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"Keynesian economics is fundamentally broken" How so, other than you don't like it? The data over the past 9 years seems to have confirmed a Keynesian analysi

"Keynesian economics is fundamentally broken" How so, other than you don't like it? The data over the past 9 years seems to have confirmed a Keynesian analysis of the global economy. "but it allows the governments to spend as much as they want" No, that's not how it works. Keynes' theory is about how a general glut can happen, due to the role of money and bonds as a second and third variable in markets (vs the usual supply and demand curve). There are various techniques to get out of it, the only time government should spend money is when we've basically dropped interest rates to 0% - free money! - and companies still aren't spending it. "Furthermore, it devalues the money in our wallet everyday we don't spend" You mean by inflation? The inflation that doesn't currently exist? http://www.usinflationcalculator.com/inflation/current-inflation-rates/ http://www.usinflationcalculator.com/inflation/current-infla... Deflation on the other hand, has always been scary, for hundreds of years.

dageshi 11y ago
Correct me if I'm wrong but Keynes also thought you should run a surplus during good economic times so you could run a deficit in the bad. Now I know the necessity to do that has been dismissed by modern economists but actual Keynesian policies still have to be implemented by politicians who get elected. During recessions there tends to be a reluctance on the part of electorates to deliberately take on more debt which IMHO leads to Keynesian responses which are never quite robust enough to do the job they're intended to do. Whereas if you did actually run a surplus during good economic times or at least during some of the good economic times then the public would likely be a lot more likely to back a real Keynesian response.
- msandford 11y ago
  > Keynesian responses which are never quite robust enough to do the job they're intended to do How much of "normal" GDP should you spend in a crisis in order to avert it? 5%? 10%? 20%? 50%? 100%? 500%? I've never heard a solid answer, mostly just "however much we spent wasn't enough" which seems a little tautological. The only reason I'm picking on you is you said "never quite robust enough" as though you just plug a number into a formula and get an answer.
  - dageshi 11y ago
    You don't spend in order to "avert" it, "it" has already happened, you spend afterwards to limit the duration and the depth of the recession which makes sense because during a recession interest rates are at the lowest they'll be during the economic cycle and the government can borrow more for cheaper than at any other point. In terms of how much I would say between 5 and 10% depending on the severity of the recession and that need not all be in the form of government spending per se, it could also be a mix of tax cuts as well.
    - msandford 11y ago
      5% of US GDP (which is around $15 trillion) would be $750 billion. 10% would be 1.5 trillion. Through all of QE a total of several trillion was spent on treasury bonds, bank bonds, mortgage backed securities, etc. https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1.2C_QE2.2C_and_QE3 https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1.2C_... By your own numbers, that should have been enough, and yet you've complained it wasn't. What gives?
      - dageshi 11y ago
        QE isn't the same as what I'm talking about. QE isn't spent by the government it's money printed by the FED which is then used to buy existing assets from the market, typically US treasury bonds but others as well. The purpose of QE is to push more money into the banks in the hopes that they will go out and lend some of it, but that's not much use if people aren't confident enough to borrow. So you can't finance a tax cut with QE, you can't finance an infrastructure program with QE, you can't do any of the real "Keynesian" things that would make a difference because the Central Bank should never be printing money to finance government spending. QE is complimentary to but not a replacement for a Keynesian response.
deleted 11y ago
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mindslight 11y ago
Keynesian economics optimizes for production and growth over efficiency and sustainability. If you want loads of shiny new gadgets every year, and want it so most people spend their entire lives working just to pay rent and only a lucky few escape with "fuck you" money, then it's the system for you. If you want the average person to have the economic freedom to work less, and actually get time to enjoy their discretionary purchases, then debt-based slavedriving is not what you want. It's a deliberate policy choice, but gets obscured as authoritative "science" by centralization-supporting economists who are compensated with money and stature. Deflation isn't scary, only the transition to it is (like any change). Deflation is actually the natural tendency, as doing things cheaper is precisely what market competition is based on (see: the entire technology sector).
- parasubvert 11y ago
  "Keynesian economics optimizes for production and growth over efficiency and sustainability." This sounds made up. How is optimized production different from efficiency? How is growth unsustainable? An economy without growth is by definition zero-sum; is that what is sustainable, no more Pareto efficiency, that someone must lose for another to gain? "If you want loads of shiny new gadgets every year, and want it so most people spend their entire lives working just to pay rent and only a lucky few escape with "fuck you" money, then it's the system for you. If you want the average person to have the economic freedom to work less, and actually get time to enjoy their discretionary purchases, then debt-based slavedriving is not what you " Keynesianism has nothing to do with private debt or private spending habits, nor weekly work hours. You can blame many for such problems, I don't know why Keynes would have anything to do with this. "Deflation isn't scary, only the transition to it is (like any change). Deflation is actually the natural tendency, as doing things cheaper is precisely what market competition is based on (see: the entire technology sector)." That's not deflation. Deflation is when the entire broad based market across products and services lowers their prices for the same products and services. It in practice causes depressions very similar (and deeper) than what we just experienced. The tech sector lowers prices in a specfic sector by using new technology. By definition this is about classic creative destruction and reallocating of resources. Deflation is what happens when there is not enough demand for the supply, and therefore everyone stops spending money, people lose their jobs. Interest rates fall to 0, and prices fall across the board. In other words, very close to what happened in 2008-2009. Deflation was something that theoretically shouldn't happen by classical models until Keynes showed it does, and we saw it in earnest in Japan during the 90s.

dageshi 11y ago

Correct me if I'm wrong but Keynes also thought you should run a surplus during good economic times so you could run a deficit in the bad. Now I know the necessity to do that has been dismissed by modern economists but actual Keynesian policies still have to be implemented by politicians who get elected. During recessions there tends to be a reluctance on the part of electorates to deliberately take on more debt which IMHO leads to Keynesian responses which are never quite robust enough to do the job they're intended to do. Whereas if you did actually run a surplus during good economic times or at least during some of the good economic times then the public would likely be a lot more likely to back a real Keynesian response.

msandford 11y ago
> Keynesian responses which are never quite robust enough to do the job they're intended to do How much of "normal" GDP should you spend in a crisis in order to avert it? 5%? 10%? 20%? 50%? 100%? 500%? I've never heard a solid answer, mostly just "however much we spent wasn't enough" which seems a little tautological. The only reason I'm picking on you is you said "never quite robust enough" as though you just plug a number into a formula and get an answer.
- dageshi 11y ago
  You don't spend in order to "avert" it, "it" has already happened, you spend afterwards to limit the duration and the depth of the recession which makes sense because during a recession interest rates are at the lowest they'll be during the economic cycle and the government can borrow more for cheaper than at any other point. In terms of how much I would say between 5 and 10% depending on the severity of the recession and that need not all be in the form of government spending per se, it could also be a mix of tax cuts as well.
  - msandford 11y ago
    5% of US GDP (which is around $15 trillion) would be $750 billion. 10% would be 1.5 trillion. Through all of QE a total of several trillion was spent on treasury bonds, bank bonds, mortgage backed securities, etc. https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1.2C_QE2.2C_and_QE3 https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1.2C_... By your own numbers, that should have been enough, and yet you've complained it wasn't. What gives?
    - dageshi 11y ago
      QE isn't the same as what I'm talking about. QE isn't spent by the government it's money printed by the FED which is then used to buy existing assets from the market, typically US treasury bonds but others as well. The purpose of QE is to push more money into the banks in the hopes that they will go out and lend some of it, but that's not much use if people aren't confident enough to borrow. So you can't finance a tax cut with QE, you can't finance an infrastructure program with QE, you can't do any of the real "Keynesian" things that would make a difference because the Central Bank should never be printing money to finance government spending. QE is complimentary to but not a replacement for a Keynesian response.

deleted 11y ago

[deleted]

mindslight 11y ago

Keynesian economics optimizes for production and growth over efficiency and sustainability. If you want loads of shiny new gadgets every year, and want it so most people spend their entire lives working just to pay rent and only a lucky few escape with "fuck you" money, then it's the system for you. If you want the average person to have the economic freedom to work less, and actually get time to enjoy their discretionary purchases, then debt-based slavedriving is not what you want. It's a deliberate policy choice, but gets obscured as authoritative "science" by centralization-supporting economists who are compensated with money and stature. Deflation isn't scary, only the transition to it is (like any change). Deflation is actually the natural tendency, as doing things cheaper is precisely what market competition is based on (see: the entire technology sector).

parasubvert 11y ago
"Keynesian economics optimizes for production and growth over efficiency and sustainability." This sounds made up. How is optimized production different from efficiency? How is growth unsustainable? An economy without growth is by definition zero-sum; is that what is sustainable, no more Pareto efficiency, that someone must lose for another to gain? "If you want loads of shiny new gadgets every year, and want it so most people spend their entire lives working just to pay rent and only a lucky few escape with "fuck you" money, then it's the system for you. If you want the average person to have the economic freedom to work less, and actually get time to enjoy their discretionary purchases, then debt-based slavedriving is not what you " Keynesianism has nothing to do with private debt or private spending habits, nor weekly work hours. You can blame many for such problems, I don't know why Keynes would have anything to do with this. "Deflation isn't scary, only the transition to it is (like any change). Deflation is actually the natural tendency, as doing things cheaper is precisely what market competition is based on (see: the entire technology sector)." That's not deflation. Deflation is when the entire broad based market across products and services lowers their prices for the same products and services. It in practice causes depressions very similar (and deeper) than what we just experienced. The tech sector lowers prices in a specfic sector by using new technology. By definition this is about classic creative destruction and reallocating of resources. Deflation is what happens when there is not enough demand for the supply, and therefore everyone stops spending money, people lose their jobs. Interest rates fall to 0, and prices fall across the board. In other words, very close to what happened in 2008-2009. Deflation was something that theoretically shouldn't happen by classical models until Keynes showed it does, and we saw it in earnest in Japan during the 90s.