Keynes is this week's champ while Brazil is the chump

This week’s champ is John Maynard Keynes, who wrote in his treatise: “The General Theory of Employment, Interest and Money” that when it came to boosting the economy the way to do it was through government deficit spending.

The Atlanta Federal Reserve’s GDP Now forecaster showed that third quarter growth is poised to hit 4.1 percent. That would follow 4.2 percent growth in the second quarter. Back-to-back quarters of 4 percent higher GDP in the ninth year of an economic expansion is all but unheard of. So how did we do it? Through expansive fiscal policy — deficit spending. Just like Keynes wrote about.

John Maynard Keynes’ Wikipedia entry states that he “was a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.” (Photo: Wikipedia)

In 2017, President Trump and the Republican Congress ordered up $1.5 trillion dollars in tax cuts and $300 billion dollars in deficit spending — paid for, in part, by borrowing from the Chinese. And look at the results: Consumer confidence — highest in 18 years; U.S. service sector activity – highest in 21 years; unemployment claims — lowest in 49 years.

This is why President Obama was asking for the money for years. Because when the government borrows money and puts it out into the economy, spending increases and the country grows. That’s Keynes was trying to say.

John Maynard Keynes. He might be dead, but he’s still this week’s champ.

‘Out of a moment of weakness’

This week’s chump is Brazil. As the country heads into this Sunday’s election, millions are going to vote to make an actual, honest-to-God fascist their president. Jair Bolsonaro, a man who said he would rather his own son be dead than gay, who was arrested for violating Brazil’s anti-racism law, who has on multiple occasions supported the country’s two-decade-long military dictatorship, who has praised war criminals and autocrats not just from Brazil, but from other countries, and said of his own daughter that he fathered her quote “out of a moment of weakness.”

Jair Bolsonaro’s tough line on crime and market-friendly policies have gained him as much support as his controversial views on women, homosexuality, race and torture have provoked scorn (AFP Photo/EVARISTO SA)

Tens of thousands of women filled the streets of Rio de Janeiro and cities around the country to protest Bolsonaro in what they called Ele Nao — or “Not Him” — protests last weekend. But Bolsonaro looks poised to win anyway. At least in the first round.

The markets clearly like him. The real currency and Brazil’s stock market and country-wide ETF rallied after a new poll showing him in the lead for president.

But of all the racist, xenophobic, misogynistic, homophobic, uneducated, freedom-hating, anti-democratic populist blowhards leading various countries around the world — and there are plenty — Jair Bolsonaro could be the worst.

All things considered, Brazil is this week’s chump.

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Dion Rabouin is a global markets reporter for Yahoo Finance. Follow him on Twitter: @DionRabouin.

See also:

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