Sunday, July 3, 2011

Is Obama a Republican?

A truly depressing post from Paul Krugman, pointed out that in his latest address Obama repeats the republican myths. Here's Obama:

"Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs."

And Krugman's comment:

"Yep, the false government-family equivalence, the myth of expansionary austerity, and the confidence fairy, all in just two sentences."

I think I've figured out a way to explain why the government-family equivalence is wrong: The government is a bank. Just as banks lend out much more money than is on their books, so too the relation between government income and spending is not the same as in a family. By deficit spending in some cases—like bank lending, when you look at at—can help grow the economy.

Krugman has extensive columns, linked in his post, on "the myth of expansionary austerity" and "the confidence fairy."

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