Real business nonresidential fixed investment (RBNRFI) was lower in 1Q2012 than it was in 4Q2011, falling at a 2.1% annual rate, quarter to quarter. This continued a decelerating trend. After growing at 15.7% during 3Q2011, RBNRFI slowed to a 5.2% growth rate in 4Q2011 and then fell at a 2.1% rate last quarter.
Why does this matter? It matters because RBNRFI is what actually drives the economy. Both real GDP (RGDP) and employment growth are a direct function of RBNRFI. The notion that “spending” drives the economy is the Keynesian Superstition.
Plans based upon superstition tend not to work very well. Obama’s $831 billion “stimulus” program of early 2009 failed utterly, as did Bush 43’s $152 billion stimulus program a year earlier. The economists in the grip of the Keynesian Superstition (e.g., Paul Krugman) were left sputtering that the stimulus “just wasn’t big enough”.
Because stimulus works in exactly the same way as trying to raise the level of a swimming pool by drawing a bucket of water out of the deep end and pouring it into the shallow end, no stimulus can ever be big enough. In retrospect, it’s unfortunate that Obama didn’t push through a $2 trillion stimulus. It would have been worth wasting another $1.2 trillion to finally bury this deadly superstition.
http://www.forbes.com/sites/louiswoodhill/2012/05/02/president-obamas-2012-re-election-prospects-suffer-an-ominous-gdp-report/
I think of the Keynesians as some peacock like bird, strutting around with an undue sense of self significance imagining all the great things they can do with power. They are defined by pretense. The pretense that men can act as gods, pulling strings, manipulating the world economy as if it was their backyard creation. Only man's fatal conceit would allow him/her to believe they possessed the depth of understanding and knowledge necessary to try and manipulate such complexity. Hubris is not something humans are running short on.
Why does this matter? It matters because RBNRFI is what actually drives the economy. Both real GDP (RGDP) and employment growth are a direct function of RBNRFI. The notion that “spending” drives the economy is the Keynesian Superstition.
Plans based upon superstition tend not to work very well. Obama’s $831 billion “stimulus” program of early 2009 failed utterly, as did Bush 43’s $152 billion stimulus program a year earlier. The economists in the grip of the Keynesian Superstition (e.g., Paul Krugman) were left sputtering that the stimulus “just wasn’t big enough”.
Because stimulus works in exactly the same way as trying to raise the level of a swimming pool by drawing a bucket of water out of the deep end and pouring it into the shallow end, no stimulus can ever be big enough. In retrospect, it’s unfortunate that Obama didn’t push through a $2 trillion stimulus. It would have been worth wasting another $1.2 trillion to finally bury this deadly superstition.
http://www.forbes.com/sites/louiswoodhill/2012/05/02/president-obamas-2012-re-election-prospects-suffer-an-ominous-gdp-report/
I think of the Keynesians as some peacock like bird, strutting around with an undue sense of self significance imagining all the great things they can do with power. They are defined by pretense. The pretense that men can act as gods, pulling strings, manipulating the world economy as if it was their backyard creation. Only man's fatal conceit would allow him/her to believe they possessed the depth of understanding and knowledge necessary to try and manipulate such complexity. Hubris is not something humans are running short on.
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