Midterm Election Preview

By Wednesday, viewers will find posted at www.CharlieRose.com “Midterm Election Preview”  a vigorous discussion of the issues and prospects pertaining to the forthcoming election, with prominent journalists Al Hunt, Mark Halperin and Steven Pearlstein.

Even these worthies fail to articulate a grasp of Keynesian economics, to wit:   When money is spent for life style  (dole, unemployment insurance, food stamps, faux education for the unemployed), it is gone.   When money is invested in infrastructure (roads, schools, education) there is an asset which generates economic returns.  Thus the debt is self liquidating.

If a person borrows two hundred thousand dollars and spends the money on vacations, he /she are left with nothing but memories and debt.   If the person borrows and spends two hundred thousand dollars on a house, he/she has an asset which can be paid for through savings on rental.

This is only true for government spending during times of recession when government dollars are not competing with private enterprise for labor and supplies. (During times of near full employment, government deficits fuel inflation.)   Failure to understand Keynesian economics extended the Great Depression until the outset of the Second World War, when plants were made busy and men drafted.   Failure to understand Keynesian economics will most certainly extend the Great Recession for years to come.

Very sad.  Very, very sad.