After a couple of recent posts, I went back to dust of my old economics book to find a chapter on Keynesian economics. I then searched the Internet to find out if his theory holds true in today's economic conditions. Economy in Crisis happened to post a video a few days ago discussing exactly this topic.
For the purpose of debate, I've pulled some quotes... the entire video can be watch here...
After a couple of recent posts, I went back to dust of my old economics book to find a chapter on Keynesian economics. I then searched the Internet to find out if his theory holds true in today's economic conditions. Economy in Crisis happened to post of video a few days ago discussing exactly this topic.
For the purpose of debate, I've pulled some quotes... the entire video can be watch here...
1st excerpt....
Unfortunately, in the past three years, major world governments have sapped their Keynesian spending capabilities. This is particularly true of the United States. Not only does the U.S. spend a preposterous amount of money on defense, far more than is existentially necessary, it has also dumped enormous amounts of capital into the financial sector.
According to Bloomberg Businessweek, after pumping hundreds of billions of dollars into their economies – in a technically “Keynesian” method, one that has been incredibly inefficient – governments around the world seem to be nearly tapped out.
2nd excerpt....
Another example of this is the United States. During the height of the downturn the U.S. adopted what it called a “Keynesian” model to combat the crisis. Keynes’ intention was for the government to take over and fund sectors that aren’t getting enough private capital. What the U.S. government chose was to instead fund a sector (finance) that already had in a quite literal sense all the capital in the world.
Now, our forecast deficit for 2010 is nearly $1.6 trillion, and our gross national debt is expected to overtake the size of our GDP within the next two years or less. And we have nothing positive to show for all of the investment.
3rd excerpt...
After pouring money into inefficient financial markets we have nothing left to prop up education, social welfare or public health. Ironically, in its blind attempt to follow the Keynesian model the United States government set the bar for what not to do.
My comment is would be that this seems to make sense. But wtf do we do now?