Boom and Bust

In the 1800s, the economies of all countries were plagued by extreme periodic boom and bust. Economists like John Maynard Keynes and John Kenneth Galbraith discovered that governments should do the exact opposite of what governments had been doing based on intuition, namely pull in their spending horns in tough times, and spend lavishly in good times. The Great Depression of the 1930s was a big of test of these new theories. The Great Recession proved beyond a doubt that austerity made a recession worse and that stimulus job-creating spending pulls a country out of a recession. Today’s Tea Party have ignored history and scoffed at economists. They want to run their country by unscientific, old-fashioned, intuitive gut feeling of the 1800s rather than modern proven economic principles.

~ Roedy (1948-02-04 age:69)