Keynsian economics is dead

[fhl]

The monetary play is more or less played out at these level of interest rates, so the only arrow the politicians have left in their quiver is the fiscal side.

There is zero chance they won't use that arrow, seeing as how they feel they must be seen as doing something. None of em want to be known as a do nothing congress or administration, so they'll do something wrong rather than nothing. If what they do is wrong, then they play the blame game and say it was the other guy's fault.

If they're going to run up the deficit, I'd rather they cut taxes instead of up the spending, because then the market will determine where the capital goes, not the politicians. That ought to get the money going to productive assets, rather than the boondogles which most assuradely will come to pass when the Obama administration starts their recovery program.

 

[intradaybill]

I think it is fair that those who say Keynesian economics is dead or stupid to state their suggestion for an alternative at this point as related to this crisis.

 

[Neodude]

Quote from intradaybill:

I think it is fair that those who say Keynesian economics is dead or stupid to state their suggestion for an alternative at this point as related to this crisis.

How about the Austrian school of economics?

-Neo

 

[intradaybill]

Quote from Neodude:

How about the Austrian school of economics?

-Neo

This is more of a philosophical school that examines the causes of events and has never AFAIK presented any quantitative way of dealing with issues and that is why it has no valauble publications to offer in journals.

 

[retire45]

Quote from JamesVU2000:

Totally agree. What is a recovery supposed to look like from Bernankes and co's perspective? Everyone go back to burying themselves in unsustainable debt?

THAT is a question I'd love to hear them answer... Sadly the answer is "banks lending and people borrowing"...

It's amazing... The patient is near dead from the drugs and recovery to them is him showing a desire for more drugs..

 

[kiwi_trader]

Quote from Thunderdog:

I'm not that big on economic theory. But I don't believe that true Keynsian fiscal policy had ever really been implemented in any meaningful way. As I understand it, the idea is to spend during recessionary periods while taxing more, spending less and paying down debt during expansionary periods. How much debt has actually been paid down during expansionary periods? Further, the idea is to reduce interest rates to stimulate the economy rather than in reaction to stock market dips. The interest rate manipulation perpetrated by Bernanke, and Greenspan before him, had nothing to do with Keynsian theory to the very limited extent that I understand it. You can't dismiss a concept while only adhering to one half of the equation and perverting the other half. Even so, let me repeat that I'm not that big on economic theory.

Good post Thunderdog.

What's more, Keynes had a lot to say and even the full application of "his" theory isn't a full application of what he had to say.

Totally agree with the "use debt to cure debt is nuts" school of thought. Part of the problem is that they're applying theories that might work if the problem was about one country. But its not.

In 29 the us had overcapacity ... now China has. Countries like Australia are congratulating themselves on being "safe" from worldwide depression ... but have been borrowing money from the rest of the world for 7 years (every quarter, every!). An interesting time is coming our way.

 

[JamesVU2000]

Quote from intradaybill:

This is more of a philosophical school that examines the causes of events and has never AFAIK presented any quantitative way of dealing with issues and that is why it has no valauble publications to offer in journals.

So its basically just a bunch of academic jibberish that has little application in the real world

 

[swtrader]

Quote from Thunderdog:

I'm not that big on economic theory. But I don't believe that true Keynsian fiscal policy had ever really been implemented in any meaningful way. As I understand it, the idea is to spend during recessionary periods while taxing more, spending less and paying down debt during expansionary periods. How much debt has actually been paid down during expansionary periods? Further, the idea is to reduce interest rates to stimulate the economy rather than in reaction to stock market dips. The interest rate manipulation perpetrated by Bernanke, and Greenspan before him, had nothing to do with Keynsian theory to the very limited extent that I understand it. You can't dismiss a concept while only adhering to one half of the equation and perverting the other half. Even so, let me repeat that I'm not that big on economic theory.

i think that's correct - keynsian can be implemented if a nation has the self dicipline to pay it back in the better times

but instead, it just became a crack habit

 

[luckybastard]

Quote from MandelbrotSet:

It's the stupidest, shittiest theory of economics I've ever heard of, I never agreed with it, and it's designed to cultivate the lowest and most base nature of human beings, and apply to their innate greed, laziness and stupdity.

It's a theory of economics desgined to milk the population as consumer driven, debt ridden, chattle, and maybe that is what they are.

I disagree. In 'normal circumstances' his theories cause more steady, solid growth: it 'fades' the up and down spikes. However, his theory was never meant to be applied to an 'un natural' boosted, sick economy.

 

[Angrycat]

Quote from Humpy:


Yes it helped countries out of the depression years ago but things are now different and it will be disastrous to implement his theories.

Keynsian economics managed to turn a regular depression into the Great Depression. It helped nobody do anything useful.

Think about it.

The Great Depression - the one in which Keynsian economics was implemented - lasted many many years longer than any other depression before it. It wasn't until Keynsianism was abandoned that the economy really grew again.