Keynesians are so predictable

I’m so good, I can not only tell you that a mainstream economist is going to be wrong, I can even tell you what his excuse for being wrong is going to be. Here’s Paul Krugman’s ex post facto explanation for why the stimulus failed:

What’s going on here? It’s basically the Fifty Herbert Hoovers problem. Because state and local governments can’t run persistent deficits, and because aid to those government was shortchanged, cutbacks at lower levels of government have undermined expansion at the federal level. Overall government purchases have actually grown more slowly than the economy’s potential output.

This is, of course, his alternate explanation. His primary explanation, which everyone anticipated, was that the stimlus was too small. Even though it was $187 billion larger than he said it had to be. It should be noted that Krugman is attempting to kill two errors with one rationalization here, as he’s also attempting to explain why he was wrong to predict that Germany’s economic performance would be worse than the USA’s due to their rejection of further stimulus.

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