With the renaissance of Keynesian economics we can only conclude that the preconditions for a new super cycle have been established, and that if the policies are not reversed we face many years of depressed economic conditions.
Obama's actions have already laid the foundation for a gigantic bubble and a further weakening of economic fundamentals.
The free market doesn't pump up the money supply and push interest rates down to levels that promote unsustainable bubbles. The free market punishes reckless risk takers, while it is government that bails them out (and thereby encourages them to take greater risks in the future).
There is a letter from a Democratic party boss telling a woman that if she wants to stay on the WPA rolls, she needs to make a campaign contribution.
This comprehensive list of the Fed's functions gives the lie to the notion that there has been "too little regulation" of financial markets. Anyone who makes such an argument is either ignorant of the truth or is lying.
If anything, all the rescue packages and all the massive pumping by the Fed has made things much worse as far as the underlying economic bottom line is concerned.
Private enterprise could have handled production of military goods better than controls actually did.
"It is no coincidence that Mankiw's worldview leads him to literally propose destroying the currency in order to fix the economy."
But if you follow the Austrian recipe of allowing liquidation of bankrupt firms and debt, allowing prices to fall without monetary inflation, not propping up employment or subsidizing unemployment, and not discouraging hoarding, you will end up with the quickest possible recovery and minimize the magnitude of economic pain.
The bonds will be backed by the usual way that the government gets money, which is to tax it or inflate it away.
