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the lesson from europe is that you can't allow governments to overreach and overspend, because they eventually collapse-or they place technocrats in power to control/manipulate the destiny of the people.
is that what we want?
history has taught us something.
the present day interpretation of keynesianism is an excuse to allow government spending-the panacea that governments cling to as they continue the reckless spending.
before it was billions and now we are spending TRILLIONS -- and have nothing to show for it.
how is keynesianism working out for us personally as a country bogged down in more debt?
we are spending TRILLIONS now and have nothing to show for it. how is keynesianism working out for us personally as a country bogged down in more debt?
oh, and merry christmas everyone!
This is moronic logic. What we have is a recession, everybody including Europe is hurting. Blame bankers if you want to blame anybody.
Europe is going to recover it has good fundamentals. Even Spain and Italy. Greece has the unfortunate problem of trying to rapidly implement a higher standard of living without the deep institutions that other democracies have. I wouldn't throw out decades of social democracy working well just because of a few hard years of economic recessions.
Nothing "Keynesian" about Europe's economic crisis, of course if you actually knew anything about the general theories expounded by Sir John Maynard Keynes beyond using his name as a epithet you would know that.
I think padcrasher was trying to say that the theory predicted what would happen in Europe. That was not clear to me at first either.
Anyway I can't possibly see what theory would suggest giving a virtual monopoly on credit to bankers is a good thing. The keynesian point of view would think that is foolish and I agree. That is what we see in Europe. Even worse is European governments pay interest to borrow against their own credit. The austrian point of view is that money is too dangerous monopoly for even a democratic government. I see that point as well, but I am very uneasy about private monopolies of the currency. Look what the Hunt brothers tried with silver. Could we really just not intervene?
I think the post keynesian and the austrians ironically are both closer to the truth because they have each identified the enemy correctly. Its their remedy that dramatically differs. Any economic system that does not target the money monopoly is defunct. It power is like that of OPEC on an order of magnitude X 100.
the lesson from europe is that you can't allow governments to overreach and overspend, because they eventually collapse-or they place technocrats in power to control/manipulate the destiny of the people.
is that what we want?
history has taught us something.
the present day interpretation of keynesianism is an excuse to allow government spending-the panacea that governments cling to as they continue the reckless spending.
before it was billions and now we are spending TRILLIONS -- and have nothing to show for it. It was considered discredited during the oil shock so it fell out of favor. It hard to believe that they could not see that stimulus would just compete for more oil at the time. I also cannot see why modern economics still does understand the role of rentiers. OPEC is a cartel of oil rentier states. Hello modern economists? Think maybe Adam Smith, Ricardo, JS Mill and Henry George had it figured out and you blew it? o we have been waylaid twice. First by oil rentiers and now financial and real estate rentiers. Do we need a third round to realize that there is capital that demands labor and there are monopolists and rentiers that make their money without it?
how is keynesianism working out for us personally as a country bogged down in more debt?
oh, and merry christmas everyone!
The government isn't following keynesian economics. Its been full throttle monetarism and neoclassical all the way.
The only economic theory that is important to 99% of the globe is cash...if the government switched to cash basis "paygo" the economy would right itself fairly quick. The ability of Congress to encumber unborn children for 100 years is not what our founders had in mind.
This is moronic logic. What we have is a recession, everybody including Europe is hurting. Blame bankers if you want to blame anybody.
Europe is going to recover it has good fundamentals. Even Spain and Italy. Greece has the unfortunate problem of trying to rapidly implement a higher standard of living without the deep institutions that other democracies have. I wouldn't throw out decades of social democracy working well just because of a few hard years of economic recessions.
i guess you would just ignore the fact that the european union is fundamentally flawed in your analysis. i saw a good comment a while back on a forum regarding the european union and i agree:
I have been writing on this forum since last 1 year that euro-zone concept of sharing same currency is like a 3-legged race, where different economies, with diverse tax-laws, diverse tax-administration, diverse budgets, diverse subsidisation policies, diverse regulations regarding corruption, diverse rates of labour and capital productivity, diverse rates of unemployment, etc. are bundled together, and their legs tied to one-another and then they r asked to run together against other world economies.
How and how long if at all, can such an entity run? Sooner than later one of the weaker participants of the bunch is going to tire out and stumble, eventually setting off a chain reaction, pulling the whole lot down. (end)
it wasn't just greece that broke the treaty either.
in this world of globalization everybody wants to go bigger, and sometimes the answer is to go smaller.
I have been writing on this forum since last 1 year that euro-zone concept of sharing same currency is like a 3-legged race, where different economies, with diverse tax-laws, diverse tax-administration, diverse budgets, diverse subsidisation policies, diverse regulations regarding corruption, diverse rates of labour and capital productivity, diverse rates of unemployment, etc. are bundled together, and their legs tied to one-another and then they r asked to run together against other world economies.
Well you hit the nail on the proverbial head. The Euro was just great for countries like Germany but disastrous for much of the rest of the EU
The main beneficiary of EMU was the dominant industrial nation in Europe: Germany. It could export all it liked to the rest of Europe with no exchange rate risk and, more importantly, no political ramifications. Germany got a free lunch, which was paid for with borrowed money by the rest of Europe. But who lent this money to the rest of Europe? Why Germany of course! So Germany was lending money to the poorer EU countries in order to give them the wherewithal to buy German goods, which had generated the German savings in the first place!
When these countries had difficulty paying back the German banks, what did the Germans do? They penalised them in the draconian terms of the EU “bailout”. Instead of acknowledging its own role at the centre of this European-wide Ponzi scheme, Germany initially played the role of major loan shark, borrowing at 2pc and lending to the distressed states at 6pc! This penal approach didn’t work because the balance sheets of the distressed countries were too weak to pay this money back and the crisis became more acute. The “patched up” solution of a few months ago is unraveling.
What this has to Keyness is still a mystery to me since Keynes was a very big proponent of balanced budgets.
Though John Maynard Keynes is portrayed as a deficit-loving interventionist, in reality he was not. What is left out of the description of his theory in regards to counter-cyclical fiscal policy, is that Keynes also believed that in times of relative prosperity sovereigns should create budget surpluses. His belief was that booms and busts were an integral characteristic of modern capitalism, and that the accumulation of reserves during times of plenty would enable governments to engage in temporary deficit spending to combat a severe recession, without creating the long-term danger of exploding national debt to GDP ratios. This is an aspect of Keynes's views on fiscal policy that has been conveniently forgotten by the modern interpreters of Keynesian economics.
"If anything, “hard” Keynesianism suggests that the problem with the macroeconomic rules governing the euro is not that they are too tough and too detailed but that they are not tough or detailed enough. States in the eurozone should not be allowed to run moderate budget deficits in boom years, the Keynesian argument goes; instead, they should be compelled to run budget surpluses. The surpluses could then be saved in rainy-day funds or used to pay down government debt or, if the country had reached a satisfactory debt-to-GDP ratio, spent as a fiscal stimulus in the event of a crisis. Unlike the kind of budget management advocated by the German government, this approach does not seek to eliminate or minimize governments’ leeway to conduct fiscal policy. It gives governments up-front the means to manage demand whenever they might need to."
Well you hit the nail on the proverbial head. The Euro was just great for countries like Germany but disastrous for much of the rest of the EU
The main beneficiary of EMU was the dominant industrial nation in Europe: Germany. It could export all it liked to the rest of Europe with no exchange rate risk and, more importantly, no political ramifications. Germany got a free lunch, which was paid for with borrowed money by the rest of Europe. But who lent this money to the rest of Europe? Why Germany of course! So Germany was lending money to the poorer EU countries in order to give them the wherewithal to buy German goods, which had generated the German savings in the first place!
When these countries had difficulty paying back the German banks, what did the Germans do? They penalised them in the draconian terms of the EU “bailout”. Instead of acknowledging its own role at the centre of this European-wide Ponzi scheme, Germany initially played the role of major loan shark, borrowing at 2pc and lending to the distressed states at 6pc! This penal approach didn’t work because the balance sheets of the distressed countries were too weak to pay this money back and the crisis became more acute. The “patched up” solution of a few months ago is unraveling.
What this has to Keyness is still a mystery to me since Keynes was a very big proponent of balanced budgets.
Though John Maynard Keynes is portrayed as a deficit-loving interventionist, in reality he was not. What is left out of the description of his theory in regards to counter-cyclical fiscal policy, is that Keynes also believed that in times of relative prosperity sovereigns should create budget surpluses. His belief was that booms and busts were an integral characteristic of modern capitalism, and that the accumulation of reserves during times of plenty would enable governments to engage in temporary deficit spending to combat a severe recession, without creating the long-term danger of exploding national debt to GDP ratios. This is an aspect of Keynes's views on fiscal policy that has been conveniently forgotten by the modern interpreters of Keynesian economics.
"If anything, “hard” Keynesianism suggests that the problem with the macroeconomic rules governing the euro is not that they are too tough and too detailed but that they are not tough or detailed enough. States in the eurozone should not be allowed to run moderate budget deficits in boom years, the Keynesian argument goes; instead, they should be compelled to run budget surpluses. The surpluses could then be saved in rainy-day funds or used to pay down government debt or, if the country had reached a satisfactory debt-to-GDP ratio, spent as a fiscal stimulus in the event of a crisis. Unlike the kind of budget management advocated by the German government, this approach does not seek to eliminate or minimize governments’ leeway to conduct fiscal policy. It gives governments up-front the means to manage demand whenever they might need to."
I admit I have been on the bashing of Keynesian's bandwagon mostly due to I am against gvt interference in the economy. Keynes is onto something that is practiced here in my state, Ohio. Our leaders have practiced Keynes theory and during good times the surplus money went into a rainy day fund. Of course from the crash to 2011 the fund was depleted because of spending and less tax revenues to the state treasury.
Then in 2011 tax collections did better then the projections and the state ended up with a 247 million surplus :
Quote:
Kasich and GOP lawmakers chose to begin replenishing the fund rather than using the money to ease budget cuts that included $779 million from schools and $633 million from local governments.
It will be interesting too see how this will work out, the following of Keynes with a conservative twist of cutting the budget at the same time. It looks like our state is in good hands at least there is a cushion. http://www.dispatch.com/content/stor...-of-money.html
Last edited by Swingblade; 12-26-2011 at 08:59 AM..
the lesson from europe is that you can't allow governments to overreach and overspend, because they eventually collapse-or they place technocrats in power to control/manipulate the destiny of the people.
is that what we want?
history has taught us something.
the present day interpretation of keynesianism is an excuse to allow government spending-the panacea that governments cling to as they continue the reckless spending.
before it was billions and now we are spending TRILLIONS -- and have nothing to show for it.
how is keynesianism working out for us personally as a country bogged down in more debt?
oh, and merry christmas everyone!
It's just total ignorance to imply this theory advocates government overspending. It only advocates this in response to a steep economic downturn for a limited duration. You don't know what you are talking about. As if Greece was following some Keynesian plan...LOL
I admit I have been on the bashing of Keynesian's bandwagon mostly due to I am against gvt interference in the economy.
Thank you for the admission because I have become really tired of people throwing around Keynes' name as it if were an epithet when it is abundantly clear that they have no idea of what they are talking about, it was honorable of you to admit as much.
As for the government's role in an economy, you call it interference, I call intervention and regulation either way that is a whole other topic.
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