The above link is to an article that speaks about the effectiveness of the U.S. president's 2009 spending package that by some recent reports has added over two million new jobs (is that net or just a regular number?) The content of the article examines, in theory pretty much only, the validity of the recent spending package, and there is some ground to be contested for the Keynsians, i.e., Romer, Summers, et. al, insofar as theorists vary on how effective government stimulus spending is at any one time, and this goes back to the Okun period in the 1960's when economic indicators started to become more true to life and "accurate" with respect to economic phenomenon and the information derived thereby using telecommunications and computing power. Keep in mind that Keynsians do believe economics is full of numbers and you need some sort of quantitative analysis to make economic decisions (Keynes read statistics in the paper pretty much always, or obtained them over the telephone in working his economic and portfolio majic at Cambridge when he was alive.) The fact is statistics do work, but they can be flawed, such as in the 2008 presidential stimulus package whence there was additional government spending, but investment was going abroad in one way or another, and the spending had little effect - there was a recession anyway.
The article does accurately propose that deficit reduction and cutting taxes, and cutting interest rates, and some other things would do well to get the U.S. economy booming again like a big band. The problem has been for years that the twin deficits are structural, and this is in time of war so the federal government needs to pay for the conflicts somehow and we are all deeply in debt which means we are taking away from tomorrow (sui generis) when interest rates will be adversely affected by the increase in debt today. The problem with interest rates and the dollar continue and if the president does what others have done before him, raising taxes, all this will mean is the commensurate spending that will result will only really cancel some of the deleterious economic effects remaining from the 2009 recession. Policy makers talk about now "cutting" the deficits, and that would be first a positive thing for our consumer economy and then might attract some capital back into the country. How this is to be done remains a huge question as Keynsians want to project an image the economy is doing better and then capital will follow; the monetarists' quip in this case might be that spending and tax reductions are not the 200% solution, but are better than projecting our economic troubles everywhere through taxing and spending behaviours. The monetarists are in a bind as they have no real voice in the federal administration right now despite some prospective redemption in thier policy ideas.
Neither tax and spend, nor manipulating monetary economic items is the answer here as both these principles work most adequately under different regimes in relative peace time. There are wars going on and our country (and its armed forces) is / are the champion(s) of liberty, honour, patriotic and civic duty in those conflicts; things we all believe in as U.S. citizens and citizens to - be. Warrring parties often have their own ways of resolving payments and items due in the conflicts: Before modern finance was discovered, moneys to pay for soldiery and armaments came mostly from the countries' treasuries, which is less so in modern times. States have given to taking out loans from the citizenry to pay for conflicts, especially the current conflicts in the Middle East. People like me do not believe government policies are the reasons for either our current economic difficulties or their solutions. Without getting into what one might think of James Earl Carter's "Conspicuous Consumption" speech during the latter part of his presidency means for us today; everyone knows some belt - tightening is in order for everyone within our shores. You also might do well to try to buy a few treasuries through the local mutual fund broker. This will in the individual case do virtually, if not absolutely, nothing, but you will thereby be in step with the problems the president has: a. Simple people have believed for years that belligerents become wealthy and this is the reason for countries going to war (war is actually extremely expensive in any age, and quickly drains the treasury of any region,) b. There is an ever - burgeoning debt mound in the federal government due just to deficit operations and spending; c. The effect of any, even extremely powerful monetary / fiscal policy decision will be marginal / has been marginal at best; d. Our region currently suffers from now historically very high unemployment on average; e. The twin deficits must be reduced - something past administrations have demonstrated as "possible" but not probable; f. To the extent deficits are cut, there are more poor tradeoffs between taxes and interest rates, for example, and other factors; g. Any efforts at federal austerity will principally choke the national and regional economies that are used to federal funding; h. and on and on... There is an entire body of work that goes into every economic policy decision, and the president, whoever he is, makes very few mistakes despite finger - pointing and partisanship, etc., especially with people like Paul Volcker in his corner. The unfortunate thing here is that the Volcker people themselves, whatever their views are, have never been the purveyors of good tidings, really, and fall more or less within the Keynsian framework that calls for a kind of modern liberalistic approach to things.
Nonetheless, pay attention to what the economic bills the president is signing, and they could pull off some austerity measure while raising taxes, or something. Maybe a new labour bill could do it, though the business climate in the States now is as if we have had a labour regime for twenty years and the 1990's and early 00's have been cancelled out. My solution would be to do what has been done in countries like Japan - hold down interest rates and muddle through, and call elections when things really do not work out. All this, though we do not want our model to be Japan (and it isn't at this point,) do we, as that region has been long suffering economically for years. People like me do believe in austerity measures and at the same time, and despite the increased expense of the wars, do not believe in rationing or quotas. The idea is to stay away from that type of business climate where everyone is trying to get their hands on gold, silk, booze and chocolate, for example.
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