It seems to me that there is something of a logical broad leap between asserting that a bust is caused by "malinvestment" - which is of course true - and the assertion that government stimulus will make things worse - which seems predicated on the wholly arbitrary assessment that government malinvests more than private investors.

In fact, purely from the point of view of a prudent manager of the public purse, it would be downright negligent not to attempt to make major public investments take place during recessions. There being less other economic activity with which to compete, public projects will, ceteris paribus, be cheaper to perform during a recession.

So underlying this is the unstated assumption that there are either no economically sound government projects or that the government is incapable of identifying and executing them.

Hoover Dam would beg to differ.

- Jake

Friends come and go. Enemies accumulate.