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For a good read on why this Keynesian push toward consumption is misguided, check out this 2005 article[1]. The counterargument against consumption as the drive

For a good read on why this Keynesian push toward consumption is misguided, check out this 2005 article[1]. The counterargument against consumption as the driver of the economy states that saving and investment actually leads to growth. The thesis of the linked article is that a huge amount of business investment is hidden from GDP numbers since it falls under "net investment," with two very large sums (business income & business investment) netting out to a small number. When we ignore the huge amount of business investment and focus only on the net, we miss its importance. Negative interest rates are simply the latest contortion of the Keynesians that will fail to produce the desired results yet again. [1] https://mises.org/library/standing-keynesian-gdp-its-head-saving-not-consumption-main-source-spending https://mises.org/library/standing-keynesian-gdp-its-head-sa...

bubbleRefuge 11y ago
Negative interest rates and interest rate policy in general is a Monetarist not Keynesian policy remedy.
jerf 11y ago
I know I'm just a lowly programmer and engineer who shouldn't opine about economics very much, but I observe simply this: The "stimulus" didn't work. I find arguments about how it wasn't big enough to be null, because it isn't clear that we could have afforded much more and if the only way this stimulus works is to spend more than is possible, that is just a way of saying "it doesn't work" that saves some face but doesn't change anything about the practicality. It's been 8 years now we've been on this policy. Nobody 8 years ago would have predicted what happened. From a scientific perspective, what you do with theories that fail to correctly predict future occurrences is simple. But our elites really like what quasi-Keynesianism tells them, so the rest of us can continue to live impoverished lives for their benefit.
- tdb7893 11y ago
  Why do you say the stimulus didn't work?
- nabla9 11y ago
  Stimulus worked. What Debate? Economists Agree the Stimulus Lifted the Economy http://www.nytimes.com/2014/07/30/upshot/what-debate-economists-agree-the-stimulus-lifted-the-economy.html?_r=0 http://www.nytimes.com/2014/07/30/upshot/what-debate-economi... Once again: Yes, the stimulus worked. http://www.latimes.com/business/hiltzik/la-fi-mh-stimulus-worked-20140228-story.html http://www.latimes.com/business/hiltzik/la-fi-mh-stimulus-wo... "Internet economics" and the discussion is full of fringe theories that refer to mises.org. For them every mainstream economist is Keynesian. Even if they belong to Chicago school.
  - dnautics 11y ago
    Yes, it worked. The stock market is back up, and employment numbers "look good" (I mean a lot of that is workers getting discouraged, but still, the fed has achieved its mandate). But how long will the stock market still be up, and why is it that over the course of those years the rich have gotten richer and the poor have gotten poorer? Don't suppose it had anything to do with directly redistributing money upwards?
    - morgante 11y ago
      > the poor have gotten poorer I'd love to see any evidence for the notion that the poorer have gotten poorer since 2008. (I don't dispute that the rich have gotten richer.) FYI median household income is up since 2008: https://research.stlouisfed.org/fred2/graph/?g=3kv6 https://research.stlouisfed.org/fred2/graph/?g=3kv6
      - dnautics 11y ago
        look at real median personal income - it's still way down. During recessions, households tend to consolidate for savings purposes... If your argument depends on "people are struggling and aggregating to survive at the lowest levels of maslow's hierarchy" then fine.
      - hashberry 11y ago
        What about the number of Americans receiving food stamps? 2008: 28 million 2016: 45 million http://www.trivisonno.com/food-stamps-charts http://www.trivisonno.com/food-stamps-charts
- MCRed 11y ago
  The reason the "stimulus" didn't work is that it costs more to the economy to produce the money that was spent to "stimulate" it than the economic benefits of that spending could produce. And yes, 8 years ago people did predict what happened, exactly, namely look at the archives of http://mises.org http://mises.org and you will find articles predicting this result. The problem is, it doesn't fit the political desires. If you really want to stimulate the economy, by getting more money being spent, simply cut taxes and cut inflation. (Which means cutting government spending). You cut monetary inflation and taxation and individuals and businesses will have more money at the end of the day to spend on things. Unfortunately, cutting government spending doesn't fit the "lets promise people free health care and education to get elected" agenda. The Bush "stimulus" didn't work either. We had a housing bubble, but that wasn't exactly a net positive for the economy. The problems is the "Science" of economics has been compromised to the point where people aren't even aware of the predictions that this would fail (you weren't for instance).... because what passes for economics is more akin to rationalizations for political policies, rather than a science. (outside of places like the Chicago and Austrian schools.)
- dragonwriter 11y ago
  > I know I'm just a lowly programmer and engineer who shouldn't opine about economics very much, but I observe simply this: The "stimulus" didn't work. That's not an observation, that's a conclusion that requires a prior conclusion on a hypothetical that requires substantial economic analysis to have any credibility on: to wit, what the economy would have done without the stimulus. My read is that the monetary stimulus by the Fed did exactly the prevention of imminent disaster that it was supposed to do. It didn't do the kind of improvements that take fiscal policy to do -- because it wasn't fiscal policy -- which isn't a difference of degree of magnitude, but kind. > I find arguments about how it wasn't big enough to be null, because it isn't clear that we could have afforded much more The only arguments I've seen about insufficient quantity of stimulus have been about the government (not Fed) fiscal stimulus of 2009 (ARRA and related bills). Given the low price of government borrowing, its quite obvious that we could have spent a lot more in (and since) 2009 on fiscal stimulus; the reason we didn't is political, not available-resources driven. But that's a whole different thing than the Feds monetary stimulus. > It's been 8 years now we've been on this policy. What policy, exactly? Most of the Feds particularly intense monetary stimulus finished several years ago and has been in winding-down/settlement for the last few years, ditto with fiscal stimulus under ARRA. And 8 years ago (early 2008) was before the crisis and stimulus responses; if you are talking about the stimulus -- both monetary and fiscal -- adopted in response to the 2008/9 crisis, it started less than 8 years ago, and the intense policy ended several years ago, so in no sense have we been on a common stimulus policy for eight years. > Nobody 8 years ago would have predicted what happened. Both Austrians and Keynesians (among others) predicted that the actual stimulus that was engaged in by the Fed and government would fail to achieve what people wanted from stimulus (for, naturally, radically different reasons). To say that no one predicted the failure of the stimulus that was adopted is, simply, incorrect.
- morgante 11y ago
  > The "stimulus" didn't work. That's pretty far from being a simple observational fact. I'd say the stimulus did work pretty much exactly as well as most economists expected. Evidence: * Unemployment rate: http://data.bls.gov/timeseries/LNS14000000 http://data.bls.gov/timeseries/LNS14000000 * GDP: https://research.stlouisfed.org/fred2/graph/?g=3kv2 https://research.stlouisfed.org/fred2/graph/?g=3kv2 * Household income: https://research.stlouisfed.org/fred2/graph/?g=3kv6 https://research.stlouisfed.org/fred2/graph/?g=3kv6 The stimulus did exactly what it was supposed to do: prevent a prolonged recession and return the economy to growth. > Nobody 8 years ago would have predicted what happened. If you had taken a poll of Keynesian economists on the likely impact of the policies (a modest fiscal stimulus together with expansionary monetary policy), I'm pretty sure most of them would have predicted exactly what we got: a mild recovery coupled with strong asset growth. This idiotic notion that stimulus didn't work is a myth promoted by Republicans. If the stimulus didn't work, we'd have suffered through a long recession and would have high unemployment to this day. You don't even have to look far to find evidence of this: European countries forced into austerity have had precisely the kind of anemic economic and labor market growth that Keynesian economics predicted.

bubbleRefuge 11y ago

Negative interest rates and interest rate policy in general is a Monetarist not Keynesian policy remedy.

jerf 11y ago

I know I'm just a lowly programmer and engineer who shouldn't opine about economics very much, but I observe simply this: The "stimulus" didn't work. I find arguments about how it wasn't big enough to be null, because it isn't clear that we could have afforded much more and if the only way this stimulus works is to spend more than is possible, that is just a way of saying "it doesn't work" that saves some face but doesn't change anything about the practicality. It's been 8 years now we've been on this policy. Nobody 8 years ago would have predicted what happened. From a scientific perspective, what you do with theories that fail to correctly predict future occurrences is simple. But our elites really like what quasi-Keynesianism tells them, so the rest of us can continue to live impoverished lives for their benefit.

tdb7893 11y ago
Why do you say the stimulus didn't work?
nabla9 11y ago
Stimulus worked. What Debate? Economists Agree the Stimulus Lifted the Economy http://www.nytimes.com/2014/07/30/upshot/what-debate-economists-agree-the-stimulus-lifted-the-economy.html?_r=0 http://www.nytimes.com/2014/07/30/upshot/what-debate-economi... Once again: Yes, the stimulus worked. http://www.latimes.com/business/hiltzik/la-fi-mh-stimulus-worked-20140228-story.html http://www.latimes.com/business/hiltzik/la-fi-mh-stimulus-wo... "Internet economics" and the discussion is full of fringe theories that refer to mises.org. For them every mainstream economist is Keynesian. Even if they belong to Chicago school.
- dnautics 11y ago
  Yes, it worked. The stock market is back up, and employment numbers "look good" (I mean a lot of that is workers getting discouraged, but still, the fed has achieved its mandate). But how long will the stock market still be up, and why is it that over the course of those years the rich have gotten richer and the poor have gotten poorer? Don't suppose it had anything to do with directly redistributing money upwards?
  - morgante 11y ago
    > the poor have gotten poorer I'd love to see any evidence for the notion that the poorer have gotten poorer since 2008. (I don't dispute that the rich have gotten richer.) FYI median household income is up since 2008: https://research.stlouisfed.org/fred2/graph/?g=3kv6 https://research.stlouisfed.org/fred2/graph/?g=3kv6
    - dnautics 11y ago
      look at real median personal income - it's still way down. During recessions, households tend to consolidate for savings purposes... If your argument depends on "people are struggling and aggregating to survive at the lowest levels of maslow's hierarchy" then fine.
    - hashberry 11y ago
      What about the number of Americans receiving food stamps? 2008: 28 million 2016: 45 million http://www.trivisonno.com/food-stamps-charts http://www.trivisonno.com/food-stamps-charts
MCRed 11y ago
The reason the "stimulus" didn't work is that it costs more to the economy to produce the money that was spent to "stimulate" it than the economic benefits of that spending could produce. And yes, 8 years ago people did predict what happened, exactly, namely look at the archives of http://mises.org http://mises.org and you will find articles predicting this result. The problem is, it doesn't fit the political desires. If you really want to stimulate the economy, by getting more money being spent, simply cut taxes and cut inflation. (Which means cutting government spending). You cut monetary inflation and taxation and individuals and businesses will have more money at the end of the day to spend on things. Unfortunately, cutting government spending doesn't fit the "lets promise people free health care and education to get elected" agenda. The Bush "stimulus" didn't work either. We had a housing bubble, but that wasn't exactly a net positive for the economy. The problems is the "Science" of economics has been compromised to the point where people aren't even aware of the predictions that this would fail (you weren't for instance).... because what passes for economics is more akin to rationalizations for political policies, rather than a science. (outside of places like the Chicago and Austrian schools.)
dragonwriter 11y ago
> I know I'm just a lowly programmer and engineer who shouldn't opine about economics very much, but I observe simply this: The "stimulus" didn't work. That's not an observation, that's a conclusion that requires a prior conclusion on a hypothetical that requires substantial economic analysis to have any credibility on: to wit, what the economy would have done without the stimulus. My read is that the monetary stimulus by the Fed did exactly the prevention of imminent disaster that it was supposed to do. It didn't do the kind of improvements that take fiscal policy to do -- because it wasn't fiscal policy -- which isn't a difference of degree of magnitude, but kind. > I find arguments about how it wasn't big enough to be null, because it isn't clear that we could have afforded much more The only arguments I've seen about insufficient quantity of stimulus have been about the government (not Fed) fiscal stimulus of 2009 (ARRA and related bills). Given the low price of government borrowing, its quite obvious that we could have spent a lot more in (and since) 2009 on fiscal stimulus; the reason we didn't is political, not available-resources driven. But that's a whole different thing than the Feds monetary stimulus. > It's been 8 years now we've been on this policy. What policy, exactly? Most of the Feds particularly intense monetary stimulus finished several years ago and has been in winding-down/settlement for the last few years, ditto with fiscal stimulus under ARRA. And 8 years ago (early 2008) was before the crisis and stimulus responses; if you are talking about the stimulus -- both monetary and fiscal -- adopted in response to the 2008/9 crisis, it started less than 8 years ago, and the intense policy ended several years ago, so in no sense have we been on a common stimulus policy for eight years. > Nobody 8 years ago would have predicted what happened. Both Austrians and Keynesians (among others) predicted that the actual stimulus that was engaged in by the Fed and government would fail to achieve what people wanted from stimulus (for, naturally, radically different reasons). To say that no one predicted the failure of the stimulus that was adopted is, simply, incorrect.
morgante 11y ago
> The "stimulus" didn't work. That's pretty far from being a simple observational fact. I'd say the stimulus did work pretty much exactly as well as most economists expected. Evidence: * Unemployment rate: http://data.bls.gov/timeseries/LNS14000000 http://data.bls.gov/timeseries/LNS14000000 * GDP: https://research.stlouisfed.org/fred2/graph/?g=3kv2 https://research.stlouisfed.org/fred2/graph/?g=3kv2 * Household income: https://research.stlouisfed.org/fred2/graph/?g=3kv6 https://research.stlouisfed.org/fred2/graph/?g=3kv6 The stimulus did exactly what it was supposed to do: prevent a prolonged recession and return the economy to growth. > Nobody 8 years ago would have predicted what happened. If you had taken a poll of Keynesian economists on the likely impact of the policies (a modest fiscal stimulus together with expansionary monetary policy), I'm pretty sure most of them would have predicted exactly what we got: a mild recovery coupled with strong asset growth. This idiotic notion that stimulus didn't work is a myth promoted by Republicans. If the stimulus didn't work, we'd have suffered through a long recession and would have high unemployment to this day. You don't even have to look far to find evidence of this: European countries forced into austerity have had precisely the kind of anemic economic and labor market growth that Keynesian economics predicted.