WSJ: It's the spending, stupid

[DJofSD]

http://online.wsj.com/article/SB10001424052748703743504575493953591176476.html?m od=WSJ_Opinion_LEADTop

Is keynesian economics dead?

[Native Texan III]

No, far from it, Keynesian economics has proven to be nearer than any other theory in explaining what has happened and why.

Keynes made the strong point that if Government does invest in the economy then it must invest in things that pay back that investment money many times over. So spend on infrastructure repairs, new factories and machinery, R&D, improved schooling and even improved health.

what has happened with TARP etc is that most of the money has gone to the filling of the black hole in bank reserves and not reappeared out again to help Main St. That is certainly not Keynesian. Keynesian measures have not really even started yet.


"Keynesian theory was much denigrated in academic circles from the mid-1970s until the mid-1980s. It has staged a strong comeback since then, however. The main reason appears to be that Keynesian economics was better able to explain the economic events of the 1970s and 1980s than its principal intellectual competitor, new classical economics (http://NewClassicalMacroeconomics.html)."

"Therefore, economic downturns, by the early new classical view, should be mild and brief. Yet, during the 1980s most of the world’s industrial economies endured deep and long recessions. Keynesian economics may be theoretically untidy, but it certainly predicts periods of persistent, involuntary unemployment."

" The massive U.S. tax cuts between 1981 and 1984 provided something approximating a laboratory test of these alternative views. What happened? The private saving rate did not rise. Real interest rates soared. With fiscal stimulus offset by monetary contraction, real GNP growth was approximately unaffected; it grew at about the same rate as it had in the recent past. Again, this all seems more consistent with Keynesian than with new classical theory.
Finally, there was the European depression of the 1980s, the worst since the depression of the 1930s. The Keynesian explanation is straightforward. Governments, led by the British and German central banks, decided to fight inflation with highly restrictive monetary and fiscal policies."


http://www.econlib.org/library/Enc/KeynesianEconomics.html

[Shemp Howard]

http://online.wsj.com/article/SB10001424052748703743504575493953591176476.html?m od=WSJ_Opinion_LEADTop

Is keynesian economics dead?

You can make book it is DEAD. This is what the so-called T-Party Movement is all about. Citizens can't spend money they don't have but the feckless boobs running the guvment can?

I can hear in the distance the faint sound of fife and drums getting closer and closer. The fake, phoney, frauds currently in power hear it too and they are sore afraid.

[boxcar]

You can make book it is DEAD. This is what the so-called T-Party Movement is all about. Citizens can't spend money they don't have but the feckless boobs running the guvment can?

I can hear in the distance the faint sound of fife and drums getting closer and closer. The fake, phoney, frauds currently in power hear it too and they are sore afraid.

That is really amazing how that works (NOT!). We're constantly told that we citizens need to cut back, save money, cut spending, cut corners, sacrifice, etc., etc., etc. But the morons in government defy logic and common sense by insisting that they can spend us into oblivion and until there's no tomorrow and everything will be just fine -- a-okay! You citizens, just do as we say, never as we do, though.

It's same ol', same ol' perverse, twisted, unbelievably convoluted thinking of government. Easily discernible pattern to see for everyone not wearing blinders. Ponzi Schemes? You people can't do that, but we can. Discrimination? You people can't do that either, but Affirmative Action works just fine for us, thank you. Spending? You people need to cut and slash your spending and debt immediately and sacrifice until it hurts, but we can spend your money and create all the debt we want.

This nation will fall and fall hard unless it gets its act together very quickly; for a house divided against itself, as it is currently, cannot continue to stand!

Boxcar