A few points to make here.
1. Economics is a social science with lots of theories. But as a social science it rests on the flimsiest foundation possible. Namely totally irrational human being and economics dares to assume there is any science possible in predicting what amounts to the aggregate behavior of a mob. To further skew any possible science to be gleaned, economics thought further rests on the concept of a government able to rationally apply controls when in fact most governments are based on the most irrational set of humans possible, namely politicians who must engage in short run thinking to ensure their survival. Always delivering the good times.
2. Classic Keynesian economics is supposed to damp the normal cyclic swings of an economy
by having the government borrow and spend during bad times to pump up the economy and
then pay back the debt during the good times to prevent the economy from swinging to far up. Instead politicians borrow all the time negating that control. Leaving only the control of interest rates based on the assumption that the capital can be found and anyone is optimistic
enough to borrow to invest in capital goods. Or that the other pillar of the economy is intact, namely that a market exists for the goods. Go too far and you get not a recession but a depression in which the very thing a capitalist economy rests on, namely the customer, can no longer afford to buy the good and services, which reduces employment, which reduces the ability of customers to buy in a vicious circle where the economy can stabilize at a very low level.
3. Given thats its consumer spending that drives the economy, we are doing things exactly wrong by allowing wealth to concentrate which was one of the root causes of the great depression. Worse yet, the machines of a modern economy tend to devalue labor as we can now produce more with less labor. And we are not properly thing about the impacts that now favor capital at the expense of labor. There are still the economic prediction of Marx and Engel thus far staved off by rising technology. And as non renewable natural resources are depleted by the twin pressures of consumption and over population, the existing world economic model is unsustainable long term.
4. I have to be somewhat baffled that any belief in a libertarian economic philosophy like Ron Paul's still exists. Those ideas flopped in the late 19'th century and the 20'th century answer was found to be regulation even if its imperfectly applied. Even a casual read of the late 19'th centuries business cycles and orgies of corporate greed show the good ole days were definitely not so good. And now the new model seems to be to dismantle those very regulations. And now we do and we get S&L meltdowns and a massive bail out during the Reagan years. And now we saw the Western electric crisis run by companies like Enron, and can't see that oil going from $40.00 a barrel to $100.00 during the GWB watch is corporate
manipulation of the supply.
5. The US myth is that we can have guns and butter, and continue to run massive deficits
in government borrowing and a balance of trade. And then piss off the rest of the world with cowboy diplomacy. Its unsustainable long term. Eventually the rest of the world will quit loaning us money and our currency will collapse. The project for the new American century has been the project to accelerate the decline.