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Keynesianism only works (in theory) if an economy pumps the breaks a bit during the good times. Failure to do that isn’t really Keynesian, and the US has done n

Keynesianism only works (in theory) if an economy pumps the breaks a bit during the good times. Failure to do that isn’t really Keynesian, and the US has done nothing but hit the gas during the past few years of growth.

kmonsen 7y ago
This is my problem with Keynesian economics. It is obviously correct, but it cannot be done in practise. Two issues: - How do we identify good times? EU would for sure said we have not had them since the last crisis. - How do we get humans to save in good times. Not regular people but politicians that wants to get reelected more than anything else
- jnwatson 7y ago
  That fiscal stimulus should be counter-cyclical isn't "Keynesian economics". It is just macroeconomics.
- Retric 7y ago
  > How do we identify good times By looking at the employment rate, not the meaningless unemployment rate numbers. https://tradingeconomics.com/united-states/employment-rate https://tradingeconomics.com/united-states/employment-rate > How do we get humans to save in good times. By electing people that save responsibility. Post WWII the US paid down huge amounts of debt. Now it seems like Republicans want to loot the place whenever they get power and Democrats are willing to trade spending for more spending.
- Zenst 7y ago
  The EU via the EMF have been doing aggressive QE upon the Euro for years now, just to keep the EUro competitive for exports as well as imports. A high euro value makes imports cheap, but kills exports as they come more expensive export wise. A low currency makes imports expensive, but makes exports cheap. So they have been interjecting to keep the balance right. Before QE you had country interest rates, but with many of those low, the new tool on the block is negative interest rates. Sadly all these have produced two decades of fiscal responsibility that has seen saver mentality die and buy today, pay tomorrow increase. Which i'm sure looks great on some balance sheet and allows politicians and accountants to say hey, look at the growth, ain't we doing well and the market perception just nods and agree. Any dent in that perception and a whole raft of cards quickly start to fall and with that in mind, interesting times ahead and let us see what happens.
seanmcdirmid 7y ago
This. It works with some discipline, but our current politicians (and by reflection ourselves) lack that discipline. We should have been raising rates and even taxes during the last boom, to slow it down so it would last longer, and to build a reserve for the next bust. A bust is a great time to hire and build, a boom is a not so great time to do that, and I’m not just referring to that from a stimulus perspective.

kmonsen 7y ago

This is my problem with Keynesian economics. It is obviously correct, but it cannot be done in practise. Two issues: - How do we identify good times? EU would for sure said we have not had them since the last crisis. - How do we get humans to save in good times. Not regular people but politicians that wants to get reelected more than anything else

jnwatson 7y ago
That fiscal stimulus should be counter-cyclical isn't "Keynesian economics". It is just macroeconomics.
Retric 7y ago
> How do we identify good times By looking at the employment rate, not the meaningless unemployment rate numbers. https://tradingeconomics.com/united-states/employment-rate https://tradingeconomics.com/united-states/employment-rate > How do we get humans to save in good times. By electing people that save responsibility. Post WWII the US paid down huge amounts of debt. Now it seems like Republicans want to loot the place whenever they get power and Democrats are willing to trade spending for more spending.
Zenst 7y ago
The EU via the EMF have been doing aggressive QE upon the Euro for years now, just to keep the EUro competitive for exports as well as imports. A high euro value makes imports cheap, but kills exports as they come more expensive export wise. A low currency makes imports expensive, but makes exports cheap. So they have been interjecting to keep the balance right. Before QE you had country interest rates, but with many of those low, the new tool on the block is negative interest rates. Sadly all these have produced two decades of fiscal responsibility that has seen saver mentality die and buy today, pay tomorrow increase. Which i'm sure looks great on some balance sheet and allows politicians and accountants to say hey, look at the growth, ain't we doing well and the market perception just nods and agree. Any dent in that perception and a whole raft of cards quickly start to fall and with that in mind, interesting times ahead and let us see what happens.

seanmcdirmid 7y ago

This. It works with some discipline, but our current politicians (and by reflection ourselves) lack that discipline. We should have been raising rates and even taxes during the last boom, to slow it down so it would last longer, and to build a reserve for the next bust. A bust is a great time to hire and build, a boom is a not so great time to do that, and I’m not just referring to that from a stimulus perspective.