Diuretic
Permanently confused
Now, I'm all ears (eyes I suppose as I'm reading stuff).
If Keynesian economics isn't any good right now what should be done?
If Keynesian economics isn't any good right now what should be done?
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Yeah, you're right, I haven't got a clue about this stuff, I should keep out of it.
Reagan was a Keynesian. That puts me right out of the ring then. I should know better than to take you on Paulie. Oh well, back to the drawing board wth me.
Reagan was a Keynesian. I need to remember that.
What free markets?So Brian. The free markets failed right?
Hey, if you want to get all childish about it and throw a hissy fit because you were proven wrong, that's fine by me.
Reagan ran huge deficits. That is the very foundation upon which Keynesianism rests.
There's really no getting around that, Diuretic.
You'll find most of them claim in one breath that there is no free market and never has been, and then in another breath, blame the free market! I just don't get it.
Because banks and consumers got greedy in a market that was already FAR from free, it is somehow all the fault of the "free market", that liberals already claim never existed in the first place.
Quite comical when you break it down.
Hissy fit? Me? Fuck no, I'm interested to know how Reagan was a Keynesian that's all. I'm no economist I only have my views and opinions and average ability to work things out (NOT if it involves numbers, I can't do numbers).
Huge deficits are the mark of a Keynesian. Okay, got it. But isn't that only when it's necessary? I mean I thought Keynes argued that governments should not be frightened of going into budget deficit to stimulate the economy. But if the economy is going well it doesn't make sense that a budget deficit is required due to increased incomings from general economic activity? Running a deficit during good times would seem to me to be negligence and I don't know if Keynes would have approved.
Ideas?
But that's exactly what Reagan did. He ran huge deficits to try and stimulate growth that was lost due to the early 80's recession. He may not necessarily have been as much of a Keynesian as Obama and his advisors are, but it at least goes to show that Keynesianism has not been dead since the 70's.
Is the only hallmark of Keynesianism running deficits? I mean Joe Blow could run a deficit in office due to negligence and claim he was a Keynesian, surely there's more to it than that. Did Reagan actually apply himself in a Keynesian manner?
And what was the cause of Reagan's budget deficits? Did he spend too much or did he cut taxes and cut govenment income? Or was there another set of reasons?
Where does Reagan's Trickle Down Economics idea fit in the overall scheme of his economic policies?
You are correct about this. I do not think Keynes approved of adding to the deficit in good times. The problem is that you are dealing with the government ... and when times are good everyone wants to drink from the punch bowl. Drinking from the punch bowl is easier when you have central bank issued fiat currency with no constraints other than the ability to issue debt (the Fed cannot lend directly to the Treasury). It is even easier when you are the reserve currency of the world.Huge deficits are the mark of a Keynesian. Okay, got it. But isn't that only when it's necessary? I mean I thought Keynes argued that governments should not be frightened of going into budget deficit to stimulate the economy. But if the economy is going well it doesn't make sense that a budget deficit is required due to increased incomings from general economic activity? Running a deficit during good times would seem to me to be negligence and I don't know if Keynes would have approved.
Ideas?
No, there is not. But the degree of freedom in a market makes a big difference. Our markets (US) continue to be less free.Brian
So there's no such thing as a free market?
I just hope the federal government gets over its fear of a budget deficit. To some extent they've been sucked in by the opposition's taunting about deficits. I'm no economist of course but those who know what they're on about are telling the feds not to get scared of deficit as in tough times governments have to do it to keep things going. So, while Chris Richardson has belled the cat that's a good thing because he's blunting the opposition's ability to scare the government. Those of us who read the newspaper and think about these things understand that it's necessary and actually good management.
You are correct about this. I do not think Keynes approved of adding to the deficit in good times. The problem is that you are dealing with the government ... and when times are good everyone wants to drink from the punch bowl. Drinking from the punch bowl is easier when you have central bank issued fiat currency with no constraints other than the ability to issue debt (the Fed cannot lend directly to the Treasury). It is even easier when you are the reserve currency of the world.
The problem is that the US economy has been weakened by so many of these cycles where we increase money, credit, and spending to escape recession, I do not think it is possible any longer to have an up cycle without continuing to deficit spend.
Brian
Yes. As I stated earlier in this thread ...To add to this, so that maybe Diuretic understands more where the anti-Keynesians are coming from...Each cycle of deficit spending that is implemented to "fix" a recession, will ultimately leave certain portions of the problem unfixed, unliquidated, whatever.
The first bubble I remember reading about (years ago and not in formal education) was the South Sea Bubble. That sounded a lot like wholesale fraud to me.
But as I understand it the bubbles you refer to are when the economy gets overheated - I'm trying to explain something I'm not sure of so bear (sorry) with me - such as when the real estate market prices housing at a rate that is (sorry) unreal.
But aren't bubbles endemic in a free (or mixed) market economy?
Aren't boom and bust cycles part of a free (or mixed) market economy?
If so then doesn't it make sense for government to increase its economic activity during the contracting cycle to try and shorten its duration and then ease off when the expansion begins again?
Surely if government didn't hop in and stimulate that the contraction would simply keep going until it found its - I don't know if there's a technical name, I suppose there is - natural bottom. But if it were allowed to do that wouldn't it (a) cause an immense amount of damage to companies and individuals, perhaps damage beyond recovery and (b) a whole lot of misery to ordinary people who are not, like the rich, protected from the vagaries of recession or depression?
This is when the moral hazard argument kicks in. By stepping in and spending their way out of it to somehow "lessen" the effects, not only are they adding more debt to the problem and not allowing the market's problems to properly liquidate, they are keeping society from having to learn from the mistakes that caused the downturn.
It's immoral to let everyone enjoy the market and benefit from it, but when times get bad, shelter them from having to endure the pain from the risk they took. Part of having freedom is having the freedom to FAIL, too. How do you learn from your mistakes and become a better society, if your government is sheltering you from having to handle ALL of the aspects of the market? You're not entitled to perpetual prosperity. If you're going to have a capitalist market that you have many opportunities to take advantage of and succeed in, then you also should be subject to the possibilities of failure as well. We're all living off the market, and as such, we all have a little bit of responsibility and accountability. Just because maybe you weren't flipping houses, or investing heavily in stocks, or taking part in the high end of the business aspect of the market, you were still living within the market environment and enjoying its prosperity regardless. Because of that, I believe that you deserve a bit of the responsibility. Everyone who benefitted from the good times, deserves to also endure the bad times as well. If you're not thick skinned enough to deal with both aspects, and PREPARE yourself for both, then you probably should move to a nice communist country that will take care of you completely.
It's a cop out to ask your government to bail you out when times get bad, in the face of you enjoying the market and benefitting from it when the times were good. We as a society ought to take responsibility for our own market, because our market is after all, what we make of it. Part of the reason consumers and business owners don't seem to be getting better at certain things, is because we continually have government stepping in and insulating us from having to actually LEARN why we failed, and make ourselves better from the learning experience. We get bailed out, and then we go hog wild again next time around because in the back of our minds, we know government will be there to save us from our own stupidity, apathy, carelessness, etc.
Diuretic, think of it like this. You live in a country whose economy is booming because credit is expanding, people are spending, houses are being built, jobs are plentiful, wages are increasing, etc. Even if you weren't trading stocks, or flipping houses, you were still benefitting from that prosperity. If you were borrowing and spending like crazy, for instance, because the money was flowing like wine, you played your part. You can pretend that you had no part in the downturn, but you did. If you jacked up your credit cards, bought a ton of trinkets, and neglected to save for a possible downturn, you share some of the overall blame. If you're living well because of the investor class jolting the economy, and the middle class spending like drunken sailors, then you share responsibility too. When the market is prosperous, you share in the prosperity. When the market hits a downturn, you share in that too.
To answer the later question, the market isn't just the stock market. It's everyone who is collectively making a transaction for a good or service. Money exchanging hands constitutes the market, for instance. Unless you were living in the woods somewhere off the grid, bartering in some kind of closed commune amongst like-minded people, you were benefitting somehow from the entire market's period of success. So why should you not share in the failure as well, considering that as a citizen, you are partly responsible for the market in which you participate on a daily basis?
If you can be free to benefit from the market, you can be free to suffer the potential consequences of the risks you take, as well.
To me, THAT is what is "fair".
It works progressively, too. The investor class lost a LOT of money. Some should have lost entire businesses because of their malinvestment, misallocations, and overall risk-taking. But instead they were REWARDED for their mistakes by literally being given the blood, sweat, and tears of the taxpayer collective. If you ask me, THAT is the TRUE collective punishment. Taxing the whole country, devaluing an entire currency, to pay for someone else's mistakes.
Sure, some played by the rules, and bought a house they could afford, and are currently making good on their liabilities. They should not be TAXED to pay for someone else's risk, but they certainly can share some of the economy's downturn, considering, like I said earlier, they did benefit from the boom as well.
That's the ultimate difference in my opinion.