Quote from Daal:
Keynes was one of the first to show that what is good for an individual(saving) can be disastrous when it happens in a MACRO scale, because some people's saving decreases other people's income, so economy can go down the tubes. Thus giving birth to macroeconomics, give the man credit when he deserves
The problem comes when folks use his great ideas for political purposes
Why is the economy "going down the tubes" disastrous? Unproductive or foolhardy economic activity can only be replaced by productive and wise economic activity through the total annihilation of the former. This means huge swathes of people getting fired, firms going bust etc. Without this the economy cannot adapt. Without adaptation you end up like the GDR, USSR, N Korea etc.
Thus the economy going down the tubes by people saving is not only not disastrous, it is *absolutely essential to prosperity*, and the only way for an economy to get much, much richer in the long run. Avoiding short-term "disaster" means guaranteed long-run disaster.
This was widely known in the 19th century, let alone Keynes's time (e.g. Schumpeter popularized this notion).
Bear in mind also that savings are the sole source of investment capital, which is the only source of funding for entrepreneurs, who are the main source of job and productivity growth in the economy.
One should note that Keynesianism was tried to the letter in Japan post 1990, and the result was the longest economic stagnation and deflation of any advanced economy since the Great Depression. Keynes' ideas failed the test of the real world.
Furthermore, advice derived from a theoretical construct is of no use whatsoever if it cannot actually be implemented in the real world. A political system which relies on humans always being good and nice is useless because humans will not always be good and nice. An economic policy prescription which relies on government being wise, impartial, and consistent will never work because no government has ever possessed those qualities.
Thus Keynes ideas are not only arguably refuted since a few months after he published them, but even if you think he is correct, they are incredibly unlikely to be implemented properly by any government. And the only time a government implemented them to the maximum one can realistically expect, the result was utter disaster. I still remember my Keynesian economics professor in the mid 90s, a guy who had advised in UK politics for 2 decades, admitting that so far the Japan experience was proving Keynesianism was not working. His words were basically that they were following textbook Keynesian policy and it had not produced any results. Another 7 years passed, same policy, same lack of results. Now its 2009, 19 years of Keynesian policy and virtually no growth, and huge government debt with nothing to show with it, bridges to nowhere and white elephants galore. This is success?
Keynes' policies have failed every test they have ever encountered. By the standard of real world results, he is the 2nd worst economist of all time (Marx being the worst). If he was a trader he would have busted out time and time again with this level of performance (ironically he was a better trader than economist).
