Exogenous Theories of the Business Cycle?

When I began reading the latest from Greg Kaza, I thought “ho-hum, more NRO cheerleading”:

Bearish critics overlook the dynamic spirit of American capitalism, its risk-taking entrepreneurs, and the economy’s resiliency. They also overlook broad indicators like the output of the nation’s mines, factories, and utilities (industrial production), and nonfarm employment, which both show an economy that keeps on growing.

But then he linked to a previous post having something to do with exogenous theories of the business cycle:

Against Keynes, capital-based economists argue that “intervention by the monetary authorities [is] the ultimate source of recession.”

If we are thinking that this sounds a lot like the Austrian theory, you’d be correct:

His theory claimed that credit creation by monetary authorities would push investment beyond society’s long-term willingness to save, creating a mismatch between supply and demand that would inevitably cause recession.

And yet, some Keynesians might attribute the fall in investment demand that began just as President Bush was taking office to the tight monetary policies of 1999 and 2000. So once again, I’m trying to figure out what is Mr. Kaza’s point – beyond cheerleading.

Update: The fall in the deficit might look like more for the Bush crowd to cheer about until one reads the details:

WASHINGTON (AP) – The federal deficit hit $319 billion for the budget year that just ended, down significantly from last year’s record red ink, although a surge in Katrina-driven spending threatens to drive the shortfall up again. The improvement from the record $412 billion recorded in the 2004 budget year, which the Treasury Department reported on Friday, is largely due to a surge in federal revenues from an improving economy.