Keynesian thinking goes like this: if consumers have lots of purchasing power, then businesses will hire workers and produce goods to satisfy them. When purchasing power goes down, as it does in a recession, the role of the state is to pump up demand with increased spending of its own.
In this piece Peter Schiff clearly explains what is wrong with that line of thinking. Investment and production must precede consumer spending and government “stimulus” programs impede the market processes.
Schiff takes aim in particular at the utterly clueless but indefatigable Robert Reich, who keeps saying that the federal “stimulus” package should have been larger to get the economy moving again.
