Fatal Flaws of Keynesian Economics

Discussion in 'Economy' started by WillowTree, Jul 23, 2011.

  1. WillowTree
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    WillowTree Diamond Member

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    It's now clear that the federal government's massive stimulus spending has not achieved its objectives. Why hasn't it? It's important that we have answers to that question.

    The stimulus was premised on the economic model known as Keynesianism: the intellectual legacy of the late English economist John Maynard Keynes. Keynesianism doesn't work, never has worked, and never will work. Without a clear understanding of why Keynesianism cannot work we will be forever doomed to pursuing the impossible.

    There's no real mystery about why Keynesianism fails. There are numerous reasons why and they've been known for decades. Keynesians have an unrealistic and unsupportable view of how the economy works and how people make decisions.

    The American Spectator : Fatal Flaws of Keynesian Economics
     
  2. Truthseeker420
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    Truthseeker420 Gold Member

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    Stimulus was to keep us from going into a depression and I think it worked. There is a fatal flaw in Keynesianism it expects politicians to be resposible in good times wich we know Bush, Republicans and Corporation were not, which is really the fatal flaw in Friedman economics.

    Their aurgument that Keynesianism is short sighted and consumers and investers are not is wrong. The article seems to be just an attack piece with no facts to back it up.
     
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    Last edited: Jul 23, 2011
  3. Truthseeker420
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    Truthseeker420 Gold Member

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    Friedman had some reasonable insights into the inefficiencies of government.

    However he made a number of unforgivable errors, which ironically endeared him to the Establishment and enhanced his reputation.

    First, he trashed Austrian Business Cycle Theory.

    Second, he was a fiat money guy, supporting fiat money over gold (up until the end, when he started having doubts – too late in my view).

    Third, he supported central banking. How he could be a “free market guy” and support monopoly fiat and monopoly price fixing of interest rates is beyond me.

    Fourth, he destroyed Chile by implementing policies which systematically removed social investment and safety nets that (arguably) govts should provide, whilst keeping monopoly fiat in place. He should have advocated the elimination of monopoly fiat and allowed the continuation of social safety nets. He was clearly a tool of the major US banks in Latin America.

    Fifth, his policies destroyed New Zealand, partially destroyed Australia, and partially destroyed many other countries including the UK and the US.

    Antal E. Fekete does a wonderful job of destroying Friedman’s theories here, in a speech he delivered in late 2006, just after Friedman’s death. He also wrote a brilliant piece critiquing both Keynesianism and monetarism here, entitled (tellingly) Götterdämmerung.

    If you are shocked by the title of my post, please read these two pieces immediately.

    I will never forget Friedman sitting on the edge of Victoria Harbour in the late 1970s openly admiring the “free market” of Hong Kong. Hong Kong has the highest number of billionaires in Asia but 18% of the population live below the poverty line. Pollution problems are very serious. If you ask the average Hong Konger are they happy I guarantee they’ll say no. Housing is hideously expensive and is a huge tax on the working people (despite the supposedly low rates of tax there). Social services for the aged are extremely poor. Worst of all no one can buy and sell in gold – the monopoly HK dollar is pegged to the US dollar. So the economy is subject to the same mad monetary swings as the US.

    It is not so much a “Free Market” as one “Trapped in a Monopoly Money Hell”. If they could be allowed to trade in any currency they liked, I’d be more sanguine about HK. Until that fundamental issue is addressed, the Hong Kong people will never be free

    Milton Friedman was an idiot « Karma is King

    http://www.professorfekete.com/articles/AEFWhereFriedmanWentWrong.pdf
     
  4. editec
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    editec Mr. Forgot-it-All

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    ACtually Obama $787 billion stimulus package wasn't a good example of Keynian type response.

    38% of it came as tax breaks and most of the rest of it didn't go into WPA type job creation, instead it when to states and municipalities to keep public employees on the job.

    Half measures do not work.

    Compare in terms of size of stimulus to GDP to China's Keynesian response. They invested very heavily in massive public works projects that actually did create jobs. We really did not.

    Our stimulus was tiny, so tiny it couldn't make much difference.

    But if your complaint is about Obama, do consider that Congress crafted this feeble response.

    His error was signing onto it.
     
    Last edited: Jul 23, 2011
  5. Truthseeker420
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    Truthseeker420 Gold Member

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    Hear Hear !
     
  6. LordBrownTrout
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    LordBrownTrout Gold Member

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    I'm pretty confident that we could have made it without the stimulus. At some point we have to start giving ourselves more credit. We can solve our own problems. We don't need the fed wiping our butts every time.
     
  7. Truthmatters
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    why do these people not realise the government of the US is the people responding to their problems and trying to help fix them?


    They have been fed right wing bullshit hate about government for so long they dont even know the government is of by and for us.
     
  8. Oddball
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    Right-o....If your Keynesian economic meddling didn't work, just proclaim that it wasn't done properly and/or that you didn't do enough of it soon enough...All of which is completely unfalsifiable.

    Sheesh. :doubt:
     
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  9. Oddball
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    Oddball BANNED Supporting Member

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    Like we can rely upon the arsonists to put out the fire. :cuckoo:
     
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  10. Truthmatters
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    we did not go into a depression did we?


    we in fact ended the recession.

    Now the republicans are doing all they can to try and push this country into a double dip so they can keep their jobs.


    Party over country at every turn
     

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