Thursday, April 2, 2009

You be the expert!

That noted economist Penn Jillette (the talking half of the Penn and Teller magic show) has some interesting thoughts about Obama's approach to the economic crisis:

Penn describes many counter-intuitive actions that produce unexpectedly good results, and then raises the question about the benefits of the counter-intuitive act of spending your way out of debt. He concludes with the reminder that while counter-intuitive phenomena exist, the general rule is that the intuitive action is the correct one.

While I would argue that by Keynesian analysis deficit spending is not counter-intuitive in a recession because it replaces the demand that has been lost from the economy (this is intuitive) and assumes that a recovered economy will pay back the debt, I applaud Mr. Jillette's weighing in on this important issue and support his right to do so. I also add that I don't think we're in a classic Keynesian stimulus situation because that approach depends on having a sound economy before the recession, which is not true now.

But the important thing to notice is that we are in uncharted economic territory here and in many ways Penn Jillette's opinion is just as valuable as the next guy's.

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