What is Keynesian Economics and why is it so destructive to America’s recovery?

An obvious fact that most liberals often ignore much to their political embarrassment is that any amount of government spending always fails to end economic recessions. Spending-stimulus advocates, such as Obama’s closest advisors and cheerleaders, claim that Congress can "inject" new money into the economy, increasing demand and therefore production.

"This raises the obvious question: From where does the government acquire the money it pumps into the economy? Congress does not have a vault of money that is simply waiting to be distributed. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another."

 

Using the 1930's Keynesian Economics to fix a 2011 economy is like using a Model T tool kit, an apple pie and a cowboy hat to repair the Space Shuttle.

 

Exactly. I prefer trickle down economics over trickle up economics. We're taxed more than enough to support our government. We shouldn't have to pay any more into our economy than we have to.

 

The left is quick to claim it's own brilliance yet they seem too stupid to stop repeating the same failed economic model over and over (to our country's infinite misfortune).
We know what works economically, because we've seen it work. Tell government to get out of the way, give the people their own money to spend and invest and stop meddling.
And we know what does not work, because we are living it. Big Government cannot spend it's way out of an economic slump. It's been tried and always fails.

 

Keynesian Economics fits the progressive government-centric worldview. For many, all that they are or ever will be is what the gov't gives them from the taxpayers. Most don't believe in God or an afterlife, so what the gov't can give them is the best thing that will ever happen in their lives. This is why they act as religious zealous in the defense of statism.



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You are very correct, DonGlock.

Your remarks are very sincere, directly to the point and well crafted!

"Socialists cry "Power to the people", and raise the clenched fist as they say it. We all know what they really mean — power over people, power to the State."

-- Margaret Thatcher

Socialism is great if you are willing to accept a much reduced standard of living and an oppressive central government who is always telling you what to do and how to live your life to the benefit of the state!

Cuba, North Korea and the old Soviet Union and East Germany are four perfect examples!

 

Exactly, the progressive is willing to accept a new serfdom for the security of a guaranteed low achievement. Ultimately, they fear failure and avoid it by selling their freedom cheaply.

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"The left is quick to claim it's own brilliance yet they seem too stupid to stop repeating the same failed economic models over and over (to our country's great misfortune).

We know what works economically, because we've seen it work. Tell government to get out of the way, give the people their own money to spend and invest and stop meddling in their personal decisions.

And we know what does not work, because we are living it. Big Government cannot spend it's way out of an economic slump. It's been tried before and always fails."

-- Yosh Shmenge

Here is confirmation of what Mr. Shmenge has said!

"Indeed, President Obama's stimulus bill failed by its own standards. In a January 2009 report, White House economists predicted that the stimulus bill would create (not merely save) 3.3 million net jobs by 2010. Since then, 3.5 million more net jobs have been lost, pushing the unemployment rate above 10 percent.[1] The fact that government failed to spend its way to prosperity is not an isolated incident:

• During the 1930s, New Deal lawmakers doubled federal spending--yet unemployment remained above 20 percent until World War II.

• Japan responded to a 1990 recession by passing 10 stimulus spending bills over 8 years (building the largest national debt in the industrialized world)--yet its economy remained stagnant.

• In 2001, President Bush responded to a recession by "injecting" tax rebates into the economy. The economy did not respond until two years later, when tax rate reductions were implemented.

• In 2008, President Bush tried to head off the current recession with another round of tax rebates. The recession continued to worsen.

• Now, the most recent $787 billion stimulus bill was intended to keep the unemployment rate from exceeding 8 percent. In November, it topped 10 percent.[2]

Undeterred by these repeated stimulus failures, President Obama is calling for yet another stimulus bill. There is every reason to expect another round to fail as miserably as the past ones, and it would bury the nation deeper in debt."

 

I believe that pure Keynesian intervention by Government also has a component that government would pull back during good times, and run its budgets so as to create the surplusses that would serve to fund the down-time spending. Pretty much a typical "rainy day fund" approach that is common to basic budgeting when folks are dealing with THEIR OWN MONEY.

Of course, politicians are capable of no such self-discipline, and to liberals, its all OPM. Keynesian economics has been FUBAR ever since libs latched onto it and bastardized it to purchase dependency.

 

People say you can't fly, but we just never have tried hard enough to prove them wrong. Keep flapping your wings, leftists. And keep jumping off the roof.
Your "brilliance" will vindicate you...someday.

 

The most articulate and interesting Democrat posters on economic topics are 17th&K and Iriemon. I hope they weign in and give the Left's perspective on what they feel the benefits of Keynesian theory are.

We probably won't see much else from any hyperlib posters, who are rarely capable of saying anything besides, "Dude, it was Bush's fault", or, "Dude, you just, like, don't care about poor people, do yuh", and of course, "Dude, why don't you just tax the rich"....

All of it is crap, of course. We can add "tax the rich" until we appear to confiscate 100% of everything they make, but unless we COLLECT FROM THE RICH, then we have done NOTHING! The rich employ huge numbers of tax attorneys and tax accountants to work all the loopholes, shelters, exemptions, and other tax dodges in the U. S. Tax Code to MAKE SURE THEY ACTUALLY PAY LITTLE OR NO TAXES AT ALL, no matter what the "tax rate" is!

Thus, until we change the Tax Code, we have done nothing but talk, and talk, and talk....

Hint: the "Limousine Liberals" big-rich who back Obama do NOT want a change in the Tax Code... think about it... who will a tax increase really fall on?!

Keynesian theory? Simply put, it is the creation of bogus, worthless money which gets pumped into the economy, sort of like heroin for an addict. It creates a "fraud balloon" which is loved by banks, financial institutions, and the stock market. It helps no one else.

It was widely practiced by the Frankie Roosevelt Administration in its "New Deal" and "Second New Deal", where it was a total failure. Only World War II got us out of the Depression, not any magic trick associated with Keynesian economic theory....

 

Keynesian Theory is exactly what obama has been shoving at us for these past 2 1/2 years. Simple as that, and it hasn't worked to date nor will it ever work. It is as anti-eco American as any other system can be.

 

Yes, and it MUST be stopped in 2012, or we will be the UK writ large.

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you are very correct,DonGlock.

Remember these famouns words that were spoken by Barack Obama!

Obama says he's responsible for economy. "Give it to me."

[ame="http://www.youtube.com/watch?v=CQBSTomBWls"]Obama says he's responsible for economy. "Give it to me." - YouTube[/ame]

 

Well, it is unforunate that he doesn't control the economy, nor can he do anything to get the economy on track without Congress's approval.

 

Keynes NEVER argued that government run a permanent deficit. He envisioned starting to put the brakes on a runaway economy (like 2005-2006) with higher taxes and levies and generating a budgetary surplus, so that when the inevitable market crash occurred that surplus, plus some deficit spending, would be available as stimulus. He never considered, nor advocated, stimulus spending in a situation where the government already had a serious deficit.

The other deliberate misrepresentation by these right-wing weasels quoted in the OP is that most of the money spent was stimulus money: it was not. Most of the money went to the TARP program which the Republicans were just as in favor of (except maybe the Tea Party) as were the Democrats. Bailing out banks and investment funds seems a clever way of redistributing wealth from the poorer citizens to the richer ones in exchange for keeping some badly run financial corporations afloat and issuing profits (and I don't think Keynes advocated that either).

 

Hey guys, are the facts invited to this discussion, or is this an ideology only party?

Too bad, we're gate crashing anyway.

Since a lot of the discussion has dealt with the Great Depression, let's start there.

Year..|gvt revenue.|gvt spending.|gvt deficit.|.....GDP|unemployment
1929.|..........3,862|..........3,127|..........734|...103.6|...3.3%
1930.|..........4,058|..........3,320|..........738|....91.2|....8.9%
1931.|..........3,116|..........3,577|.........-462|....76.5|..15.9%
1932.|..........1,924|..........4,659|......-2,735|....58.7|..23.6%
1933.|..........1,997|..........4,598|......-2,602|....56.4|..24.9%
1934.|..........2,955|..........6,541|......-3,586|....66.0|..21.7%
1935.|..........3,609|..........6,412|......-2,803|....73.3|..20.1%
1936.|..........3,923|..........8,228|......-4,304|....83.8|..17.0%
1937.|..........5,387|..........7,580|......-2,193|....91.9|..14.3%
1938.|..........6,751|..........6,840|...........-89|...86.1|..19.0%
1939.|..........6,295|..........9,141|......-2,846|....92.2|..17.2%
1940.|..........6,548|..........9,468|......-2,920|..101.4|..14.6%
1941.|..........8,712|........13,653|......-4,941|..126.7|....9.9%
1942.|........14,634|........35,137|....-20,503|...161.9|...4.7%
1943.|........24,001|........78,555|....-54,554|...198.6|...1.9%
1944.|........43,747|........91,304|....-47,557|...219.8|...1.2%
1945.|........45,159|........92,712|....-47,553|...223.0|...1.9%
1946.|........39,296|........55,232|....-15,936|...222.2|...3.9%
1947.|........38,514|........34,496|.......4,018|...244.1|...3.9%
1948.|........41,560|........29,764|.....11,796|...269.1|...3.8%

Federal budget statistics in millions of dollars, not inflation adjusted, from http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf
GDP in billions of dollars, not inflation adjusted, from http://www.bea.gov/national/nipaweb...ar=1948&3Place=N&Update=Update&JavaBox=no#Mid
Unemployment from http://www.bls.gov/cps/cpsaat1.pdf and http://www.bls.gov/opub/cwc/cm20030124ar03p1.htm

First thing, no, James, unemployment did not stay above 20% until WWII. that's just wrong.

So, if Keynesian economics have been proven not to work, why is it that the economy started to turn around in 1933, just when FDR got into office? Coincidence? And look at what happened in 1937. Congressional Republicans succeeded in pressuring FDR into cutting spending to try to balance the budget, and the economy promptly tanked and unemployment skyrocketed. Yet another coincidence? And yes, it was the war that finally ended the Depression for good. Do you suppose that had anything to do with a the federal government spending more then twice what it took in, or is that yet another coincidence? And even after the economy had recovered, when federal spending was cut with the demobilization at the end of the war, the economy took another hit. Boy, there sure were an awful lot of coincidences back then, weren't there?

And Keynes has been proven wrong, then why has every President - of both parties - faced with an economic downturn since the great Depression turned to Keynesian stimulus policies? And why has the US economy become markedly more stable since then as well? From 1857 - 1899, the US economy spent 48% of the time in recession. That dropped to 18% for 1945 - 2009. http://66.147.242.158/~papolicy/wp-content/uploads/2009/06/Figure1_Recessions_1857to2009.gif

Heritage is right about one thing - the evidence is in. 80 years of evidence says that Keynes' ideas work better then just about anything else ever tried, and certainly a heck of lot better then the laissez faire economics of the late nineteenth century. Or would you rather return to the days of half the time spent in recession, robber barons, child labor, appalling working conditions, and continent spanning monopolies? Yes, those were the good old days, all right.

 

TARP was a Bush program that socialized losses for Wall Street and was continued under The Lightworker. No advantage to left or right there as both are run by Wall Street.
Did more money go to TARP than the stimulus? Not sure but I wouldn't be surprised if it was TARP. However this does not excuse the Keynesian nature of Obama's sordid job stimulus and I don't know which is worse: the notion of letting government throw money around (and away) to make jobs or the miserable failed track record of the stimulus.

 

Yet another hyper-anti this or that with bogus numbers, yet ten years before the numbers you posted was another Depression with earmarks that it was gonna be a doosey of a depression but what happened? Little pain no memory of this event just a few years before, no the Keyn's don't want to discuss that, in fact they simply lie and pretend like it never happened.

Another err on your numbers and regarding history, unemployement started going down when war orders (yes Europe was at war along with Japan and nearly all of Asia before the US officially jumped in believe it or not) were being placed by other Nations and the US military complex started to kick in to create a supply to sell to other nations not to mention all other goodies needed like cloths and food to nations suffering no productivity since their nations were ravaged with War.

Posters like this have no real idea just political BS they want to shape their numbers and they will lie and misrepresent history to attempt to prove their lies. Politicians adopt these Keyn's ideas for one basic reason, it gives them power to do something and that is what politicians want, Power! It is better not to give it to them but some people think that a powerful government is good regardless of what History teaches us.

 

Keynesian economics works, those who say otherwise are simply lying. The Recovery Act worked. Those who say otherwise are simply lying. for the second quarter of 2011, the Recovery Act raised GDP by 0.8% - 2.5%, lowered unemployment by 0.5 - 1.6 points, and increased the number of people with jobs by 1.0 - 2.9 million. And that's with the money mostly spent and the effects fading. That's the difference between a stagnant economy and one still in recession. That's the difference between a horrible job market and massive layoffs.
http://www.cbo.gov/ftpdocs/123xx/doc12385/08-24-ARRA.pdf

TARP was originally authorized to conduct $700 billion in transactions, however, only $432 billion was actually used. The vast majority of that either has already been repaid or is expected to be repaid. CBO's latest estimate is that TARP's actual cost to the taxpayer will be $19 billion.
http://www.cbo.gov/doc.cfm?index=12118&zzz=41633

Honestly, don't you guys ever get tired of being lied to by Murdoch & Co? If I can provide hard numbers that clearly show that the story Fox News and the rest is telling is just simply not true with a few minutes of goggling, why do you listen to these folks? They don't care about the country or conservative principles, just their own personal agendas. $100 says that if News Corp had received TARP funds, Fox News would have been heralding it as the salvation of western civilization. I mean Murdoch is a guy who had his people hack into the voice mail of a 13 year old girl who'd been kidnapped to get a story, and when they found the mailbox to be full, he had them start deleting messages to make room for new ones, leading the police and the girl's family to think she was alive and free when she was really being raped and murdered. This is the person you're trusting to tell you what to believe?

 

Where are in Keynesian model deregulation and tax cuts? If you want really fix economy you should listen to Michelle Bachmann. She promised that if she will be a POTUS she will will go away with minimum wage so US will be again competitive with countries where average monthly salary is 200$. That is what I call economical genius!

 

And what was World War II? Government spending.

You have disproven your own silly beliefs that government spending can do no good, when in fact America was never more prosperous than after that huge "stimulus". The space race and the cold war were also successful stimulus programs.

 

Your defense of Keynesianism "working" is analogous to claiming that a Southern Plantation during slavery days worked.

I guess the real metric is asking the "employees".

Keynes wouldn't support what has taken place at this point. He said that if we expanded Government's share of GDP beyond 25%, we would create an unsustainable house of cards.

Unfortunately, inciting Government to spend increasing levels of money to keep up with constantly inflating of the economy results in just that. That is the best reason to say that Keynesianism doesn't work.

Just like history established that Southern Plantations didn't work - despite the claims to the contrary of the Plantation owners.

 

I did a small Keneysian experiement. I invested $350 K to generate 13 million.. in 18 months. Imagine that.

 

Actually, that would only be analogous if you actually printed it first, and then - somehow - didn't get thrown in jail.