Interesting bit on Keynes

Discussion in 'Economy' started by Ravi, Jan 29, 2009.

  1. Ravi
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    Ravi Diamond Member

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    You can listen or read...pretty well describes Keynesian economics.

    I found it interesting to learn that economic theories are about as valid as Creationism...in other words, no proof that any of the various theories work.

    Obama Gives Keynes His First Real-World Test : NPR
     
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  2. xsited1
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    xsited1 Agent P

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    This will be the end for Obama. He hasn't even been in office for a month and he's already doomed his chances for reelection in 2012.
     
  3. Ravi
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    Ravi Diamond Member

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    You didn't even read it, did you?

    As for your assertion, that all depends on whether it works or not.
     
  4. manu1959
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    manu1959 Left Coast Isolationist

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    Yes, Roosevelt expanded government spending, with an alphabet soup of programs. But he never spent as much money as Keynes said he should have. He also did all sorts of things that Keynes opposed, like raising taxes and trying to balance the budget. Keynes said those steps would cancel out any positive effect from spending. Roosevelt bothered Keynes so much that the economist sent him at least one scolding letter.

    Then, finally, geopolitical events took over, and World War II forced Roosevelt to spend as much money as Keynes wanted.

    yep.....and then the feds tried to get banks to lend money at zero interest....

    now we flood the market with money.......

    what happens if i flood the oil market with oil.......
     
  5. xsited1
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    I've read the book on Keynesian economics. It doesn't work, period. There are plenty of studies to prove that it doesn't work. As a quick example, Japan spent hundreds of billions on Keynesian public works schemes after 1991, and economic growth averaged only 1.1 percent. On the other hand, other economic theories have been proven to work. Here's a Harvard study entitled "Fiscal Policy, Profits and Investment" in 18 large economies by Profs. Alesina, Ardagna, Perotti and Schiantarelli. The data is overwhelming:

    http://fmwww.bc.edu/EC-P/WP504.pdf

    If you apply an economic theory that has been proven to fail, it will fail. So why would anyone do something so foolish? Politics.
     
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    Last edited: Jan 29, 2009
  6. Ravi
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    Ravi Diamond Member

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    If you flood the market with oil, the price goes down. If you flood the market with money and create jobs, you give people money to spend. Spending is really what the economy is all about.

    Of course the key is when to stop, and I don't think Keynes ever addressed that point. Not knowing when to stop is basically what caused these policies to fail thirty years after they were started, no?
     
  7. Ravi
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    Ravi Diamond Member

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    I tried to wade throught that...but it was difficult. Could you summarize it for me in your own words? Methinks they suffer a bit from confirmation bias.
     
  8. Valerie
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    Valerie Gold Member

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    I listened to the NPR clip on Keynes. Thanks for posting it!

    The basic gist is Politicians and their advisers love to tweak taxing and spending our money. The idea is that the government "steers" the economy. They aim to balance an effective demand between the public and private sector and attempt to permanently eliminate recession.

    They conclude that Keynesian economics has no answer for inflation. There is no proof it will work and there is proof that it might not.
     
  9. manu1959
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    manu1959 Left Coast Isolationist

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    money is a comodity same as oil and when you flood the market with money its value ........
     
  10. Dante
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    Dante On leave Supporting Member

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    what shape is Japan in economically compared the the USA?

    the data is overwhelming? is it theoretical data? hmmmm,...we'll see.
     

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