Krugman schools Will

Well spoken.

You are incorrect. Hoover raised taxes and slashed spending to prevent a budget deficit, which he had to do because of the gold standard. Also, the Fed refused to expand the money supply. Also, have you ever heard of the dollar multiplier effect? Read all about it in Keynes' The General Theory.

Not true. Your model is simply incorrect. Think of it like this: and economy consists of labor, capital, and physical plant (factories, offices, stores, ports, ect.) and when these resources are all employed, the economy is sound and growing. A recession is when a large amount of these assets become idle, thereby reducing demand for the still active assets, thereby causing others to fall unemployed in a vicious cycle. Stimulus restores demand so the economy can return to full employment.

Do you really beleive unemployment and economic growth aren't symbiotic? Economic growth has come from stimulus, 3.5% annualised in this quarter alone. Not because of the direct effect of Gov't spending, but the flw on of 'multiplier effect.'

Falls in unemployment lag as businesses sell their excess inventories which have accumulated through the slump. As those excess inventories are sold down businesses start hiring again to replenish inventories.