The Obama - Clinton Disaster Message Board

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Politics : The Obama - Clinton Disaster

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To: GROUND ZERO™ who wrote (4713)	1/10/2009 10:12:04 AM
From: DuckTapeSunroof	Read Replies (2) of 103300

A Keynesian 'counter-cyclical' economic policy of providing liquidity at the bottoms of serious down-turns can only achieve it's optimal results (reducing the range of violent swings in volatility in an economy) IF governments also follow the counter-cyclical part of the prescription during the GOOD TIMES: and reduce excesses in liquidity (which foster bubbles/bust cycles) near the tops of abnormal spikes in the economy... the "irrational exuberance" times. But... "taking away the punch bowl" is ALWAYS the last thing that most politicians will want to do... (it's 'let the good times roll' and the 'Devil take the hindmost' for the short-term-focused politicians). Which is why a Keynesian prescription can not really work until and unless a nations Central Bankers are STRONGLY independent from the politicians... (and of at least 'average' intelligence <g>). It ain't as easy as it sounds. And --- when politicians and nations constantly neglect to apply Keynesian principles at the TOPS of the cycles... fail always to 'take away the punch bowls'... then what happens is that Keynesianism is the direct CAUSE of systemic inflation in the society.

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