5 ms·

> Keynesian policy only works when every country in the world is not practicing it. Huh?

• baybal2 9y ago
  >> Keynesian policy only works when every country in the world is not practicing it. >Huh? When somebody big prints money, everybody print money.
  • tome 9y ago
    And that means Keynsianism fails to work why exactly?
    • dforrestwilson 9y ago
      Government creep results in suboptimal outcomes for everyone, raising tensions and exacerbating economic books and busts. I point to Greenspan and the housing crisis. Maybe the U.S. shouldn't be subsidizing housing and student loans? Additionally, currency and trade wars tend to become the violent kind. You could argue that the real problem is that Keynesian backed governments never turn off the spigot, but why should they when the chosen stimulus policy neatly aligns with their own professional goals?
      • tome 9y ago
        That sounds like "Keysian policy never works". dforrestwilson said "Keynesian policy only works when every country in the world is not practicing it" which sounds like a different claim entirely, so I'm confused.
      • dforrestwilson 9y ago
        It worked before and during WW2 because it was unprecedented and other countries did not engage in similar policies to remain competitive in international trade.
      • dforrestwilson 9y ago
        It will not work again.
  • dforrestwilson 9y ago
    Thank you. This is what I tried to say above in a much longer way..
  • CalChris 9y ago
    >>> Keynesian policy only works when every country in the world is not practicing it. >>Huh? >When somebody big prints money, everybody print money. This is not what Keynesian policy is.
• dforrestwilson 9y ago
  Keynes basically advocated for massive government stimulus to make up for national economic slack. The problems with governments doing this is: 1. Governments are less efficient than free markets at spending money. See China. 2. It tends to lead to central bank stimulus (dilution and tight control of currency values). 3. Currency devaluation results in a more competitive international trade for the country in question. This puts more unnatural pressure on other nations' economies. 4. Everybody racing their currencies to the bottom to remain economically competitive. Which is why people got in a tizzy about Japan, China, and now Germany. If a politician can get away with it why wouldn't they tweak monetary policy to juice the economy under their watch? Trump has made comments to this effect and appears poised to continue the cycle. If you can believe anything he says.. These ingredients (high global trade levels compared to historical, tightly interconnected economies, disconnect from the established standard of trade ie: gold in favor of paper IOUs, yet competing and ambitious political interests) can only lead to one thing. An undeclared currency war. Why else are we still witnessing weak to no inflation across the developed world?
  • ue_ 9y ago
    >1. Governments are less efficient than free markets at spending money. See China. It's worth noting that the free market is less efficient than governments in other areas, or at least, it does not optimise for outcomes in certain areas.
    • djschnei 9y ago
      care to provide an example?
      • ue_ 9y ago
        Worker rights.
    • bjelkeman-again 9y ago
      Healthcare is a nice example of this. http://www.commonwealthfund.org/publications/issue-briefs/2015/oct/us-health-care-from-a-global-perspective http://www.commonwealthfund.org/publications/issue-briefs/20...