Most of us of Austrian persuasion who read or listened to Obama’s “economic” speech yesterday were horrified at the absolute recklessness of his proposals. Here is someone who claims that we can and should “spend our way out” of the recession/depression, which is absolute folly.

However, there is always Paul Krugman. Obama is not being reckless, according to the newest Nobel laureat; no, Obama is too conservative, too cautious:

…Mr. Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed.

Bear in mind just how big the U.S. economy is. Given sufficient demand for its output, America would produce more than $30 trillion worth of goods and services over the next two years. But with both consumer spending and business investment plunging, a huge gap is opening up between what the American economy can produce and what it’s able to sell.

And the Obama plan is nowhere near big enough to fill this “output gap.”

Yes, you see, Professor Krugman already has done the math, and everyone knows that economics is a “mathematical science.” So we have this:

To close a gap of more than $2 trillion — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough.

Now, fiscal stimulus can sometimes have a “multiplier” effect: In addition to the direct effects of, say, investment in infrastructure on demand, there can be a further indirect effect as higher incomes lead to higher consumer spending. Standard estimates suggest that a dollar of public spending raises G.D.P. by around $1.50.

But only about 60 percent of the Obama plan consists of public spending. The rest consists of tax cuts — and many economists are skeptical about how much these tax cuts, especially the tax breaks for business, will actually do to boost spending. (A number of Senate Democrats apparently share these doubts.) Howard Gleckman of the nonpartisan Tax Policy Center summed it up in the title of a recent blog posting: “lots of buck, not much bang.”

The bottom line is that the Obama plan is unlikely to close more than half of the looming output gap, and could easily end up doing less than a third of the job.

There you have it, folks. He believes that the U.S. Government should borrow (From whom, Dear Professor?) to purchase almost everything that the U.S. economy theoretically can produce.

Lawrence Reed, in his wonderful 1981 classic, “7 Fallacies of Economics,” lists “Production for its own sake” as one of them. It is based upon the old Malthus/Marx fallacy that production and consumption are separate entities, and that capitalism fails because its workers “cannot buy back the products” they produce.

Thus, the Nobel Laureate continues in that wrong-headed vein: Have the government “buy back” our output, since those consumers are unwilling or unable to do so. The fallacies here are obvious, but I guess that “elite” economists are unable to see them. Par for the course, I’m afraid.