In this devastating article Bob Murphy points out that Paul Krugman, in his incessant efforts at trying to prove that the Keynesian theory of recessions is correct, has resorted to lying to save face. He keeps yammering that under Hoover, the federal budget was “slashed” and that made the recession into the Great Depression. Murphy presents facts that are available to anyone, even NY Times columnists, proving the precise opposite. Under Hoover, federal spending rose greatly.
If you think that’s an inconvenient fact, here’s another. The short-lived 1920-21 recession was so short because under President Harding, the federal budget really was slashed.
Here’s the takeaway: government spending just wastes resources on politically-attractive frills. That’s always a bad idea, but especially so when the economy is struggling to recover after the distorting effects of federal meddling.
