Oracle smack down: Krugman vs. Laffer

[Neue Regel]

1. The problem with Keynesian economics

Yes, deficit/stimulus spending is needed at times to pull the economy out of a tailspin. However, we as a nation have lost the political will to implement the second half of the Keynesian formula. In Keynesian economic theory, cutting deficit spending and paying off the debt that was incurred is supposed to follow the stimulus/deficit spending. Instead, our politicians just keep spending at the same level, making interest-only payments on the ever-increasing debt burden. Given this reality, I would prefer that we take our lumps now for a few years rather than continue to rack up debt like there is no tomorrow. Iceland's example is a good place to start.