The Economy Is Building a Resistance to Keynesianism

Like bacteria can build up a resistance to antibiotics, or an alcoholic can build up his tolerance for alcohol, so too can an economy build up a resistance to Keynesianism.  We are now in our 5th year of Obama's Keynesian wet dream (13th if you want to be fiscally technical) and unlike Bush Jr's economic growth, Obama's growth figures are "paltry" at best.  Even taking out the recession Obama has only managed to grow the economy by 2% per year, not enough to increase standards of living with a growing population.  And if you wanted to compare "stimulus" vs. "economic growth" a chart showing the ratio of GDP growth to deficit spending as a percent of GDP shows government spending is having the least amount of effect on growth in history.

Why is happening?  Why isn't Keynesianism working?  And why is Paul Krugman in the fetal position, crying and sucking his thumb?

Let a real economist answer.

First you have to understand that while most Americans aren't smart, let alone savvy on economics, there is SMART MONEY.  People who have money and are smart about it.  These are your entrepreneurs, investors, businessmen, industrialists, etc.  These people are, and always have been, the people that make or break an economy.  Without these people you are just left with workers (who are honorable and good) and parasites (government workers, freeloaders, etc.), both of which rely on the "smart money people" for their jobs, and in the case of parasites, taxes, economic growth, and money.

Sadly for Keynesians, the smart money is reading the writing on the wall.  And while a little bit of Keynesian stimulus might be OK, when you have so much of it, it threatens the fiscal stability of the nation, then they get worried.  Additionally, even if these "smart money" people believe in Keynesianism, when the majority of the money gets handed out for political purposes instead of genuine investments, you start to see a kleptocracy instead of on overly concerned, but well-intentioned government.  This further deters investments and moots the effectiveness of Keynesian stimulus.

Second, there is always a "message" attached to Keynesian stimulus.  This "message" is important because it tells investors, businessmen, entrepreneuers, and employers what the intentions are of the government.  And there can be no starker contrast between the two presidents who have ran up the largest deficits since WWII:

Barack Obama and

President Reagan

Both presidents ran deficits that would make Keynes giggle - Reagan around 4.7% and Obama around 8%.  However, the message between the two presidents could not be more stark:

Reagan's message was:

Pro-America
Pro-growth
Pro-business
Pro-success
Pro-excellent
Pro-achievement

Obama's message was/is:

Anti-American (yes, yes it is)
Class warfare
Fair outcomes/equalization of income
Anti-business
Mediocrity
Woeismism/Victimization/Racism

In short Reagan wanted to invest in the future of America while Obama hates nothing more than America and wants to redistribute wealth.

Criticize the above if you must, but the "smart money" doesn't care about your opinion.  It's already spoken.  Gold alone shows the difference to how receptive the smart money people are to the two presidents.  Even with dangerous levels of deficit spending, people had enough faith in Reagan that they pulled their money out of gold and invested it in America.  Obama, it's the opposite - people went screaming for gold.

Unemployment is another metric you can use.  After Reagan took office, unemployment tanked primarily because jobs were being created.  Obama has relied on people leaving the work force to lower unemployment, and even then unemployment is stubbornly high.

And revisiting the original purpose of this post, economic growth under Reagan was more positive and responsive to deficit spending than under Obama:

Ultimately what the above shows is that economists have got to get over themselves thinking economics is a science and that they are somehow smart.  That people are somehow their little playthings and lab rats.  That the idea that the government should somehow "intervene" to "help" is the most arrogant and cocky thing to think because it implies professors, policy wonks, and politicians know what's best for people more than the people themselves.  But what's worse is when the intention of Keynesian spending goes from "noble" to "political."  And your buddy Obama has gotten rid of all pretenses about using Keynesian economic policies to "boost the economy" as he blatantly abuses it to steal from the productive to bribe his parasitic constituents.

And you all wonder why economy isn't growing.