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>Policymakers don’t know what to do. They press the usual (and unusual) levers and nothing happens. That's not really true if they're refusing to push the Keyn

>Policymakers don’t know what to do. They press the usual (and unusual) levers and nothing happens. That's not really true if they're refusing to push the Keynesian levers for ideological reasons.

dragonwriter 10y ago
Yeah, it's not exactly a mystery what is happening; many central bank policy makers (contrary to the optimistic but unsourced charters toon of QE expectations in TFA) have been quite blunt about the limitations of monetary policy, while in many large economies that have substantial impact on the global situation (especially, but not exclusively, the US) the authorities with power over fiscal policy have refused to intervene (or intervened in the opposite direction that would be represented by the "usual levers") for ideological reasons. The results have been predictably disastrous, but it's not a failure of mainstream economics. EDIT: Which is not, at all, to say that there aren't real problems in economics, just that the article here isnt identifying the and is instead pushing a narrative that has been repeatedly advanced to pass of responsibility for dereliction of duty by legislators onto, well, anyone else.
- crdoconnor 10y ago
  I'd say it was as much practical as it is ideological. Keynesian spending is inherently inflationary and creates jobs. As a member of the 1%: * Inflation is your enemy. It not only causes the value of your cash holdings to decline, it causes the value of the money you lent out to decline. * Creating jobs is your enemy. If you employ people you want as little competition for labor as possible to reduce your wage bill and the wage bill of the companies you invest in.
  - dragonwriter 10y ago
    > I'd say it was as much practical as it is ideological. The disagreement isn't practical (over what broad effect given policy will have), it's ideological (over what broad outcome is desirable). That the ideology is often sslf-serving (if arguably only in fairly myopic perspective) for lawmakers who are also part of the economic elite doesn't make it any less ideological, it just explains the attraction of the ideology to those actors.
  - eli_gottlieb 10y ago
    The definition of "ideological" in this circumstance is, "targeted at maintaining the wealth and interest of a particular class at the expense of other classes and the economy as a whole". In this case, yes, opposition to Keynesian measures has been targeted at maintaining the value-capture by "the 1%" (by now even more just rentier asset-owners than those whose capital does real work in fields like technology, really) at the expense of the skilled-professional class (the most common Hacker News user), the semi-skilled middle class, the smallholder class (probably including start-up founders), and the broad working class as a whole.
  - iopq 10y ago
    Inflation causes the value of your investments to increase, so it hurts the people who rely on cash more than people with stock portfolios
    - cmdrfred 10y ago
      I'm not sure that is going to be true of the stock market. Many firms now have record cash holdings[0] so by buying stock you are essentially buying a slice of a pile of money. I argue the reason many firms stock price keeps going up hasn't been a rise in demand but instead a limit on supply as stock buybacks are also at record levels[1]. [0]http://mobile.nytimes.com/2016/01/24/magazine/why-are-corporations-hoarding-trillions.html http://mobile.nytimes.com/2016/01/24/magazine/why-are-corpor... [1]https://hbr.org/2014/09/profits-without-prosperity https://hbr.org/2014/09/profits-without-prosperity
    - dragonwriter 10y ago
      Inflation doesn't cause the real value of investments to increase, because the real value is the nominal value relative to general prices (and inflation is increase in general prices.)
      - iopq 10y ago
        That's true in the general sense, but low interest rates lead to higher inflation AND better stock market performance. So having lower interest rates benefits people with stock market portfolios and hurts people who have mostly cash.
    - tormeh 10y ago
      Bond returns are fixed, I think. So even though inflation is fine for stock investors it's bad for bond investors.
gaius 10y ago
That's not really true if they're refusing to push the Keynesian levers for ideological reasons. snort Everyone's a Keynesian when it's time to spend but Keynes also said to pay down your debts on the upswing of the cycle, and guess what everyone didn't do?
- acjohnson55 10y ago
  ...But that doesn't make them wrong. That just makes society spineless when it's time to start the unglamorous work paying back.
  - tormeh 10y ago
    Being impossible in practice because of political dynamics isn't particularly great for a policy suggestion, though.
    - acjohnson55 10y ago
      You simply need to change the dynamic. We have the Fed, which is structured to insulate our monetary policy from politics, and it has worked quite nicely for the past 70 years. It's not insane to imagine doing something similar for at least some aspects of our fiscal policy.
- eli_gottlieb 10y ago
  Well, I was a teenager before the housing bubble went bust, but I'm just fine with paying higher taxes in boom times. Don't snort at me: raise my taxes! It's what I'm already voting for. Tax me and my high-tech salary. It can pay for schools and trains in my own community, it can pay down the national debt, etc. Redistribute my wealth, because I'm exceptionally well-off for my age group.
  - r_smart 10y ago
    Why not just make voluntary contributions to organizations you support? Governmental or otherwise. Why wait for someone to take it from you when you could give it instead?

>Policymakers don’t know what to do. They press the usual (and unusual) levers and nothing happens. That's not really true if they're refusing to push the Keynesian levers for ideological reasons.

dragonwriter 10y ago

Yeah, it's not exactly a mystery what is happening; many central bank policy makers (contrary to the optimistic but unsourced charters toon of QE expectations in TFA) have been quite blunt about the limitations of monetary policy, while in many large economies that have substantial impact on the global situation (especially, but not exclusively, the US) the authorities with power over fiscal policy have refused to intervene (or intervened in the opposite direction that would be represented by the "usual levers") for ideological reasons. The results have been predictably disastrous, but it's not a failure of mainstream economics. EDIT: Which is not, at all, to say that there aren't real problems in economics, just that the article here isnt identifying the and is instead pushing a narrative that has been repeatedly advanced to pass of responsibility for dereliction of duty by legislators onto, well, anyone else.

crdoconnor 10y ago
I'd say it was as much practical as it is ideological. Keynesian spending is inherently inflationary and creates jobs. As a member of the 1%: * Inflation is your enemy. It not only causes the value of your cash holdings to decline, it causes the value of the money you lent out to decline. * Creating jobs is your enemy. If you employ people you want as little competition for labor as possible to reduce your wage bill and the wage bill of the companies you invest in.
- dragonwriter 10y ago
  > I'd say it was as much practical as it is ideological. The disagreement isn't practical (over what broad effect given policy will have), it's ideological (over what broad outcome is desirable). That the ideology is often sslf-serving (if arguably only in fairly myopic perspective) for lawmakers who are also part of the economic elite doesn't make it any less ideological, it just explains the attraction of the ideology to those actors.
- eli_gottlieb 10y ago
  The definition of "ideological" in this circumstance is, "targeted at maintaining the wealth and interest of a particular class at the expense of other classes and the economy as a whole". In this case, yes, opposition to Keynesian measures has been targeted at maintaining the value-capture by "the 1%" (by now even more just rentier asset-owners than those whose capital does real work in fields like technology, really) at the expense of the skilled-professional class (the most common Hacker News user), the semi-skilled middle class, the smallholder class (probably including start-up founders), and the broad working class as a whole.
- iopq 10y ago
  Inflation causes the value of your investments to increase, so it hurts the people who rely on cash more than people with stock portfolios
  - cmdrfred 10y ago
    I'm not sure that is going to be true of the stock market. Many firms now have record cash holdings[0] so by buying stock you are essentially buying a slice of a pile of money. I argue the reason many firms stock price keeps going up hasn't been a rise in demand but instead a limit on supply as stock buybacks are also at record levels[1]. [0]http://mobile.nytimes.com/2016/01/24/magazine/why-are-corporations-hoarding-trillions.html http://mobile.nytimes.com/2016/01/24/magazine/why-are-corpor... [1]https://hbr.org/2014/09/profits-without-prosperity https://hbr.org/2014/09/profits-without-prosperity
  - dragonwriter 10y ago
    Inflation doesn't cause the real value of investments to increase, because the real value is the nominal value relative to general prices (and inflation is increase in general prices.)
    - iopq 10y ago
      That's true in the general sense, but low interest rates lead to higher inflation AND better stock market performance. So having lower interest rates benefits people with stock market portfolios and hurts people who have mostly cash.
  - tormeh 10y ago
    Bond returns are fixed, I think. So even though inflation is fine for stock investors it's bad for bond investors.

gaius 10y ago

That's not really true if they're refusing to push the Keynesian levers for ideological reasons. snort Everyone's a Keynesian when it's time to spend but Keynes also said to pay down your debts on the upswing of the cycle, and guess what everyone didn't do?

acjohnson55 10y ago
...But that doesn't make them wrong. That just makes society spineless when it's time to start the unglamorous work paying back.
- tormeh 10y ago
  Being impossible in practice because of political dynamics isn't particularly great for a policy suggestion, though.
  - acjohnson55 10y ago
    You simply need to change the dynamic. We have the Fed, which is structured to insulate our monetary policy from politics, and it has worked quite nicely for the past 70 years. It's not insane to imagine doing something similar for at least some aspects of our fiscal policy.
eli_gottlieb 10y ago
Well, I was a teenager before the housing bubble went bust, but I'm just fine with paying higher taxes in boom times. Don't snort at me: raise my taxes! It's what I'm already voting for. Tax me and my high-tech salary. It can pay for schools and trains in my own community, it can pay down the national debt, etc. Redistribute my wealth, because I'm exceptionally well-off for my age group.
- r_smart 10y ago
  Why not just make voluntary contributions to organizations you support? Governmental or otherwise. Why wait for someone to take it from you when you could give it instead?