Keynesian Economics

mame said:

Why don't you try actually learning Keynes positions instead of just spouting random shit? To say Keynesianism does not take into account a global economy is laughable you tool. Keynes himself never argued perpetual debt was good. It seems you don't know what Keynesianism is IMO.

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Keynes applied the economic theories of his country to America. He knew how the economy worked in his homeland but not here. Different animal. Once he crossed the pond he went from smart to not so smart. In one of his writings he said his theory works best in a certain form of government. I can't remember the word he used. Something close to socialist. None the less, a brilliant man who taught people a lot about economics and corrections.

I think the "global economy" stuff is a buzzword anyway. Hasn't there always been a global economy? Technology has allowed things to move quicker and less costly.

Inflation a better term than perpetual debt? For some reason quite a few economists think very small inflation is the thing to shoot for. Of course those same ones will tell you about the bad economy in the latter part of the 1800's too because of deflation. But they ignore the fact that prices went down faster than wages. Isn't it always about the purchasing price of the dollar anyway?

Economists like a low inflation number because it promotes growth via liquidity. The federal reserve has achieved "the great moderation" by maintaining modest core inflation(2%).

The thing is, 0-1% inflation generally happens when an economy is stagnant and in periods of deflation the economy is generally losing jobs because wages have downward rigidity(it's more likely an employer fires an employee or two to cut costs rather than give their employees a pay cut).

well textbook says you are right, but reality says you are wrong. the reason for inflation is so that people do not hoard and are forced to spend as quickly as possible so as to preserve purchasing power. As long as people are forced to spend the illusion can be kept a reality.

When the price of Porterhouse steaks increases 200%, the CPI wouldn't change at all, because they figure you will start eating 80% ground beef, and if 80% ground beef increases 200% they will assume that you will be eating the offal and trimmings from the kill room floor. If trimmings increase 200% they figure you will start eating dirt instead, and dirt is free so it would actually show prices in deflation. In other words, when they calculate the CPI, they make it a nice small number regardless of the actual inflation in the system.

Core inflation is a scam. we should not be looking at prices, we should be looking at the total amount of dollars in the system to ultimately dictate what our future looks like.

no drama is kicking this threads ass


Keynesians conveniently ignore the depression of '21 and why it wasn't a great one and what the governments response was to that one. When you point out that it took until the 50's for the market to return to precrash levels inspite of Keynesian spending they'll say it's because FDR chickened out and started austerity measures in 37. So after making things worse for 8 years the reason it didn't work faster is because we didn't keep doing it?

We've increased the debt by 5T in 3 years but barely increased GDP by 1.3T, not a very good return on money we are supposed to pay back with interest. I don't care what you call your economic values, the math is the same looked at it this way.

For Keynesian economics to work properly people must behave in predictable patterns, give me an extra 20, i buy an extra pizza, pizza guy has to hire new employee, new employee pays taxes and spends money on something else making that 20 a multiplier of X (x=3 if you are Nancy Pelosi, then why the number in the last paragraph Nancy?). What happens if I decide to pay down a credit card or heaven forbid save that 20. What happens if the pizza owner doesn't hire an employee with extra 20? What happens if the new employee is just someone taking on a 2nd job to pay off dept? These factors are unpredictable.

If we could accurately and consistently predict human behavior insiders like Paul Krugman who can actually affect policy would be trillionaires. Instead he wins a Nobel and lauds the stimulus by saying the genius of it was it was to be implemented at the state level. Now he's saying the reason it didn't work was because it was implemented at the state level.

Ask any Keynesian why their method didn't work as advertised, or listen to their revisionist history describing why the New Deal didn't work in a timely manner (or did work depending what day it is) the answer is always more. We didn't do enough, we should have done more, it would have worked better had we doubled it, we didn't spend enough blah blah blah. Their motto should be 99% of all problems can be solved with money because that's the intellectually lazy thought process guiding this system.

I'm not sure looking at the money supply does any good. For example, there has been a TRIPLING of the monetary base since 2008 and inflation has remained low, as predicted by IS-LM. It's not just the core and CPI that show this, the billion price project confirms those numbers as well. Also, if inflation was higher than reported, Real GDP and wages must have been falling the last few years...and they have not. The inflation numbers are not a lie.

when calculating inflation necessities like energy and food are for some reason not included, wonder why that is?
what costs are increasing at the highest rates?

inflation is like unemployment numbers, we can make them look like anything we want. It's hard to see gold double in price but say nah, the dollar is STRONG!!

And btw ginwilly, youre putting words in krugmans mouth. He said from the very beginning that the stimulus was too small.

http://krugman.blogs.nytimes.com/2011/08/22/early-stimulus-worries/

Gold doesn't rise in price with inflation, it's rises with negative real interest rates.

mame said:

Gold doesn't rise in price with inflation, it's rises with negative real interest rates.

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Everything rises in price with inflation...

That is why it is called inflation... Duh

NLXSK1 said:

Everything rises in price with inflation...

That is why it is called inflation... Duh

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Of course, but golds recent rise in price is NOT inflation driven, because inflation has only been 2-3% in recent years and golds rise has been much more. The huge increase in the price of gold the last few years is explained by negative real interest rates.

mame said:

And btw ginwilly, youre putting words in krugmans mouth. He said from the very beginning that the stimulus was too small.

http://krugman.blogs.nytimes.com/2011/08/22/early-stimulus-worries/

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of course he said it wasn't enough, that's called hedging your bets for when you are wrong. The undeniable fact is that when passed he said the best thing about it was it would be implemented at the state level which would be the quickest ways for the funds to funnel into the economy and when the numbers were more like what the Autrians said it would be than the Keynesians he changed his stance to saying the mistake was implementing it at the state level.

seriously, 99% of all problems can be solved with more money.....

mame said:

Of course, but golds recent rise in price is NOT inflation driven, because inflation has only been 2-3% in recent years and golds rise has been much more. The huge increase in the price of gold the last few years is explained by negative real interest rates.

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ROFLMFAO!!!

Yeah, inflation has been piddly according to the government.

Why dont you check actual inflation... Like on gold and meat and sugar and gas, etc... Inflation has been far higher than 2-3% You just havent been paying attention.

ginwilly said:

of course he said it wasn't enough, that's called hedging your bets for when you are wrong. The undeniable fact is that when passed he said the best thing about it was it would be implemented at the state level which would be the quickest ways for the funds to funnel into the economy and when the numbers were more like what the Autrians said it would be than the Keynesians he changed his stance to saying the mistake was implementing it at the state level.

seriously, 99% of all problems can be solved with more money.....

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Just because yu say it doesn't mean it's true... The consensus by a majority of Keynesian economists PRIOR to the bills passage warned it was too small. If you'd like I can explain to you exactly why it was to small (read: output gap), because it seems your understanding of the situation and of the economics is limited. "Austrian economics predicted this!" "keynesianism is wrong!"... Why? What's your model? Do you even understand the fundamentals of the positions you take? Or are you just repeating what youve heard from politicians and Internet forums?

NLXSK1 said:

ROFLMFAO!!!

Yeah, inflation has been piddly according to the government.

Why dont you check actual inflation... Like on gold and meat and sugar and gas, etc... Inflation has been far higher than 2-3% You just havent been paying attention.

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If the inflation numbers are wrong, than real GDP and real wages MUST have been plummeting in recent years... Can you produce evidence of either? If not, than the inflation numbers are entirely correct (hint: real GDP and wages have not been falling). Also, the independent billion price project produces almost exactly the same number as the official CPI. The numbers aren't cooked. There is no conspiracy to hide inflation.

definitely not repeating what politicians are saying because they are on your side of this argument.

You glossed over Krugman's flip-flop.

"we face the worst economic crisis since the great depression and if we don't act now then X will happen and the only way to prevent X is to do Y"

Mr. Keynesian, why did X happen even though we did Y like you said?

"well you poor uneducated non-central planner, the worst economic crisis since the great depression was much worse than we thought making it REALLY the worst economic crisis since the great depression (ignore the early 80's when not only were the UE numbers worse, interest rates were double digits and inflation was soaring, but the opposite actions brought us out) so we misjudged that. Also, it wasn't big enough."

seriously?

ginwilly said:

definitely not repeating what politicians are saying because they are on your side of this argument.

You glossed over Krugman's flip-flop.

"we face the worst economic crisis since the great depression and if we don't act now then X will happen and the only way to prevent X is to do Y"

Mr. Keynesian, why did X happen even though we did Y like you said?

"well you poor uneducated non-central planner, the worst economic crisis since the great depression was much worse than we thought making it REALLY the worst economic crisis since the great depression (ignore the early 80's when not only were the UE numbers worse, interest rates were double digits and inflation was soaring, but the opposite actions brought us out) so we misjudged that. Also, it wasn't big enough."

seriously?

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It's like you didn't even read the linked krugman posts of him harshly criticizing Obama for his too-small stimulus package. The linked columns were in January of 09. How can you flip flop when your position was the same before, during and after the legislation is passed? I'd quote him directly but I've been posting via my phone and it's a pain in the ass, go read the columns and show me a flip flop(hint: there isn't one).

I get a kick out of the Keynesian's that act like the theory is some complicated meta-physical genius that only they can understand. The only possible reason people could have for disagreeing with this genius is because they don't understand.

We are in for central planning taken to new heights. The latest economic Nobel went to economists based on their claims that Keynesian economics are too simple-minded and outdated. Politicians latch on to any reality that allows them to spend someone else's money under the guise of "greater good".

mame said:

It's like you didn't even read the linked krugman posts of him harshly criticizing Obama for his too-small stimulus package. The linked columns were in January of 09. How can you flip flop when your position was the same before, during and after the legislation is passed? I'd quote him directly but I've been posting via my phone and it's a pain in the ass, go read the columns and show me a flip flop(hint: there isn't one).

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no you misunderstand. Of course he said it was too small, I'm not making that argument. I'm saying he said the best thing about it was that it was to be implemented at the state level after it was passed. Some point last year he said what was wrong with the stimulus was that it was done at the state level. He took a little bit of shit over this but not much, people are used to him doing this, remember he's the guy after the tech bubble crashed that said we needed to create a housing bubble. Paul Krugman has predicted 11 of the last 5 recessions, he's amazing.

It's not my fault you dont understand Economics 101. Eveything I've posted is supported by Facts and evidence... So far you've basically said "Keynes bad!" in maybe a half dozen different - and fallacious - ways. I asked before, and I'll ask again: do you even understand the fundamentals that drive your positions?

mame said:

If the inflation numbers are wrong, than real GDP and real wages MUST have been plummeting in recent years... Can you produce evidence of either? If not, than the inflation numbers are entirely correct (hint: real GDP and wages have not been falling). Also, the independent billion price project produces almost exactly the same number as the official CPI. The numbers aren't cooked. There is no conspiracy to hide inflation.

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What you are saying makes no sense.


Lets say the price of meat goes up 10%.

That does not affect the GDP or the price of wages but cuts into people's disposable income.

Gas is twice as expensive as years ago, meat is 10-20% more expensive, gold is double, everything in the supermarkets is shrinking in size while remaining the same cost (they now have 20 packs of coke in some stores and I cannot even find the family size bag of ruffles chips anymore and the regular size is 4.99 at Walmart.

Everything has gone up and not by a piddly 2-3%.

If you cannot see it in your real life you are blind.