Keynsian economics is dead

[intradaybill]

Quote from mccd:

I think that people here have a somewhat backwards understanding of Keynes.

The only thing that has died recently is Friedman's monetarism which, despite what some of the self-styled libertarians may assume, calls for the extreme expansion of the money supply right now (Friedman thought that aggressive easing would have avoided the great depression). Bernanke has followed his and Shwartz's advice and it has clearly failed.

Keynes saw only a minor role in monetary easing (hence why the monetarists disagreed with him) and instead argued in favor of fiscal stimulus. History has proven that fiscal stmulus is the best way of fighting a depression. Germany and Japan pursued fiscal stimulus in the early thirties and came out of the depression far earlier than anyone else, and strong enough to almost take over the world. Japan in the 90s pursued monetarist policies (attempt to reinflate the money supply with negative real interest rates) and failed. The USA is now in the same position. Keynes foresaw this failure and called it the liquidity trap.

So, despite what Murray Rothbard or whoever you read might try to tell you, Keynesians are not into printing money - they are into deficit spending - two very different things.

There are basically 3 ways to approach the current problem:

1) Monetarist - print money like there is no tomorrow, re-inflate asset values as quickly as possible

2) Keynesian- deficit spending to raise employment and sustain aggregate demand

3) Austrian - liquidate bad debts, allow insolvent institutions to fail, reduce the overall debt-load and start over from a sound base.

While the Austrian solution sounds good in theory, the danger is that once you willingly start a deflationary spiral, it is very hard to stop, and no one knows where it will end. Starting from a sound foundation might not seem so appealing when that foundation looks like something out of Mad Max.

One of the best posts. Thanks.

 

[Anaconda]

Quote from mccd:


While the Austrian solution sounds good in theory, the danger is that once you willingly start a deflationary spiral, it is very hard to stop, and no one knows where it will end. Starting from a sound foundation might not seem so appealing when that foundation looks like something out of Mad Max.

You gotta pay the Piper eventually. The problem with your thinking, which is prevalent in society, is that you can't handle the truth, hence you hide from it and keep making excuses.

As for Mad Max scenario, have you ever seen what happens during a currency collapse? There is a chance you soon may.

 

[faure]

Quote from Anaconda:

Uhm,

There is still no real production. It's just credit sloshing around. You can build highways all day long, but without any real production, it's just fluff.

Keynes' concept of the multiplier is the crux of the whole theory. Take a closer look at it before you decide the market solves everything.

 

[intradaybill]

Quote from hawk24:

Yes that is it. Expand government because they have done such a good job.

You got no choice. Otherwise you will go into negative interest rates and hyperinflation.

Government is no bad thing if it does what is supposed to do. Negative interest rates is a bad thing regardless.

Your choice....

 

[intradaybill]

Quote from Anaconda:

You gotta pay the Piper eventually. The problem with your thinking, which is prevalent in society, is that you can't handle the truth, hence you hide from it and keep making excuses.

If you're looking for the truth go to your local priest. He did a very good job explaining to truth seekers like you what options are there.

 

[Anaconda]

Quote from faure:

Keynes' concept of the multiplier is the crux of the whole theory. Take a closer look at it before you decide the market solves everything.

Once again,

There is NO REAL PRODUCTION. You build a highway, attract some activity but then what? You going to keep building highways to keep the contractors employed? Or do you just assume that because of the highway, there will be new development? Where are the jobs? Servicing the highway? Who is paying for that? Taxes from the residents who are doing what? Running service businesses for each other?

If you research the roots of Keynesian economics, you will find that it is essentially propaganda of the central banksters. Common sense will make that obvious to you as well.

 

[Anaconda]

Quote from intradaybill:

If you're looking for the truth go to your local priest. He did a very good job explaining to truth seekers like you what options are there.

My local priest? I don't associate myself with any religion, so no thanks. But he did have a message for you, he wants to reconnect and share some of those fun times the two of you had. You still like sucking on lollipops?

 

[intradaybill]

Quote from Anaconda:

Once again,

There is NO REAL PRODUCTION. You build a highway, attract some activity but then what? You going to keep building highways to keep the contractors employed? Or do you just assume that because of the highway, there will be new development? Where are the jobs? Servicing the highway? Who is paying for that? Taxes from the residents who are doing what? Running service businesses for each other?

If you research the roots of Keynesian economics, you will find that it is essentially propaganda of the central banksters. Common sense will make that obvious to you as well.

You do not understand economics. The word "highway" is used to mean general infrastructure projects which are very useful to society and productivity increase and can stimulate future growth.

I think you ought to visit your local priest and confess your ignorance.

 

[faure]

Quote from Anaconda:

Once again,

There is NO REAL PRODUCTION. You build a highway, attract some activity but then what? You going to keep building highways to keep the contractors employed? Or do you just assume that because of the highway, there will be new development? Where are the jobs? Servicing the highway? Who is paying for that? Taxes from the residents who are doing what? Running service businesses for each other?

Okay let me put it another way, the building of a bridge is real production in the sense that something real is created, right? A bridge has been built but at the same time the cement factory has made cement, the steel company has manufactured steel, orders for machinery have to be placed at the machinery company. All these companies spend their money on suppliers. The money trickles down the system along with production of goods that the money brings.

The aim of all of this is to temporarily support the economy until private spending takes over. Then taxes are raised to pay back the government debt.

 

[Anaconda]

Quote from faure:

Okay let me put it another way, the building of a bridge is real production in the sense that something real is created, right? A bridge has been built but at the same time the cement factory has made cement, the steel company has manufactured steel, orders for machinery have to be placed at the machinery company. All these companies spend their money on suppliers. The money trickles down the system along with production of goods that the money brings.

Hey, well with that logic, why don't we just start building homes & condos all over the place, get the people working, start materials moving, service industry developing for the workers, and everything will be great. Except that this nation just went through that.

The aim of all of this is to temporarily support the economy until private spending takes over. Then taxes are raised to pay back the government debt.

Been to Florida lately? I just came back. Hilarious. That's exactly what they did there. Wonderful results (heavy sarcasm intended)

I know that the real events exemplifying what a joke this concept is avoid you. But let me try explain it once again. THERE IS NO REAL PRODUCTION. Just building random structures which have no real demand does not accomplish anything except generate more debt & illussions.

Government spending should from an excess of tax receipts for projects that need to be done. Not borrowing money to create projects that have questionable demand & value. That's called waste.