01 Sep 2009

More Free Market Evangelism From Larry Kudlow

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Long-time readers know that Larry Kudlow is not on my A-team for free market economics. (It pains me that this is so; I seriously used to love him when he worked for Bear Stearns and I was just getting into this stuff, reading Walter Williams and such.) I went ballistic over his flip-flopping endorsement of TARP, and then I was flabbergasted by his support for “cash for clunkers.”

But now he has outdone himself. Bill R. emailed me this piece at NRO, and said that Kudlow mentioned Mises and Hayek. So I said to Bill, “thanks I’ll give Kudlow a chance to redeem himself. :)”

Well, did Kudlow restore my faith? You tell me:

While so-called spending-and-deficit stimulus may be an economic depressant, Friedmanite monetary stimulus — which has been substantial — is gradually exerting a powerful impact on economic growth. At the same time, businesses have become lean and mean, with radical cost-cutting of inventories, employment, and hours worked. That’s setting up a big profits surge, which is the biggest economic stimulus of all.

Consumers also have retrenched, as is appropriate with falling home prices, a rough stock market correction, and a slowdown of incomes. But from the ashes of recession, these corrective forces lead to the next recovery.

In Hayekian and Misesean terms, bad investment and spending decisions are being remedied through the free-market corrective process. And, greased by easy money, today’s market correctives may produce a much stronger V-shaped recovery than the stock-market consensus expects.

Note that there are no ellipses in the above block quotation. I wanted you to see it in its full glory. That is in context, my friends.

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