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Americans in search of new economics

Business Times - 15 Jun 2010


Americans in search of new economics

By LEON HADAR
WASHINGTON CORRESPONDENT

ASK a Republican politician or a free-market pundit whether the Keynesian oriented approach of Obamanomics - using fiscal policy to boost the economy during a downturn - was working and he or she would probably respond with a resounding 'No'.

The revival of conventional Keynesianism to fight the Great Recession reflects short-term political considerations by providing quick fixes to the crisis and creates the illusion of economic growth and declining unemployment, they argue.

They say that the government's efforts to stimulate aggregate demand and reduce unemployment by manipulating spending has not - and will not - work and that it will end-up producing negative side effects, including rising debt and higher inflation.

The recent jobs numbers, suggesting that most of the job created last month were the temporary jobs of workers conducting the census, seemed to be playing …