4 ms·

I have no idea why Keynesian ideas are assumed as the proper way to solve economic problems when, in fact, they never work. Germany is unusual, especially in c

I have no idea why Keynesian ideas are assumed as the proper way to solve economic problems when, in fact, they never work. Germany is unusual, especially in comparison to the United States, in that they make a point of only spending the money they have. They have been watching the "wonderful" results of Keynesian intervention in the US recently and around the world and likely noticed that the results are always greater economic disasters. What sense is there in pouring gasoline on a fire?

Aloisius 15y ago
Are you saying Germany has no debt?
- coldarchon 15y ago
  There's a difference between investment and debt. If your cash flow equals your debts, it's an investment.
  - Aloisius 15y ago
    So, if the US has a net positive year where tax revenue exceeds costs, all the trillions of dollars in debt we are in will suddenly become investments? Fantastic!
DasIch 15y ago
Germany uses Keynesian ideas as well for example it launched a Konjukturpaket[1] in 2009. Germany was just not hit as hard and recovered faster, there is nothing particularly unusual about that. [1]: http://de.wikipedia.org/wiki/Konjunkturpaket_II http://de.wikipedia.org/wiki/Konjunkturpaket_II
lukeschlather 15y ago
The US has been doing extremely half-assed Keynes. It's not working because the bills haven't been large enough to have a measurable effect. Fundamentally I think the problem is the US has been too risk-averse. We've been hamstrung by our inability to accept that we have to take big risks to solve big problems, instead we're neutering any sort of solution to the point here it doesn't present a risk, and consequently can't present a true solution. I think there's a similar issue with this economist article. The assumption that there is a "correct choice" I think is wrong. There are a variety of bad choices, and it's probable that extremely risky choices are the only ones that have a chance of solving the crisis.
- hugh3 15y ago
  You're making economics sound like a religion rather than a science, there. If Keynesian economics hasn't worked in the US, then there's two possibilities: 1. It was too small or wrongly applied, or 2. Keynesian economics doesn't really work
  - _delirium 15y ago
    It's also worth separating the descriptive and prescriptive aspects of Keynesian economic theory. On the descriptive aspects, it seems to be doing fairly well so far. In particular, Keynesian models predicted that we wouldn't suffer significant inflation from the stimulus program + QE/QE2, due to a liquidity trap, whereas some monetarist models predicted that high inflation would result (and the Austrians were even predicting hyperinflation). Since high inflation hasn't materialized, that seems like at least some evidence in favor of the Keynesian macroeconomic models.
- gibsonf1 15y ago
  For actual Economic theories with a causal basis, the Austrian School wins with Von Mises the clear leader. Keynes simply can't work and never will - more Keynes means an even worse economic disaster.
jtbigwoo 15y ago
...they make a point of only spending the money they have. Germany has the third-highest public debt in the world with only the fifteenth-highest population. Their debt is much higher as a percentage of GDP than the U.S. (83% vs. 62% according to the CIA world Factbook. [1]) They've spent plenty of money they don't have. [1] https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html https://www.cia.gov/library/publications/the-world-factbook/...
- lispm 15y ago
  But Germany was/is in a very different situation. We are absorbing since twenty years a formerly communist econom - the GDR. Germany had little choice than invest a lot of money to do so. If you look at current policies, they are much about getting the debt problem under control.
- Uchikoma 15y ago
  Germany bailed out a bankrupt state in the 90s (the GDR).

Aloisius 15y ago

Are you saying Germany has no debt?

coldarchon 15y ago
There's a difference between investment and debt. If your cash flow equals your debts, it's an investment.
- Aloisius 15y ago
  So, if the US has a net positive year where tax revenue exceeds costs, all the trillions of dollars in debt we are in will suddenly become investments? Fantastic!

DasIch 15y ago

Germany uses Keynesian ideas as well for example it launched a Konjukturpaket[1] in 2009. Germany was just not hit as hard and recovered faster, there is nothing particularly unusual about that. [1]: http://de.wikipedia.org/wiki/Konjunkturpaket_II http://de.wikipedia.org/wiki/Konjunkturpaket_II

lukeschlather 15y ago

The US has been doing extremely half-assed Keynes. It's not working because the bills haven't been large enough to have a measurable effect. Fundamentally I think the problem is the US has been too risk-averse. We've been hamstrung by our inability to accept that we have to take big risks to solve big problems, instead we're neutering any sort of solution to the point here it doesn't present a risk, and consequently can't present a true solution. I think there's a similar issue with this economist article. The assumption that there is a "correct choice" I think is wrong. There are a variety of bad choices, and it's probable that extremely risky choices are the only ones that have a chance of solving the crisis.

hugh3 15y ago
You're making economics sound like a religion rather than a science, there. If Keynesian economics hasn't worked in the US, then there's two possibilities: 1. It was too small or wrongly applied, or 2. Keynesian economics doesn't really work
- _delirium 15y ago
  It's also worth separating the descriptive and prescriptive aspects of Keynesian economic theory. On the descriptive aspects, it seems to be doing fairly well so far. In particular, Keynesian models predicted that we wouldn't suffer significant inflation from the stimulus program + QE/QE2, due to a liquidity trap, whereas some monetarist models predicted that high inflation would result (and the Austrians were even predicting hyperinflation). Since high inflation hasn't materialized, that seems like at least some evidence in favor of the Keynesian macroeconomic models.
gibsonf1 15y ago
For actual Economic theories with a causal basis, the Austrian School wins with Von Mises the clear leader. Keynes simply can't work and never will - more Keynes means an even worse economic disaster.

jtbigwoo 15y ago

...they make a point of only spending the money they have. Germany has the third-highest public debt in the world with only the fifteenth-highest population. Their debt is much higher as a percentage of GDP than the U.S. (83% vs. 62% according to the CIA world Factbook. [1]) They've spent plenty of money they don't have. [1] https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html https://www.cia.gov/library/publications/the-world-factbook/...

lispm 15y ago
But Germany was/is in a very different situation. We are absorbing since twenty years a formerly communist econom - the GDR. Germany had little choice than invest a lot of money to do so. If you look at current policies, they are much about getting the debt problem under control.
Uchikoma 15y ago
Germany bailed out a bankrupt state in the 90s (the GDR).