Thought Of The Day: The Keynesian Circular Thought Process

This quote from Professor William Anderson

"In the world of Keynesian economics, there really is no individual behavior that is purposeful. People don't "spend" because they believe that the purchase of a specific good or service will make them better off, but because they are "buying back the product" they have produced as workers.

"This is what one might call circular logic, and it reminds me of the imaginary exchange that Professor Israel Kirzner used to explain the circular flow of Keynesianism:

"FIRST PERSON to SECOND PERSON: Why do you eat breakfast?

"SECOND PERSON: So I can go to work.

"FIRST PERSON: Why do you go to work?

"SECOND PERSON: So I can eat breakfast.

Thought Of The Day: The Fallacy of Deficit Spending

Here is Andrew Coyne on deficit spending:

``And even if you thought deficit spending was the answer to a problem of insufficient aggregate demand, it was hard to see what relevance it had to the credit crisis, which was primarily a problem of supply. As the economist John Cochrane, of the University of Chicago, has written, imagine if several major oil refineries blew up at the same time, leaving gasoline in short supply: “Stimulating people to drive around would not revive gas sales.” All it would do is drive up gas prices. Substitute banks for refineries, and the point becomes clear.

(bold highlights mine)