Keynesian Myths

By Rahul of Alt Investors Hangout

Keynesians emphasize how governments must engage in excessive spending during an economic downturn. Their main argument is that stimulating aggregate demand has proven to be successful in cases like WWII. In their eyes, WWII and government spending pulled the U.S. out of the depression. This may seem like a legitimate statement since unemployment decreased to around 3% in the 1940s. Economists like Robert Reich and Paul Krugman believe this foolish ideology and proposed a few trillion dollar stimulus plan during the 2008 financial crisis. These two progressives fail to comprehend that government spending crowds out private sector investment and simply exacerbates the problem.

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2 comments to Keynesian Myths

  • Rojelio

    The Keyesian way works if you have endless resources to stimulate infinite growth. Even if most of the wealth concentrates at the top, we didn’t care because a rising tide lifts all the boats. Now that oil production, thus economic activity, can no longer keep up with debt production, the party is over for most of the 7 billion soon to be very angry apes on the planet.

  • Ben Simon

    ….”the party is over for most of the 7 billion soon to be very angry apes on the planet.”

    Angry apes on a planet? Someone should make a movie about that….

    I think the only way to get us out of this is for the elites to have a big ol’ war…sadly, I think that is the direction we are heading.

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