What have we learned....

[midcan5]

More proof Keynes was right.

'What We’ve Learned from the Financial Crisis' by Justin Fox

What We?ve Learned from the Financial Crisis - Harvard Business Review

"Five years ago the global financial system seemed on the verge of collapse. So did prevailing notions about how the economic and financial worlds are supposed to function.

The basic idea that had governed economic thinking for decades was that markets work. The right price will always find a buyer and a seller, and millions of buyers and sellers are far better than a few government officials at determining the right price. In the summer of 2007, though, the markets for some mortgage securities stopped functioning. Buyers and sellers simply couldn’t agree on price, and this impasse soon spread to other debt markets. Banks began to doubt one another’s solvency. Trust evaporated, and not until governments jumped in, late in 2008, to guarantee that major banks would not fail did the financial markets settle down and begin fitfully to function again."

"Companies achieve great economies, but they do so in part by driving wages down, and over time they will drive wages below the subsistence level unless the government intervenes to prevent them." Adam Smith

 

[Avorysuds]

We have learned that Politicians with little to no economic understanding will buy their way out of Recessions and depression only to leave the future citizens with massive and unsustainable debt.

Keynes produced a theory that proved to not work. It didn't work for FDR and it has not worked for Clinton, Bush or Obama.

The FED-R spends 87 billion a month, over a trillion a year to float a fake economy. If the markets were left alone we would fall into a depression due to the debt, however a recovery, a real recovery would occur as proven by Harding in the 1920's.

The economy today is doing very badly. Less people are working and more people are on food stamps and welfare. You have to be desperate, incredibly bias and or ignorant to try and claim Keynesian economics works.

 

[midcan5]

...Keynes produced a theory that proved to not work. It didn't work for FDR and it has not worked for Clinton, Bush or Obama....

After FDR we had fifty years without a crash, I doubt you read the piece as your ideological comments are simply wrong and history is there to show them wrong.

Clinton and Bush did not need to use similar tactics, Obama has after the crash of 07/08, and we have had steady growth for six years, again history demonstrates your ideological frame wrong. One has to wonder how it is that ignorance on the right persists?

I doubt you will consider the below as it will show the earth to be round.

'The Sequester’s Hidden Danger' by Jeff Madrick
"And the sequester will be painful. Educational and housing subsidies will be cut, as will unemployment insurance and research spending. More than $40 billion will be cut from the defense budget, music to my ears, but not to those who will lose jobs at defense contractors. Above all, claims that economic growth down the road will be spurred by reducing the federal deficit through spending cuts are not credible." The Sequester?s Hidden Danger by Jeff Madrick | NYRblog | The New York Review of Books

The Nonsense of Austerity | The Business Desk with Paul Solman | PBS NewsHour | PBS
ttp://www.usmessageboard.com/clean-debate-zone/264699-taxes-spending-the-fiscal-cliff-and-austerity-16.html#post6563484
http://www.nytimes.com/2012/02/19/magazine/the-way-greeks-live-now.html

 

[Dont Taz Me Bro]

Keynes was a quack and only ideological fools living in their own little bubble still lap up any of his destructive crap.

 

[midcan5]

There was little comment on the above so instead of starting a new thread why not develop the theme. This commentary and the book quoted below are fascinating thought provokers.

"The roots of the current American predicament go back to the 1970s, when wages of workers stopped keeping pace with their productivity. The two curves diverged: Productivity continued to rise, as wages stagnated. The “great divergence” between the fortunes of the top 1 percent and the other 99 percent is much discussed, yet its implications for long-term political disorder are underappreciated. Battles such as the recent government shutdown are only one manifestation of what is likely to be a decade-long period."

Blame Rich, Overeducated Elites as Our Society Frays - Bloomberg

"...In the United States large sections of the population were happily abandoned to illiteracy from the very beginning. Now new sections are added to this lumpen proletariat with each passing year. Everywhere one hears the elites saying to each other, in private: "Well, of course, they are not educable." There are endless statistics to confirm the already educated in their pessimism. Seventy-two million Americans are illiterate, the majority of them white. This doesn't include the functionally illiterate. One-quarter of American children live below the poverty level. Forty percent of children in public schools are from racial minorities. The whites who can afford to are slipping away into the private school system. Twice as many children are born to American teenagers as to those of any other democracy. But if you begin to add such facts as that forty million Americans do not have access to medical care, you are also obliged to wonder if the problem lies not with the population but with the elites, their expectations and their own education." p131 'Voltaire's Bastards: The Dictatorship of Reason in the West' John Ralston Saul


"We have two American flags always: one for the rich and one for the poor. When the rich fly it means that things are under control; when the poor fly it means danger, revolution, anarchy." Henry Miller

 

[martybegan]

Keynes was a quack and only ideological fools living in their own little bubble still lap up any of his destructive crap.

Modern progressive statists only follow 1/2 of keynes's theories, that of deficit spending during economic downturn. What they forget is that the deficit created during the downturn needs to be paid back during the corresponding economic upturn, i.e. the government has to run a surplus and pay off its debts. Instead the progressive statists use the surplus to further expand the government, thus never paying off the debt.

The closest we ever came to that recently was under Clinton, and even then they spent most of the gains, and that can be blamed on congress as well.

 

[editec]

We do NOT live in a Keynesian economic system.

Economics out of favour 1979–2007

Main article: Post-war displacement of Keynesianism

Keynesian economics were officially discarded by the British Government in 1979, but forces had begun to gather against Keynes's ideas over 30 years earlier. Friedrich Hayek had formed the Mont Pelerin Society in 1947, with the explicit intention of nurturing intellectual currents to one day displace Keynesianism and other similar influences. Its members included Austrian School economist Ludwig von Mises along with the then young Milton Friedman. Initially the society had little impact on the wider world – Hayek was to say it was as if Keynes had been raised to sainthood after his death and that people refused to allow his work to be questioned.[52][53] Friedman however began to emerge as a formidable critic of Keynesian economics from the mid-1950s, and especially after his 1963 publication of A Monetary History of the United States.

On the practical side of economic life, big government had appeared to be firmly entrenched in the 1950s but the balance began to shift towards private power in the 1960s. Keynes had written against the folly of allowing "decadent and selfish" speculators and financiers the kind of influence they had enjoyed after World War I. For two decades after World War II public opinion was strongly against private speculators, the disparaging label Gnomes of Zürich being typical of how they were described during this period. International speculation was severely restricted by the capital controls in place after Bretton Woods. Journalists Larry Elliott and Dan Atkinson say 1968 was a pivotal year when power shifted in the favour of private agents such as currency speculators. They pick out a key 1968 event as being when America suspended the conversion of the dollar into gold except on request of foreign governments, which they identify as when the Bretton Woods system first began to break down. [54]

Criticisms of Keynes's ideas had begun to gain significant acceptance by the early 1970s as they were able to make a credible case that Keynesian models no longer reflected economic reality. Keynes himself had included few formulas and no explicit mathematical models in his General Theory. For commentators such as economist Hyman Minsky, Keynes's limited use of mathematics was partly the result of his scepticism about whether phenomena as inherently uncertain as economic activity could ever be adequately captured by mathematical models. Nevertheless, many models were developed by Keynesian economists, with a famous example being the Phillips curve which predicted an inverse relationship between unemployment and inflation. It implied that unemployment could be reduced by government stimulus with a calculable cost to inflation. In 1968 Milton Friedman published a paper arguing that the fixed relationship implied by the Philips curve did not exist.[55] Friedman suggested that sustained Keynesian policies could lead to both unemployment and inflation rising at once – a phenomenon that soon became known as stagflation. In the early 1970s stagflation appeared in both the US and Britain just as Friedman had predicted, with economic conditions deteriorating further after the 1973 oil crisis. Aided by the prestige gained from his successful forecast, Friedman led increasingly successful criticisms against the Keynesian consensus, convincing not only academics and politicians but also much of the general public with his radio and television broadcasts. The academic credibility of Keynesian economics was further undermined by additional criticism from other Monetarists trained in the Chicago school of economics, by the Lucas critique and by criticisms from Hayek's Austrian School.[37] So successful were these criticisms that by 1980 Robert Lucas was saying economists would often take offence if described as Keynesians.[56] Keynesian principles fared increasingly poorly on the practical side of economics – by 1979 they had been displaced by Monetarism as the primary influence on Anglo-American economic policy.[37] However many officials on both sides of the Atlantic retained a preference for Keynes, and in 1984 the Federal Reserve officially discarded monetarism, after which Keynesian principles made a partial comeback as an influence on policy making.[57] Not all academics accepted the criticism against Keynes – Minsky has argued that Keynesian economics had been debased by excessive mixing with neoclassical ideas from the 1950s, and that it was unfortunate the branch of economics had even continued to be called "Keynesian".[19]
Writing in The American Prospect Robert Kuttner argued it was not so much excessive Keynesian activism that caused the economic problems of the 1970s but the breakdown of the Bretton Woods system of capital controls, which allowed capital flight from regulated economies into unregulated economies in a fashion similar to Gresham's Law (where weak currencies undermine strong currencies).[58] Historian Peter Pugh has stated a key cause of the economic problems afflicting America in the 1970s was the refusal to raise taxes to finance the Vietnam War, which was against Keynesian advice.[59]

A more typical response was to accept some elements of the criticisms while refining Keynesian economic theories to defend them against arguments that would invalidate the whole Keynesian framework – the resulting body of work largely composing New Keynesian economics. In 1992 Alan Blinder was writing about a "Keynesian Restoration" as work based on Keynes's ideas had to some extent become fashionable once again in academia, though in the mainstream it was highly synthesised with Monetarism and other neoclassical thinking. In the world of policy making, free-market influences broadly sympathetic to Monetarism remained very strong at government level – in powerful normative institutions like the World Bank, IMF and US Treasury, and in prominent opinion-forming media such as the Financial Times and The Economist.[60]

 

[Nemo]

What have we learned? What we have learned is that we have not learned our lesson. Alan Greenspan was wrong in thinking that the market would regulate itself; and he admitted that he was wrong in his testimony before Congress. The congressional response was Dodd-Frank incorporating the Volcker Rule against proprietary trading by banking entities; which was violated by JP Morgan Chase Bank before the ink was dry on the "remedial" legislation. (How many billions were lost? Does anyone know?) Dodd-Frank was too little to late; and it was immediately attacked by the banking and Wall Street lobbyists that have succeeded in getting the few restrictions on trading financial derivative contracts "relaxed" to the point that it is back to "business as usual". In this, I fault President Obama's leadership; for although he did not create the problem, he failed to take decisive action to correct it. When he had the bankers by the balls and called them on the carpet at the White House, instead of bringing these rogues to heel, he let them off the leash. The gleeful bankers held a press conference to announce that the President had agreed to "work with them". You can rest assured that what happened before will happen again - and soon. And you and I - and everyone not responsible - will end up paying for it; and for a very, very long time to come.

 

[oldfart]

Modern progressive statists only follow 1/2 of keynes's theories, that of deficit spending during economic downturn. What they forget is that the deficit created during the downturn needs to be paid back during the corresponding economic upturn, i.e. the government has to run a surplus and pay off its debts. Instead the progressive statists use the surplus to further expand the government, thus never paying off the debt.

The closest we ever came to that recently was under Clinton, and even then they spent most of the gains, and that can be blamed on congress as well.

If "progressive statists" did not follow the Keynesian prescription of fiscal restraint in good times, it was not for lack of trying. Libertarian/conservative politicians and economists cut taxes with a vengeance, passing key legislation by only one vote over the opposition of the progressives. The fault lies entirely with non-progressive conservatives and libertarians who cut taxes in every environment to "starve the beast" of government. It was a prescription that inevitably leads to eventual economic disaster.

 

[Freemason9]

Keynes was a quack and only ideological fools living in their own little bubble still lap up any of his destructive crap.

"Taz?"

sheesh.

 

[Freemason9]

Modern progressive statists only follow 1/2 of keynes's theories, that of deficit spending during economic downturn. What they forget is that the deficit created during the downturn needs to be paid back during the corresponding economic upturn, i.e. the government has to run a surplus and pay off its debts. Instead the progressive statists use the surplus to further expand the government, thus never paying off the debt.

The closest we ever came to that recently was under Clinton, and even then they spent most of the gains, and that can be blamed on congress as well.

If "progressive statists" did not follow the Keynesian prescription of fiscal restraint in good times, it was not for lack of trying. Libertarian/conservative politicians and economists cut taxes with a vengeance, passing key legislation by only one vote over the opposition of the progressives. The fault lies entirely with non-progressive conservatives and libertarians who cut taxes in every environment to "starve the beast" of government. It was a prescription that inevitably leads to eventual economic disaster.

Right wing policies have always been economically and socially disastrous for civilizations.

 

[midcan5]

I was fascinating this morning by a news' article claiming our flyover of space China now claimed was a act of support for Japan. I see more Japanese cars on American roads today than American, do they need more support? Why is that, part of the reason is after (and because of) WWII Japan spent its money on building capital goods not war goods. America and much of the world today do more war goods than useful goods. Japan even has excellent healthcare. So this article struck me as interesting, Bill Gates who crushed his competition to the point where annoyed programmers created Office for free, now is a philanthropist extraordinaire.

'Made in the USA: The Rise and Retreat of American Manufacturing' Vaclav Smil

[ame=http://www.amazon.com/Made-USA-Retreat-American-Manufacturing/dp/0262019388/ref=sr_1_1?s=books&ie=UTF8]Made in the USA: The Rise and Retreat of American Manufacturing: Vaclav Smil: 9780262019385: Amazon.com: Books[/ame]

"... But, asks Smil, do we want a society that consists of a small population of workers doing high-value-added work and masses of unemployed? Smil assesses various suggestions for solving America's manufacturing crisis, including lowering corporate tax rates, promoting research and development, and improving public education." from review

"In every society, manufacturing builds the lower middle class. If you give up manufacturing, you end up with haves and have-nots and you get social polarization. The whole lower middle class sinks." Vaclav Smil

This Is the Man Bill Gates Thinks You Absolutely Should Be Reading - Wired Science

 

[martybegan]

Modern progressive statists only follow 1/2 of keynes's theories, that of deficit spending during economic downturn. What they forget is that the deficit created during the downturn needs to be paid back during the corresponding economic upturn, i.e. the government has to run a surplus and pay off its debts. Instead the progressive statists use the surplus to further expand the government, thus never paying off the debt.

The closest we ever came to that recently was under Clinton, and even then they spent most of the gains, and that can be blamed on congress as well.

If "progressive statists" did not follow the Keynesian prescription of fiscal restraint in good times, it was not for lack of trying. Libertarian/conservative politicians and economists cut taxes with a vengeance, passing key legislation by only one vote over the opposition of the progressives. The fault lies entirely with non-progressive conservatives and libertarians who cut taxes in every environment to "starve the beast" of government. It was a prescription that inevitably leads to eventual economic disaster.

Nice attempt at a dodge there, but considering progressive statists have never met a budget item they didnt like (except for defense, and even then the opposition is only 1/2 hearted) your attempt to pin this on fiscal conservatives, who dont want deficit spending in the first place, is comical.

 

[martybegan]

Modern progressive statists only follow 1/2 of keynes's theories, that of deficit spending during economic downturn. What they forget is that the deficit created during the downturn needs to be paid back during the corresponding economic upturn, i.e. the government has to run a surplus and pay off its debts. Instead the progressive statists use the surplus to further expand the government, thus never paying off the debt.

The closest we ever came to that recently was under Clinton, and even then they spent most of the gains, and that can be blamed on congress as well.

If "progressive statists" did not follow the Keynesian prescription of fiscal restraint in good times, it was not for lack of trying. Libertarian/conservative politicians and economists cut taxes with a vengeance, passing key legislation by only one vote over the opposition of the progressives. The fault lies entirely with non-progressive conservatives and libertarians who cut taxes in every environment to "starve the beast" of government. It was a prescription that inevitably leads to eventual economic disaster.

Right wing policies have always been economically and socially disastrous for civilizations.

Provide some proof please.

 

[jasonnfree]

We've had Keynesian policies since the 30's when the republicans crashed the economy. God bless FDR as the old folks used to tell me. He gave people hope and put them to work even if it was WPA. He even electrified rural parts of America on the way to giving us social security and winning WW2. Keynesian policies were in force when the middle class came into being. This is a democrat legacy, help all that need help. Now republicans are whining about Keynes. To hell with them, all they know how to do is whine about spending when democrats are in power and of course they're good at crashing economies including the latest bushcheney crash that Obama is slowly getting us out of even with no help from republicans.

 

[jasonnfree]

I was fascinating this morning by a news' article claiming our flyover of space China now claimed was a act of support for Japan. I see more Japanese cars on American roads today than American, do they need more support? Why is that, part of the reason is after (and because of) WWII Japan spent its money on building capital goods not war goods. America and much of the world today do more war goods than useful goods. Japan even has excellent healthcare. So this article struck me as interesting, Bill Gates who crushed his competition to the point where annoyed programmers created Office for free, now is a philanthropist extraordinaire.

'Made in the USA: The Rise and Retreat of American Manufacturing' Vaclav Smil

Made in the USA: The Rise and Retreat of American Manufacturing: Vaclav Smil: 9780262019385: Amazon.com: Books

"... But, asks Smil, do we want a society that consists of a small population of workers doing high-value-added work and masses of unemployed? Smil assesses various suggestions for solving America's manufacturing crisis, including lowering corporate tax rates, promoting research and development, and improving public education." from review

"In every society, manufacturing builds the lower middle class. If you give up manufacturing, you end up with haves and have-nots and you get social polarization. The whole lower middle class sinks." Vaclav Smil

This Is the Man Bill Gates Thinks You Absolutely Should Be Reading - Wired Science

Both Japan and Germany kept their industries. You don't have to be an economist to see that deindustrializing is not a good idea.

 

[midcan5]

[Both Japan and Germany kept their industries. You don't have to be an economist to see that deindustrializing is not a good idea.

I agree but then why does America not do the same? See bold.

JRS: No. What I'm talking about is balance.
Russ: Go ahead.
JRS: What I'm talking about is that the more you are engaged as an individual in the public good, empathy, you know, the idea of imagining the other and what it is like to be the other--the more you are engaged in that way, then the more individualistic you will be, and be able to be. Because there will be this balance between your good and the public good. And there will be room to be selfish there. But it will not be the dominant element. The dominant element is empathy. And you know, we know that's what humanism says. We know that that's how societies function best, is when we have a sense of the other and how we all function together. It isn't about love. That's one of the dangers--well, you'll notice, I'm very, very careful to stay away from concepts of love. Because, you know, how can you say you 'love' your fellow American? You don't even know him. Russ: It's a meaningless statement.
JRS: You don't even know the people three houses down from you.
Russ: Well, that's my question for you. You are talking about--
JRS: But you don't have to love them. You don't have to like them. You can actively dislike your fellow citizens. That's fine. It isn't about love. It's about empathy. It's about the public good. It's about being able to imagine or feel--and 'feel' is a dangerous word--imagine and feel, together, what it's like to be the other. And then, on that basis, you put in place both public programs and public protections which make for a fair society. And that balance is the tough one. And it's never perfect, it's never right. You have to work at it every day. You have to wake up every morning and work at it. But if somebody wakes up every morning and says, Listen, I'm a citizen; that means I don't have to do this and I don't have to do that, and I paid my taxes, or I don't even want to pay my taxes -- I mean, the very fact that you could have had--sorry to do this--but you could have had a candidate for President who could publicly be proud of the fact that he'd minimized his taxes by sending his money abroad. You know. And that was a statement of copping out as a citizen. Right? [?] society, whether you are on the left or the right. That that could happen without people saying, Well, that's over, he's out, he can't exist--that shows the trouble we're in.
Russ: He did have a little trouble.
JRS: A little trouble. But not a lot. Not absolutely.
Russ: Fair enough.
JRS: It should have been catastrophic for a citizen to say that and want public office.

http://cafehayek.com/2013/11/john-ralston-saul-on-econtalk.html