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

To: Mary Cluney who wrote (178331)	12/30/2011 3:09:48 PM
From: Steve Lokness	Read Replies (2) \| Respond to of 543020

Here's where Keynes and Krugman are wrong; especially when they rely on the one blip as proof that they are right and everyone else is wrong. To follow their logic, that means we should have kept stimulating in 1937 and furthermore, most now suggest that it wasn't the stimulus that was the end of the Depression - but rather the further stimulus of the war. So to get to the end of the Depression, we needed the added stimulus of a World War. Sooooo, considering that Krugman thinks of this keynesian spending as a solution - when it took 15 years is just a little weird. We're only three years into our current mess and we're doing better than that! But here's the thing they miss; for Keynesian to be really fairly used as a predictive tool, we have to have an end point for it's success for the Depression. By that I mean we have to consider what we lose when we pay alllllll that stimulus money back. To use the example of the last Depression, how did we pay that investment for a decade of stimulus and then another almost 5 years of war? .........We got that dividend when we supplied the world with goods BECAUSE we were the only country that didn't have the holy crap bombed out of them. Keynesian - kind of worked - because of a once in a lifetime event (well even less than that really). That will NOT happen again. ONLY if people somehow believe we don't have to pay the stimulus money back - is it fair to consider it in only the first half when there is a benefit - and not the second half when there is a cost. That cost also of course has to include massive charges for interest payments and it has to consider lost opportunity in the future when people are paying for the cost of that borrowed money instead of the benefit of investing in the present. Krugman never addresses this second part.

To: Mary Cluney who wrote (178331)	12/30/2011 3:14:55 PM
From: JohnM	Respond to of 543020

Thanks for posting today's Krugman column. He's clearly now on a very visible campaign to try to make certain there's at least contention about the claim that Keynesianism failed during the recent economic crash. More power to him.

To: Mary Cluney who wrote (178331)	12/30/2011 3:19:07 PM
From: Steve Lokness	Read Replies (1) \| Respond to of 543020

<<<<So the real test of Keynesian economics hasn’t come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans — and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits. >>>> The logic here blows me away! Greece and Italy's problem stem from not spending too little - that's absurd. Annnnnd yet that is the only conclusion one can draw from Krugmans silly comparison as to which way is right - spend more or spend less. Both Greec and Italy are in trouble for one single reason; they spent too much. They lived beyond their means and that, as happens every time, eventually led to a point where the rest of the world became skeptical of their ability to pay it back and so demanded more of an interest rate premium. That premium pushed up the cost to the respective governments that now is putting fear into every bankers eyes. If Europe spirals into economic bad place, it is not because Greece and Italy spent too little, it is because they borrowed to live today on money they wanted to borrow tomorrow - and couldn't.