Embracing. . . . .JM Keynes From Some. . .Distance

Discussion in 'Economy' started by mascale, Jun 8, 2010.

  1. mascale
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    mascale VIP Member

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    In the link, anyone notices that what Keynesian, MacroEconomics, is heavily about is a collusion of private and public spending to avoid recessions. If there are unemployed, then why not public works?

    John Maynard Keynes: The Concise Encyclopedia of Economics | Library of Economics and Liberty

    In fact, China, Canada, Australia, The Germans, The French, and even a cast of billions had the same concept: Public Works!

    In the United States, we have an Ivy League. Regardless of what was supposed to be done, and regardless of what everyone else was doing: The United States refused to go along, and do anything that it really was supposed to do.

    In fact, TARP was not Keynesian. Elsewhere noted, it is better thought "Paulson's Revenge," for having forgone all the banker's bonuses all those years in office. The banker's got bonuses, but no Public Works! Even the "Tea Party" eventually got mad, and ceased to believe in even the Conservative GOP.

    In fact, The Stimulus was only one third Keynesian. It was one-third a bail-out of state and local public sector employees--and not public works! It was one-third public works to commence in the following year. It was one-third a remedy of what Keynes actually should be said to have overlooked, which is arithmetic. When the rich get richer, and the poor get poorer: Then actually the economy cannot work at all!

    So what remedy was devised? The first attempt at adjustment had been the raised and indexed, standard deduction, and personal exemptions, in the 1986 U. S. Income Tax reform. Rather than a Reagan Trajectory, the Senate Democratic Leader, Alan Gregg Cranston was the Head Liberal In Charge. The outcome of that was a part of the Reagan Trajectory. More and more people got thrown off the tax rolls, and so were not included in any further, income tax relief measures---or "stimulus" measures. Reagan did massive, ineffective, defense procurements, and really did not do public works. Reagan did not prepare for 9/11, with all the spending.

    Bush II, Term I, would try various "stimulus measures," to no avail. Those were tax cuts, and not public works. Finally, A Reagan Trajectory Opportunity was created out of the nonsense of a gun-waving lunatic with "Weapons of Mass Destruction." Government had effectively fled to "an undisclosed location," or something. Later On, "Paulson's Revenge" would make it look like it would never come out! A housing bubble was created out of the fiction of the Clinton Administration: That actually the poor were better off. That era, however, was tax-cut based, and was no more. These were not public works, but faudulent, aka, business as usual.

    So the poor were unable to pay the mortgages, and the bundled instruments all became worhless. The rich houses all came tumbling down. . . .Sort of. There was a temporary cash flow bind, in reality. Paulson sought to address that, and that was not Keynesian. The Federal Reserve could have done a less expensive job: With the federal money spent on public works, instead.

    The Refundable Income Tax Credit is a stimulus that works in the old-fashioned way, even though public works are not involved. The equal dollar amount adjustment corrects the tendency to fixed percentage income increase: Throughout the Economy. Like public works, or the ignored BP settlements in the last employment data, there is income provided.

    That part is still not Keynes, who had never had the clue that arithmetic would be an economic problem, even less that it would a solution. Keynes focused more on public works.

    The Refundable Tax Credit is like a National COLA, government subsidized. Easily enough, planet trading partners may soon seem to notice this.

    That in fact will likely happen, one way or another: But in fact it is not a Keynesian program. Neither was another one third of the stimulus, or 100% of the previous black hole in the universe of U. S. Presidential Administrations.

    "Crow, James Crow: Shaken, Not Stirred!"
    (Would a Bush Dam, or Paulson Dam, be any sort of different dam from the great Hoover Dam of America? Not Even Great Prophet, Rev. Jeremiah Wright was never able to approach that leve of Damn, Oh Damn! Goddess be praised. . . .Hoover Dam was actually Keynesian!)
     
    Last edited: Jun 8, 2010
  2. Baruch Menachem
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    Baruch Menachem '

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    The Brazilians and Argentines bought hevily into Stimulus during the 70's Keysn's didn't like inflation either.

    It didn't work.

    The Japanese also were hevily into Kensyan stimulus. And they have a 30 year recession to show for it.

    the UK was hevily invested in Keynes during the 70s. It worked badly.

    So was Carter. Like 0bama, Carter had huge majorities in both houses and campainged on fiscal responsibility and ruled on stimulus.


    It is a great theory, but it presupposes an honest political class. I have yet to see a place where the prerequisite is in place.
     
  3. mascale
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    mascale VIP Member

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    Most of the planet was in an inflationary state during the 1970's There were oil price crises, even in places with cars, that ran on fuel, coincidentally in some people's minds.

    Argentina managed to reduce it's poverty rate to 7% in the 1970's. The 1970's,"Brazilian Miracle" managed to attract foreign investment such that during the period, inflation was low, and GDP growth was high. The downside would happen later on.

    The British Government was not really doing public works, but did do public spending, in the 1970's. The inflation still tends to be credited to the oil crisis. The contribution of other factors is then difficult to partial out.

    When hyper-inflation actually finally hit Argentina, the wages were fixed percentage indexed to the inflation rate. The whole thing tanked. The Monetarists had suggested and implemented the fixed percentage indexing, and that didn't work.

    A shortage of something badly needed is clearly inflationary, and is mostly what is shown from the 1970's. Public Works spending is not shown inflationary. Demand gets created, so that supply gets created, so that demand gets created: And so on. That kind of inflation is supposed to happen. When demand gets created, and then there is no supply: Then inflation happens.

    Even in that scenario: Anyone is back to public works, including greening public works.

    One thing to now notice is that all the deficit creation happening now isn't working very well, since in fact TARP was a non-event, and since the Obama-Biden stimulus was even expected to last into a second year, with mostly only preservative impact for state and local public employees expected in year one.

    Bush II, Term II, wondered where the credit expansion went. Mostly consumer credit contracted, only to reappear in April, 2010. That is in the 2nd year of government planned spending. Inflation is nowhere on the horizon.

    "Crow, James Crow: Shaken, Not Stirred!"
    (1860's were a much better decade, for Native Americans! The West Wing especially, seems to admire Abraham Lincoln, In Fact!)
     

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