Niall Ferguson - A Stimulating Failure

Anyone following this blog will no that I have been no fan of stimulus.

With credit frozen because of debt it was crazy to increase the debt load for the purpose of stimulus and would be counter-productive. There has never been a case that I know of where an alcohalic was cured by increasing his or her dosages of alcohal.

The idea of stimulus originated in the work of John Maynard Keynes. He is fawned over by the left and that has become a problem. Stimulus is supposed to protect jobs during a recession. The idea is that during a downturn in the business cycle a government can spend rainy day savings to create demand ahead of time.

The problem is that we are not in a recession. We are sufffering a systemic collapse brought about by fraud and a failure to regulate the financial sector. The government borrows money but there is no growth and so government debt is put onto the taxpayer. Only the lenders benefit. The left should really review the benefits of Keynes in light of this development.

Keynes himself would be none too happy at having the current malaise of stimulus parked at his door. The British government had no savings during the good times - indeed the 'good times' were a consequence of debt driven economics - an illusion. Now we have to pay for that illusion and there's nothing set aside for this downpour.

To make matters worse it is the productive, high-value part of the economy which has to pay for the temporary jobs. When the stimulus is withdrawn the companies and taxpayers who subsidised them will be pulled down by the weight of subsidy. Hundreds of thousands of job losses have been caused by this 'medicine'. Clearly this should be a hot topic of left debates.

Here for your pleasure is a video of Niall Ferguson discussing the failure of stimulus: