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Definition of 'Keynesian Economics'
An*economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.
Read more: Keynesian Economics Definition | Investopedia
With all due respect, the Investopedia definition is a caricature. Keynesian economics lays out a role for government in helping manage the economy. It argues for an expansionary fiscal policy during periods of economic weakness to address an output gap and for mopping up the stimulus during periods of growth. U.S. policy makers have had a bias for accommodation. They've focused on the first element, but ignored the latter one. Due to that bias for accommodation, once the economy has strengthened, one has not seen a concerted policy effort to mop up the stimulus. As a result, temporary spending measures have often been extended, as have temporary tax cuts. The end result has been a greater accumulation of public debt than would have been the case were the latter aspect of Keynesian economics applied.
For those who are interested, Keynes's classic work, The General Theory of Employment, Interest, and Money can be found here: http://cas.umkc.edu/economics/peopl.../courses/econ645/Winter2011/GeneralTheory.pdf
Yes, World War II got the United States out of the Depression. No, FDR did not cause the Depression. That is just false.
With all due respect, the Investopedia definition is a caricature. Keynesian economics lays out a role for government in helping manage the economy. It argues for an expansionary fiscal policy during periods of economic weakness to address an output gap and for mopping up the stimulus during periods of growth. U.S. policy makers have had a bias for accommodation. They've focused on the first element, but ignored the latter one. Due to that bias for accommodation, once the economy has strengthened, one has not seen a concerted policy effort to mop up the stimulus. As a result, temporary spending measures have often been extended, as have temporary tax cuts. The end result has been a greater accumulation of public debt than would have been the case were the latter aspect of Keynesian economics applied.
For those who are interested, Keynes's classic work, The General Theory of Employment, Interest, and Money can be found here: http://cas.umkc.edu/economics/peopl.../courses/econ645/Winter2011/GeneralTheory.pdf
From CNBC:
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The CBO's entire report can be found at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook.pdf
Supplemental material accompanying the report can be found at: CBO | The 2012 Long-Term Budget Outlook
DA60 said:But my point was the New Deal DEFINITELY was - as you typed - 'an expansionary fiscal policy during periods of economic weakness'.
If running yearly deficits for almost a decade that averaged 3.5% of GDP to try and stimulate an economy is not Keynesian economics (or, part of it) then I do not know what it is.
Have I read the book you speak of? Nope.The above quote is true. The leap that the New Deal was Keynesian in nature is not.
Increased spending is not inherently Keynesian. Increased spending in a time of economic contraction is not inherently Keynesian. "Economic stimulus" is not inherently Keynesian.
You're absolutely right: you don't.
Have I read the book you speak of?
But I understand it fairly well, imo.
Yes, actually I have studied Keynesian and post-Keynesian economics for quite some time so I know exactly what I am talking about, especially something so elementary as to what it actually is.
If you understood it fairly well then you wouldn't be appealing to incorrect dictionary definitions but rather arguing your point yourself. You're very clearly misinformed on what Keynes asserted.
The fact that don and I are on the same side on this issue is pretty telling. It's because this is economics 101.
He didn't cause it, but he extended it, and created generations of Americans who have fed off the government teet since. It was the beginning of oversized government, which the Constitution was written to prevent.
Wrong again. In fact FDR's pro-growth policies were working very well ... until conservatives talked him into going to austerity mode before the recovery was on solid ground. THAT caused the economy to backslide until it was bailed out by the biggest stimulus package of all time: WWII.
And what happened during the 1920/21 Depression...
Have I read the book you speak of? Nope.
But I understand it fairly well, imo.
The causes of the Great Depression and the causes of the 1920-21 contraction were different. The former had far more systemic and structural causes. The latter was largely the consequence of the post-WW I scale-down. If one looks at Pre-WW II U.S. history, one finds numerous significant economic downturns following the end of the nation's wars.
I said 'fairly well' - not 'well'.If you haven't read Keynes or studied Keynesian economics, how can you understand it well? Just because one hears about it, even if quoted accurately, does not mean one understands it well. Absent the context and details, one can have a superficial understanding.
Finally, even as KC and I have disagreed on numerous issues, I strongly disagree with you that he is trolling. He is insisting on precision that is essential to discussing/debating Keynesian economics in a rigorous sense.
3) Do you have links to unbiased, factual statistics that prove that the two were so dissimilar that to compare the two in the way I did is completely ineffective?
Besides - the definiton from the Financial Times disagrees with you and the other guy's opinions.
You honestly think I should take two faceless, nameless people on a chat forum's word over the Financial Times?
Nothing KC or I said contradicts the FT definition. Your error is in assuming that the definition is an end point, and no context beyond the words of the definition is necessary.
Come on now?Some starting points:
Kindleberger, C. Manias, Panics, and Crashes: A Hstory of Financial Crises, 3rd edition, New York: Wiley, 1996.
Shiller, R. Irrational Exuberance, 2nd edition, Princeton University Press, 2005
Meltzer, A. A History of the Federal Reserve, Volume I 1913-1951, Chicago, The University of Chicago Press, 2003
BTW - the two worst economic downturns of the 20th century happened within 20 years of the creation of the Fed.
Coincidence?
I think not.
I suspected that you might hold to the fallacy that the institution of central banks/central banking has made things worse, hence I suggested the first volume of the Meltzer book. That volume covers the time period in question. To be sure, the Fed has made mistakes, but the Great Depression was not largely or wholly the Fed's creation. Many other factors led to the credit boom and mania that it financed, including the role of gold. The disproportionate role of gold also reduced U.S. flexibility to deal with the economic crisis once it was underway.
I strongly recommend watching this video.
"Why Was the Fed Created?" with George Selgin -- Ron Paul Fed Lecture Series, Pt 1/3 - YouTube
well if we let the tax cuts expire,umm wouldnt even raise enough to fund the government by far.
at our current rate of spending,well probably have to run 75% tax rates for everyone to pay down this debt without cutting costs.
god forbid we cut programs america survived without,because not handing out stimulous checks and funding deads green companies and buying frivilous military gear will turn america into somalia
How the US Nation Debt could be paid-off NOWBoth political parties when in power have continued to charge on the US credit card and have increased the debt.
So you ask – How can we pay down the debt? How can we eliminate the $13 trillion and start over?
Well the answer comes from the Ronald Reagan former Director of the Budget – David Stockman. He says tax the personal net wealth of the richest 5% of Americans. What is the personal net wealth of the top 5%?
Stockman estimates that the richest 5% or approximately 1.5 million Americans are worth $40 trillion in net wealth. Net wealth is the amount a person is worth after all debts are subtracted from all the assets, cash, stock, real estate, etc. The top 5% are richer than the bottom 95% of all Americans, 308.5 million.
In 1985 this top 5% had a net wealth of just $8 trillion. Most of the gain in wealth is directly from low tax rates.
Keep in mind this is “personal” wealth not corporate wealth and has NO affect on corporations or business.
Stockman says we should have a one- time 15% tax on this net wealth that would bring in approximately $6 trillion and use this to pay down the debt. We would still have about $7 trillion in debt.
A ****en ron paul video ??? boy that’s gotta put the rubes in their place.:lamo
I strongly recommend watching this video.
"Why Was the Fed Created?" with George Selgin -- Ron Paul Fed Lecture Series, Pt 1/3 - YouTube
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