Snark on] Bad news Keynesians – you’ve been declared dead by Scott Sumner. And that means counter-cyclical policy of any type doesn’t work. Yes, it’s true. Just look at the evidence:
- By accounting identity, the government deficit has contributed enormously to corporate profits in recent years, but there’s no way that increased corporate profits help the economy.
- Adding trillions of dollars of net worth during a de-leveraging via the direct issuance of net financial assets via deficit spending, does not help private sector balance sheets despite the very basic accounting that proves otherwise.
- The Troubled Asset Relief Program, which helped our financial system avoid widespread calamity, did not work even though our financial system is far more stable than it was in 2008.
- The American Recovery and Reinvestment Act did nothing despite the CBO’s estimates of widespread positive economic impact.
Sorry Keynesians. Time to take your ball and go home, losers. [Snark off]