Keynesianism Delivers a Decade of Zero

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"The end result of destroying the currency is the wiping out of the middle class."

This past week we celebrated the end of what most agree was a decade best forgotten. New York Times columnist and leading Keynesian economist Paul Krugman called it the Big Zero in a recent column. He wrote that "there was a whole lot of nothing going on in measures of economic progress or success," which is true. However, Krugman continues to misleadingly blame the free market and supposed lack of regulation for the economic chaos.

It was encouraging that he admitted that blowing economic bubbles is a mistake, especially considering he himself advocated creating a housing bubble as a way to alleviate the hangover from the dotcom bust. But we can no longer afford to give prominent economists like Krugman a pass when they completely ignore the burden of taxation, monetary policy, and excessive regulation.

Policymakers would have been wise to heed the warnings of the Austrian economists, and must start listening to their teachings if they want solid progress in the future. If not, the necessary correction is going to take a very long time.

The Austrian free-market economists use common sense principles. You cannot: spend your way out of a recession; regulate the economy into oblivion and expect it to function; tax people and businesses to the point of near slavery and expect them to keep producing; or create an abundance of money out of thin air without making all that paper worthless. Government growth is the opposite of all these things.

Bureaucrats are loathe to face these unpleasant, but obvious realities.

Americans have been working hard, and Krugman rightly points out that they are getting nowhere. Government is expanding steadily and keeping us at less than zero growth when inflation is factored in. Krugman seems pretty disappointed with zero, but if we continue to listen to Keynesians in the next decade instead of those who tell us the truth, zero will start to look pretty good. The end result of destroying the currency is the wiping out of the middle class. Preventing that from happening should be our top economic priority.

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