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Not sure why this is being downvoted. This is just well-estatblished history. Keynesian economics came out of the Great Depression of the 1930s and was the lead
by culi 4y ago
Not sure why this is being downvoted. This is just well-estatblished history. Keynesian economics came out of the Great Depression of the 1930s and was the leading economic theory until stagflation posed a major theoretical challenge for it and monetarism took over instead
- sideshowb 4y agoYeah that was a problem with Keynes, sure. Don't mention the oil crisis
- notahacker 4y agoStrictly speaking it depends what you consider to be "Keynesian" economics (But yeah, your comment was a lot more accurate than the one it was replying to) Stagflation killed the Phillips-curve "Keynesianism" which emerged after Keynes' death as wasn't actually in the General Theory: the idea that inflation was inversely proportional to unemployment so you could get rid of the latter if you had enough of the former. It didn't kill off the more generally useful idea of macroeconomic modelling or the assumption government policy could mitigate recessions. . Similarly, strict monetarism (the idea that the government could easily stabilise things by ensuring the money supply was at a certain level) didn't survive the realisation the banking system made the money supply flex and so the result was interest rates and other monetary aggregates bouncing around all over the place , but the basic idea that controlling inflation was possible and a priority for central banks persisted once governments switched to fixing interest rates instead.