Hello Ryan,



So you argue that Reagan or the supply-siders are actually Keynesians. So be it.



Then why is it that all of these so called European governments have chosen to ignore one of the main tenets of the Keynesian prescription? Why is it that all these so called economics thinkers advocate only for big government expenditures to amend receding economies?



There is a shortage of labour. You see the government with its great and glorious stimulus projects and its projects of the past have done everything they can to keep people out of the meaningful labour markets. All sorts of special unemployment or idle employment programs funded by the taxpayer emerged over the years to limit the labour supply.



This is in keeping with socialist doctrine. The more people paid to remain idle, the more people employed to do roughly the same by the government, the less people there are to produce the goods that all need and must buy, and the less people there are to fund this malignant and invariably expanding monstrosity of government.



Now we see why Europe is nearing the edge of that steep financial cliff. Government with its meager productive contributions has grown to such a size that it has driven out a large fraction of those wishing to add to a needed aggregate supply.



So government now creates all this money and hands it to people for work of little or no value. Those people then head out into the retail markets to compete for those needed goods of energy and food produced by a handful of people gainfully employed and properly rewarded. Too much money chasing too few goods. Aka, inflation.



The reason that so few firms are hiring at this time is because the government has commandeered immense amounts of labour, material, resources to produce so little. So the costs in attempting to add to aggregate supply are excessive. The most profitable route is for firms to just raise prices. And how they have raised prices.



It is not a shortage of demand. Its a shortage of supply. And the higher government's participation in an economy, the lower the aggregate supply of needed goods and services.



Now on the monetary front, that dunce Bernanke has added greatly to bank reserves artificially driving the supply of funds to incredible heights at a time when so few are needed. With great supply and little demand, is it any wonder that borrowing rates are set artificially low. And when it turns, the Fed will be forced to sell bonds into a market of rising rates, sending them ever so much higher.



Now the funds the Fed used to greatly increase those reserves are precarious investments. The Fed has purchased Treasuries at their near maximum price. any selling pressure will see those prices decline rapidly leaving the Fed with enormous losses, and doubtless seeking a bailout.



There will be no recovery until the Fed has removed these artificially inflated reserves. Its the Japan disease of which we are now in our 4th year.



The proper Keynesian prescription is to put money into the hands of those who know how to produce the goods sought in the market place. Those who know how to invest, save, retire debt, and consume.



The highest corporate tax rate in the world is not conducive to such an aim. Needless and frustrating regulations that stifle the means of production are not conducive to such an aim.



Follow Reagan's Keynesian prescription, and how much better things will be. Follow present prescriptions for government stimulus and we shall again limit the means of valued production.



You speak of government as an investor. Tell me what the costs of its investments and what are the benefits of its investments? Could not perhaps that money have earned better returns in the hands of those who earned it?



GM