If I can put the whole Keynesian set of fallacies into one statement, it would be this: the modern Keynesians believe that the economy operates like a perpetual motion machine, with government spending being the “grease” that keeps it from slowing down. The “friction” in this economic machine, according to the pundits, is private saving. Eliminate it, and the economy goes on forever, adding energy and expanding indefinitely.
Such a notion, of course, is nonsense and dangerous and delusional. In fact, everything Gross says about the economy represents a view that becomes destructive when carried into policy. Therefore, it is imperative that we lay out what the real foundations of an economy are and point out that the present behavior by consumers is badly needed if there is to be an economic recovery.