My conservative friends claim the stimulus spending from the Recovery Act was a failure, thereby proving Keynesian economics wrong but this simply isn’t true. The Keynesian approach is what saved us in the 30s and could have saved us this time, had it been fully embraced. (Yes, I know you hate him but that doesn’t make him wrong) Dr. Krugman neatly explains:
So the real test of Keynesian economics hasn’t come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans — and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits. [...]
The bottom line is that 2011 was a year in which our political elite obsessed over short-term deficits that aren’t actually a problem and, in the process, made the real problem — a depressed economy and mass unemployment — worse.
Read the whole analysis at the link. Furthermore, if the Keynesian approach was wrong, then why are the banksters doing so well? Certainly the government threw plenty of money at them. Those guys are thriving while those of use who are living with the effects of the conservatives’ “austerity cuts to growth” are paying the price for that truly failed policy.