4 ms·
Sorry but this was a pretty novel idea and one-time solution for 2 countries in a time of serious crisis. It was not known or practiced by other nations at the
by dforrestwilson 9y ago
Sorry but this was a pretty novel idea and one-time solution for 2 countries in a time of serious crisis. It was not known or practiced by other nations at the time, so there was no counter-Keynesian policy enacted by other trading countries.
- crdoconnor 9y agoI have never heard of, nor do I believe there is any such thing as "counter-keynesian policy". Are you thinking of export-substitution industrialization?
- dforrestwilson 9y agoKeynesian seems to lead to currency manipulation doesn't it?
- dforrestwilson 9y agoI'm thinking of purposefully devaluing your currency to remain competitive against countries with subsidized production.
- CalChris 9y agoYou are talking about Mercantilism and more specifically Protectionism. That is not Keynesianism at all. In fact Keynes was part of the British delegation to Breton Woods favoring negotiated trade balance. https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system
- dforrestwilson 9y agoIf stimulus comes from devaluing your currency, that strikes me as a highly unstable loop for the same reasons I have mentioned elsewhere. Perhaps it doesn't fit the literal definition of Keynesian, but the end result of both policies is the same.
- CalChris 9y agoNo, it doesn't fit the accepted definition of Keynesian. Indeed, I've never heard of stimulus devaluing a currency. At 2% inflation since the Great Recession of December 2007 to June 2009, we do not have an overvalued currency and we had stimulus spending. Keynesianism raises taxes to cool an overheated economy and spends those taxes to spur a stalled economy. The trouble is that no one likes taxes and they're easy to campaign against and everyone likes spending and they're hard to cut, especially in your district or on your project.
- dforrestwilson 9y agohttp://www.econedlink.org/lesson/593/Keynes-vs-Hayek-Rise-Chicago-School-Economics http://www.econedlink.org/lesson/593/Keynes-vs-Hayek-Rise-Ch... One of Hayek's big points which I count against Keynes is that we still don't fully understand market mechanics. It's as true today as ever. Going back to the initial quote about dentists, too many people think that it's an easily explainable macro-system. I struggle to see how there won't be (and already haven't been) ramifications from printing money to support national economies. Printing more IOUs definitely devalues the existing IOUs.... Call it disinflation or deflation, it does exist. We're seeing it in Japan and in an increase in real (inflation-adjusted) short-term rates which are negative in several countries (Sweden, Denmark, etc).
- crdoconnor 9y ago>One of Hayek's big points which I count against Keynes is that we still don't fully understand market mechanics. That, along with the notion that market mechanics were not necessarily rational, was one of Keynes' main points. He termed it "animal spirits". >I struggle to see how there won't be (and already haven't been) ramifications from printing money Nobody said that there wouldn't be ramifications. >Printing more IOUs definitely devalues the existing IOUs No, not necessarily. If an economy is operating way under capacity it will increase production, dampening inflation: you get the same number of widgets for your IOU it's just there are more widgets built. If an economy is operating at capacity (as Zimbabwe's was), all it will do is devalue existing IOUs.