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I'm thinking of purposefully devaluing your currency to remain competitive against countries with subsidized production.

CalChris 9y ago
You 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 ago
  If 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 ago
    No, 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 ago
      http://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.
      - CalChris 9y ago
        Ron Paul made a lot of hay (and fundraising) out of name dropping Hayek. Still Hayek had one idea that is in common use, price signals, but otherwise he's been adopted by a partisan crowd. And the frustrating thing about Keynes is that he failed to acknowledge the simple fact that Keynesian policy only works when every country in the world is not practicing it. This was nonsense.

CalChris 9y ago

You 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 ago
If 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 ago
  No, 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 ago
    http://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.
    - CalChris 9y ago
      Ron Paul made a lot of hay (and fundraising) out of name dropping Hayek. Still Hayek had one idea that is in common use, price signals, but otherwise he's been adopted by a partisan crowd. And the frustrating thing about Keynes is that he failed to acknowledge the simple fact that Keynesian policy only works when every country in the world is not practicing it. This was nonsense.