Wait, your from the University of Michigan? That makes your economic stance even more confusing... as far as I know... the University of Michigan is a "freshwater" economics schools that rejects Keynsian ideals even more then Monetarists and the like.
Can government spending bring the economy back to it's regular levels. The answer is... No.
The only thing that can bring back the economy is the private sector. The government could make it LOOK like it's bringing back the economy, however it doesn't really do so. It just makes everying look better to the layman while it actually hurts and delays the recovery. Things like crowding out are not avoidable.
Expansionary and Contradictory policy DON'T work... that's why most economists aren't Keynesian... and even most of those who are... are New Keynesian.
I mean... why else do you think that...
A) Monetarists have ruled the economic roost for so long.
and
B) The next big movement of Economics is actually tied to Neoclassicalism. They're the ones on the rise.
Just how if I lose a major client in my car buisness I can make it look like i'm not in trouble by buying my own cars. It gives the Illusion everything is ok, without the underlying problems being fixed. Well until I run out of money. (Or in the governments case... inflation.) It doesn't fix anything and it's not "We'll have to pay it back later"... It's "We crash later". Things like crowding out are NOT avoidable. It's not a matter of "paying it back" it's a matter of it not working.
Keynsian economics is the smallest of the three major schools and it's dominated by New Keynsian economics because all available data shows that Keynsian economics were wrong.
You have the entire great depression backwords which I believe is why you are having this issue. We didn't get out of the Great Depression because of Government spending in WW2. It was the massive increases in demand, which weren't related at all to our government.
I mean look at the Europeon Governments after WW2.
I can understand where your coming from because I used to think like that. Until I studied more and learned up on economics. This is very much like having an arguement with myself back when I was in highschool.
