The Kroog Versus Confidence Fairies

Hey, I'm not calling them confidence fairies, Krugman is.

I was on Good Morning America this not-so-good morning, doing what I could. But I was struck by something that George Stephanopoulos said: he claimed to have been speaking to an administration official who asserted that what we need to get businesses investing is for business to know that the government has stopped — presumably, that means no new spending, no new regulation, whatever.

GS is a careful guy, so this must be true. And it’s shocking — not that people are saying this, but that someone inside the administration is saying it.

It’s garbage, of course: businesses are refusing to invest because they don’t see enough demand for their products. And administration economists know that it’s garbage. But obviously some people in the WH — I’m guessing a political person, but who knows — have bought the right-wing line hook, line, and sinker.

We’ll never know what might have happened if Obama and co. had actually had the courage of their convictions; what we do know is that they have undermined their own message at every turn.

It's 1994 all over again.  The message here is government should do nothing and leave everything to the free market.  The funny part is we did that from 1996-2008 in a blood-soaked orgy of deregulation, and the result was a massive financial crisis. 

The lesson everyone has chosen to learn from this is...that government should do nothing and leave everything to the free market.  I wonder how that will turn out?

So what's the free market solution to create enough demand to sustain real economic growth, aka spending?  I know, cut spending and take more money out of the economy.  That will fix everything!