But it is even an internal contradiction when it comes to mainstream Keynesian economics, as pointed out by two of my favorite Keynesian economists, Ben Steil of the Council of Foreign Relations and Harvard Professor Martin Feldstein.
Steil sent out this tweet last yesterday:
In other words, basic Keynesian theory calls for more government spending when the economy is in recession. Trump is going to launch massive spending programs now. But some believe that Trump will appoint Fed members who will steer the Fed toward monetary restraint---which according to Keyensians is done when the economy is overheating and far from recession.So Trump will spend more but appoint Fed officials who will act as if the economy is already overheating. Markets: this is monetary offset.— Benn Steil (@BennSteil) November 14, 2016
So what gives?
And then he makes this point from his Keynesian perspective, which is policy advice contrary to what Trump is expected to do:
Although there appears to be bipartisan support for spending on roads, bridges and other infrastructure, this should be postponed until an economic downturn creates the need for fiscal stimulus. Meanwhile, it would be good to devote those dollars to reducing the national debt while drawing up specific investment plans to be ready during a downturn.There will be no debt reduction under Trump. There will be massive infrastructure spending.
Even Keynes has to be spinning.