Recommended - Bleeding the Economy Back to Health

So far the government, under both the previous administration and the current one, has adopted the arguments of Keynesian economics - the way out of a depression is for the government to spend lots of money. But there are alternate views, and I recommend Louis Woodhill's July 17, 2009, article Bleeding the Economy to Health in Real Clear Markets for one of the more cogent alternative arguments.

It may be true that it is still too early to judge the effectiveness of the stimulus package, but the signs so far aren't promising. Unemployment continues to skyrocket, and may well reach 14% or higher in the next few months. That means a lot of people without jobs, and they certainly aren't going to be spending much to help the economy recover. Credit remains tight, and consequently new investment is way down. Far more companies, big and little, are going out of business then are starting up. Something had better change for the better in the next few months or it will be clear the stimulus approach assembled by this Congress doesn't work.

Of course there is already talk of a second stimulus package -- adding more leeches because the patient isn't recovering. I am reminded of Einstein's definition of insanity: "Doing the same thing over and over again and expecting different results."