Back in our June 2009 issue, Andrew Wilson wrote in his piece, “A Ladder to Nowhere: Why WWII-level deficits won’t work today”:
To listen to some prominent liberal economists who believe in Keynesian-style “demand management,” the only thing wrong with this confabulated ladder [of growing debt and money creation] is that it should be even taller. And truly, if money is no object, why not build it right up to the sky? Why stop where we are now — with a federal deficit expected to reach 13.5 percent of GDP under the current stimulus package.
That question will take on real weight and urgency if the economy continues to be mired in a deep recession entering 2010. At that point, the cry will go out for higher deficits and more spending.
Sure enough, a cry for higher deficits and more spending went out today in Nobel prize-winning economist (and occasional Obama mentor) Joseph Stiglitz’s testimony to Congress. He said: “There is, in economics, something akin to the Powell doctrine in the military: one needs to attack the problem with overwhelming force.… As we approach the looming jobs problem, we should not repeat the mistakes we have continually made in responding to this crisis: too little, too late.”
In other words, if at first you don’t succeed, plough ahead blindly at greater speed. Perhaps Stiglitz should share his Nobel with Wilson.
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