As an economics simpleton, I’m merely attempting to wrap my head around the concepts of macro economics. With the absolutely crippling effects of the S&P downgrade and the stock market plummet, I thought now would be a good time to look at what should be done and to pose the question, is more debt the way out of the hole? Did Keynes have it right and has the fiscal policy of the U.S. been absolutely absurd since the mid 70’s? Let me know because I don’t the right answer.
One Response to Keynesian Economics: Is It What We Need?
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I would say that Keynes was right. The problem is two fold, we didn’t bother listening to him even when we tried his economic policies, and we certainly haven’t been listening to him since the 1980′s.
Keynes major argument centered around aggregate demand and that when the economy starts to slow down, the government should start to spend more to increase aggregate demand. Thus, if the economy started to boom and no longer needed government spending, the gov. could slow down, or at least spend within its means. You should only borrow, and borrow, and borrow for very important investments or during the recessionary period of the cycle. Otherwise don’t rack up debt, or if anything save for rainy day.
We never bothered with that. We thought, hell lets just spend and spend and spend. Then, when we are done. Fuck it. Lets spend some more. And not investments, nah screw that. Lets drop million dollar bombs on mud huts filled with 100 bucks work of AK’s . Then lets invade two separate foreign countries whose populations don’t even want us there. And then lets bomb them too, bc bombs will someone equal love and freedom.