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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Katelew who wrote (103443)	2/7/2009 4:45:14 PM
From: Mary Cluney	Read Replies (1) \| Respond to of 541967

<<<From the fact that it always has>>> I don't understand it, but I think the thinking has changed since 1936 when John Maynard Keynes published The General Theory of Employment, Interest and Money. In economics Keynesianism (pronounced /'ke?nzi?n/, also Keynesian economics and Keynesian Theory), is based on the ideas of twentieth-century British economist John Maynard Keynes. According to Keynesian economics the state should stimulate economic growth and improve stability in the private sector — through, for example, adjusting interest rates and taxation and funding public projects. The theories forming the basis of Keynesian economics were first presented in The General Theory of Employment, Interest and Money, published in 1936. In Keynes's theory, some micro-level actions of individuals and firms can lead to aggregate macroeconomic outcomes in which the economy operates below its potential output and growth. Many classical economists had believed in Say's Law, that supply creates its own demand, so that a "general glut" would therefore be impossible. Keynes contended that aggregate demand for goods might be insufficient during economic downturns, leading to unnecessarily high unemployment and losses of potential output. Keynes argued that government policies could be used to increase aggregate demand, thus increasing economic activity and reducing high unemployment and deflation. Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches : a reduction in interest rates. Government investment in infrastructure - the injection of income results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.[1] A central conclusion of Keynesian economics is that in some situations, no strong automatic mechanism moves output and employment towards full employment levels. This conclusion conflicts with economic approaches that assume a general tendency towards an equilibrium. In the 'neoclassical synthesis', which combines Keynesian macro concepts with a micro foundation, the conditions of General equilibrium allow for price adjustment to achieve this goal. The New classical macroeconomics movement, which began in the late 1960s and early 1970s, criticized Keynesian theories, while New Keynesian economics have sought to base Keynes's idea on more rigorous theoretical foundations. More broadly, Keynes saw his as a general theory, in which utilization of resources could be high or low, whereas previous economics focused on the particular case of full utilization. Some interpretations of Keynes have emphasized his stress on the international coordination of Keynesian policies, the need for international economic institutions, and the ways in which economic forces could lead to war or could promote peace.[2]

To: Katelew who wrote (103443)	2/7/2009 5:05:24 PM
From: Travis_Bickle	Read Replies (2) \| Respond to of 541967

The tone of the 24/7 coverage on cable television cracks me up, I expect rivers to turn to blood by Thursday whether or not the bill gets passed. As you say there is nothing new or different going on, the economy will recover even absent any government action, all we are really arguing about is whether a proposed action will speed the recovery in a meaningful way at a rational cost. The unemployment rate was just reported at 7.6%, look around you, is your life any different than when it was at 5.4%? But oh, they say, people are suffering! How can you not feel for the suffering of the people! As if life three years ago was never ending joy ... people were suffering then too, except nobody noticed them cause the media was focused more on foreign affairs than domestic difficulties, or they were focused on a particular part of the nation (I'm looking at you, New Orleans!) rather than noticing the economy wasn't near as strong as a lot of people thought it was.

To: Katelew who wrote (103443)	2/8/2009 10:35:49 PM
From: Cogito	Read Replies (1) \| Respond to of 541967

>>The current stock market rally could be telling us that it has sensed that the amount of unwind is the correct amount and renewed growth is on the horizon....maybe 6-9 mos. out.<< Kate - From everything I've read, indications are that the current rally is based on the expectation of swift and massive government inputs to jump-start that recovery. If no stimulus package is passed, the rally will quickly turn to a rout. Would that be better for the country as a whole in the long run? I don't know. It's quite possible that it would be. It's also possible that the package will be more right than wrong, and that it could avert a lot of pain and suffering. Obviously, there's little chance that nothing will be done. So we'd better hope for two things. One, that the latter possibility mentioned above turns out to be true. And two, that once the recovery is well under way, and the economy is once more on a sound footing, that we will have the good sense to start paying back the debt sooner rather than later, and make a concerted effort to do so. - Allen