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First Trust Economics Chief Economist Brian Wesbury on Paul Krugman’s view that further spending would boost the economy.
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Out -- I -- he's got a Nobel Prize.
Sort of wondered if Paul Krugman is a little bit.
Off and I'm not alone -- at the latest add to join a chorus of voices that -- to wonder the same thing out loud is first trust advisor cheap it's.
Brian Wesbury -- Brian.
You -- -- guess similar just stop -- Krugman today you that's been going back and forth.
You say you have the math to prove that he is sort of off his rocker so let it rip.
Yeah yeah -- well I was asked earlier today what I thought about.
His idea to stimulate the economy by spending more.
And I said it wouldn't work I said if it were true that spending could.
Boost economic activity.
-- gosh wouldn't it be easy to make everybody in the world rich just spend more money.
There should be no poverty and so I thought I just matter of fact matter of truth common sense people would realize how wrong he was.
He decided to take to the pages of the New York Times blog in and say I was wrong.
We -- -- -- -- for our audience just -- you can see you know what he said and then you can respond to it.
You know he says -- -- fiscal expansion has a positive effect of the economy is depressed and monetary policy won't move to a -- -- it typically.
If the economy is enhanced liquidity traps that that was his response what do you think about it that.
-- you know these things called.
Liquidity trap so.
So the idea is that -- a liquidity trap the Federal Reserve's pumping in money but nobody will span that's the whole point.
And and that's where John Maynard Keynes and now Paul Krugman his -- apparent.
I have taken opposite well the government must spend in those kinds of cases the problem is is that people are spending.
Banks are lending there is liquidity you know the economy's not doing.
-- -- it's not doing perfect.
But but it's clearly in my opinion being slowed down because government is spending too much money and I.
I use as an example of this just look at France I mean France has.
The government I think that Paul Krugman would want you know national health care.
You know lots and lots of Regis yeah is there and the -- exactly.
But you know what in the last forty years their economy is only grown 2% a year and they've averaged.
Eight point 1% unemployment rates so.
They are we are France today America is France if you look at our economy -- he's arguing.
Yet does not much make make canes you know the whole theory was was operating when government was in a surplus that they -- going deeply into debt and raising taxes.
On their population in order to support this dramatic spending and -- key difference.
Between -- is -- -- philosophy and what is going on today it's true whenever knowledge.
No he doesn't the other thing true also and that's a very good point Melissa but there's also it's also true that if you go back to the 1930s the government was only 5678%.
Of our GDP in other words.
You know one dollar out of every ten or or seventy cents out of every ten dollars.
Today our our where we're two dollars and forty cents out of every ten dollars so.
I I think if -- were alive today he'd say we've tried this and it doesn't work it.
I am asking all bright and go ahead make -- must -- -- it was at a time I -- one make one last point I think Paul Krugman one of the reasons he lashed out at me today.
Is that he's in his own personal Alamo.
A good -- failing Europe is failing California is failing keynesian economics is falling apart.
He's fighting his last battle and he's going to lose so I say bring it on.
Gasoline you're not the only one he's been fighting with eatery is fighting with professor Gregory -- Q you know obviously brilliant professor at Harvard.
-- supported -- president Obama's that we're gonna see real growth of fifteen point 6% during his administration right it professor thank you said that he would love to bet him on that he never got a response -- -- at this point.
We would have to grow about you know what 1617%.
Here in this in this last year -- order last quarter noted that up TO.
In order gas -- that that did.
Make you wins the Iowa I think that how to write -- brave man Brian west -- thanks for coming on tonight we appreciate it back.
