QE2 is winding down. And what did we get for all this? Slower growth overall, paltry job creation, more energy and commodities inflation, continued housing deflation, and virtually no new business start-up entrepreneurship.

We know the Obama spending package failed to create a 7 to 8 percent unemployment rate, as advertised. And now we’re learning that the Fed’s QE2 has actually done more harm than good.

All that money-printing stimulus worked to depreciate the dollar and jack-up commodity prices, especially oil and gasoline, but also food. So both companies and consumers have been punished.

Some demand-side boneheads on Wall Street want the Fed to move to QE3, allegedly to fight a stalling economy. But if the central bank prints another $600 billion or so, all that will do is sink the greenback another 10 percent and drive oil and gasoline prices higher and higher. And that, in turn, will slow business and consumers even more.

Yes, but will it stop the inevitable crash before the 2012 elections? Because that’s all that matters. Obama wants to preside over the crises he creates, so that he can justify his grand plans to “transform” society. And have no doubt: that’s been the plan all along.

this whole boom-and-bust monetary policy, with its blatant disregard for King Dollar, is a snare and a delusion. Stabilize the greenback by linking it to gold. Then move to the supply-side: Slash individual and business tax burdens, roll back enormous regulatory costs, and stop the merciless threat of higher future taxes.

If there was a serious pro-growth movement in Washington to accelerate tax-reform overhaul and pin-back regulatory barriers like the NLRB war with Boeing, the EPA war against energy, and the Obamacare threats that are too numerous to count, that just might revive the animal spirits. But what we know for sure is that small businesses are barely hiring today, and that brand new startups are few and far between.

Just recently, the New York Times, while bemoaning the dreadful state of the economy, still managed to dismiss the Republicans and their supply side economics and laud the Democrats for their progressive moves to create jobs, such as educational retraining and calls to tax at a higher rate to raise revenue for “needed government spending”.

And yet what such policies promote are a downsized private sector, fewer jobs, more government debt, and a bunch of newly educated people still without jobs.

This is as it has always been. But still, the Democrats repeat the process, grow the government, damage the private sector, and then blame everyone and everything else for the disasters they’ve created — and beg the American people either to put them in power so that they can spread the wealth, or else keep them in power so that they can continue to fix the damages done by everyone but them, done under their watch and under their legislative control.

What’s most sad is, voters continue to buy it.

(h/t Bob Reed)

16 Replies to “"Boneheaded Stimulus Never Works"”

  1. geoffb says:

    When it gets to the point of, “Who you going to believe, me or your lying eyes”, things never end well for at least one of the parties involved.

  2. Squid says:

    And yet it’s still far from assured that any GOP candidate will articulate these truths to the nation at large.

    I’ll write the speeches for free, guys. Just drop me a line!

  3. Joe says:

    The economy being in the toilet for four years has a clarifying effect. At least that is my guess. I was rather young during the Carter years (which were not nearly as bad as this).

  4. Slartibartfast says:

    No problem is so big and intractable that it can’t be remedied if you throw enough money at it. Therefore, we just haven’t thrown enough money at it yet.

  5. Ernst Schreiber says:

    Too bad for us that throwing money at our problems is more than a bit like Thor trying to quaff the world-sea.

    On the one hand, we have Democrats who are afraid of the truth, and on the other, Republicans who are afraid of the voters. Clearly we need a better alternative.

  6. DarthLevin says:

    Squid, the GOP simply can’t speak TRVTH to powah. That might be cast by the media or the opponent as “mean-spirited”, “uncollegial”, or (dare we even think it) raaaaacist. The most important key to electoral victory is apparently “Do whatever it takes for the other side to say nice things about you”.

    God, how I’d love to hire a plane to fly a banner over the Mall reading, “Dear GOP: Stop Being Pussies”

  7. Stephanie says:

    (which were not nearly as bad as this).

    Weekly take home pay was in the $500- $750 range if you were in a sweet gig.
    Minimum wage was $2.15.
    Gas lines.
    Inflation in the teens.
    The Prime lending rate was in the teens.
    Home prices were stagnant.
    Unemployment was in the 6-8 percent range.
    Tax rates topped out at 70%.

    But hey, you could write off your credit card interest and car loan on your taxes. Which your credit card balance was about $500 and your car loan was about $130 a month for a TransAm. And you could get interest rates on some investments in the 20-22% range.

  8. Squid says:

    On the bright side, Steph, we did have several thousand nuclear warheads pointed at us.

  9. Stephanie says:

    Rereading that list, I realized that the housing bubble is the only thing missing.

    It seems that the current crisis is a reboot (Cartah 2.0) to those glorious times since they found out then that folks can take a lot of bad shit if they are secure in their homes. Dial up Fannie to eleventy and this time, not so much.

  10. Carin says:

    And yet it’s still far from assured that any GOP candidate will articulate these truths to the nation at large.

    *cough*HERMAN CAIN*cough*

  11. Swen says:

    But still, the Democrats repeat the process, grow the government, damage the private sector, and then blame everyone and everything else for the disasters they’ve created…

    Well then thank goodness we have John Boehner and his Pledge to America, where he promises to “put common-sense limits on the growth of government”. By golly he won’t let government grow quite as fast as the Democrats wish! ‘Course we can’t afford the government we’ve got now, so one must wonder where the common sense is in letting it grow at all….

  12. SDN says:

    Nah, Carin, the latest on Cain is that he and Bachmann are stalking horses for Romney, splitting the Tea Party vote with Sarah so Mittenz will win.

    Of course, evidence for this is thin on the ground….

  13. geoffb says:

    Obama Has Failed America: Romney

    Does this mean that those who said “I hope he fails” are now rehabilitated and can enter “normal” society again.

  14. Bob Reed says:

    I mean, if friggin’ Larry Kudlow’s, Mr. Optimism/green shoots/Goldilocks economy’s coming back, is willing to say this straight up is it too much to ask that at least 1 or 2 of the GOP candidates do the same?

    It’s like between Obama and the Bernank, they’re trying to bring back the stag-flation of the 70s.

  15. Ernst Schreiber says:

    trying?!? Damn. I’d hate to think what things would be like if they were succeeding.

  16. Bob Reed says:

    Thankfully Ernst, the Obama bunch is mostly a bunch of incompetent, pie-in-the-sky, academics.

    You know, who never had much first-hand experience in ruining anything. Now what would worry me is if Obama were re-elected. Then he’d be experienced at ruining our way of life…

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