Robert Shiller at the WSJ thinks the stimulus “isn’t big enough to restore confidence“. Not enough… despite knowing that just one in seven dollars of a huge $18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year and a half.

But just like there are no atheists in foxholes, everyone is a keynesian during a recession. Investing in infrastructure and public works is the keynesian way of creating demand and getting out of a recession, they say. Or is it?

“Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle.”

Keynes, Collected Writings, vol. XXVII, p.122

Not to mention how the Federal Reserve, knowing we have more homes for sale than buyers, will embark on a program to buy $500 billion of mortgage bonds in the first half of 2009. Instead of letting prices get to their own level, we will stimulate artificial housing demand. How keynesian.

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