The bottom line is that all this focus on government actions through the lens of a Keynesian model has been basically worthless. Investors are better served when they follow free-market economic theories that focus on production, not demand-side models that focus on spending and debt. And this appears true in both the long, and the short, run. Brian Westbury from his article today Keynesian Model Blew It Again
Oh no! The Sequester! Fiscal Cliff! Payroll tax rates going back to normal!
BERK: First they told us that the Federal Government must continue spending at the crisis rate. They told us that the dreaded fiscal cliff resolution and its payroll tax rate normalization would derail the economy. Then the "sequester" was supposed to kill the economy...as I say around here the economy is doing ok because the government is cutting back...
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