Those who have studied the history of the Great Depression typically split into two groups. Those who think government tinkering (easy money) helped to create the bubble and further tinkering made it deeper and last longer versus those who posit that the problem was insufficient tinkering, stimulus, etc. Ben Bernanke seems to believe that a lot more Keynes is needed. Too bad that Keynes's followers seem incapable of such ardour during the so-called good times when governments and society is supposed to run surpluses in preparation for the bad times.
Anyway, we are continuing to run deficits and stimulate and print like crazy and I think this time round we will finally understand that Keynesian approaches don't solve any real problems of financial over-indulgence, impropriety, manipulation and outright fraud. In the end, only hard work, reduced expectations, lower consumption consistent with individual and national revenues and production are the key - reality, in other words, not smoke and mirrors. We are watching this grand experiment around the world, not just here in Canada and the U.S. And I thought I wasn't really into spectator sports!
