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As usual One of the only commentators that knows what he is talking about.

Over dosed on debt? Spend more!

Myth-makers are having a field day with the recession, which is why this year's precipitous downturn will turn into next year's depression.

Myth 1: When it comes to solutions, there is “no single silver bullet,” writes David Smith in the Sunday Times (September 14, 2008). How would he know? He failed to prepare his readers for the crash, which suggests we can't place much value on his pronouncements.

Commentators like Smith love mind-bending jargon like “quantitative easing”. What on earth does it mean? Not “printing money,” insists Smith. No; it means something grander. But torture the language this way or that, it does boil down to scheming governments expanding aggregate demand by increasing spending power. Theirs!

It's all a matter of logic

Myth 2: We have to spend our way out of recession, writes Roger Bootle of Capital Economics. This, he insists, is the logical strategy (Daily Telegraph, January 13). “The recession is about a shortage of aggregate demand.”

Funny, but I thought the recession came about because people spent too much money – on property they couldn't afford; by over-dosing on products consumed by going into debt. The recession did not originate because of a shortage of aggregate demand, and we won't get out of it by spending more money.

But governments don't want people to do cold turkey, so they are dusting off the clichés from John Maynard Keynes. He prescribed government spending to “pump-prime” an economy out of recession. Politicians love it!

But what about that “silver bullet”?

To curtail the depression and build our way into stable growth, it's necessary to eliminate the points of friction in the enterprise economy. We know the location of the problem: real estate. We know the dynamics of reckless lending: the pursuit of capital gains. We know where to find the solution: fiscal policy.

Just one silver bullet, and we bag just about all the pathological problems in the capitalist economy. But have economic commentators like David Smith turned the vitriol in their pens against those who have grown rich because of the perversities of the property market. No!

Does Roger Bootle apply his logic to the problem, to help governments order their policy priorities? No!

So sit tight, watch the Keynesian pump boost the money supply, and observe the busy-bees buzzing around all the solutions under the sun, except that one silver bullet that will remain locked away in the magazine.

Linky to His Blog

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