Bernie Madoff, Keynes, St. Augustine, and Cassanova
A stinging observation from John Cochrane:
If you really believe Keynesian Stimulus, you think Bernie Medoff is a hero. Seriously. He took money from people who were saving it, and gave it to people who were going to consume it. In return he gave the savers worthless promises that look a lot like government debt.
Brutal. And this:
The current policy attempt, consisting of stimulus now, but strong promises to address the deficit in the future, can have no effect whatsoever. If you think stimulus works by fooling people to ignore future tax hikes or spending cuts, then loudly announcing such tax hikes and spending cuts must undermine stimulus! Augustinian policy, “give me chastity, but not yet,” will not work. Casanova is needed.
Cochrane’s essay, “Fiscal Stimulus, R.I.P.,” is well worth a read.