Wednesday, November 5, 2008

Forget those Depression rescue plans and focus on his vision for a more fulfilling life

The hippy guide to Keynesian economics

Alistair Darling, the Chancellor, may be basing his economic rescue plan on the idea that “a lot of what Keynes wrote still makes sense”, but he doesn't know the half of it.

Posted by gardeniadotnet @ 09:42 AM (460 views)
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2 thoughts on “Forget those Depression rescue plans and focus on his vision for a more fulfilling life

  • mark wadsworth says:

    Re Keynes, I was recenrly referred to this delightful paper by Paul Krugman from 1999 in which he admitted that Keynes was right in his prediction that there was a type of recession/depression where even if you cut base rates to nil, it does not stimulate the economy. Rather interestingly, PK sort of predicted what would happen in Japan – i.e. people would just borrow JPY cheaply and invest it overseas, aka ‘carry trade’ which didn’t help Japanese investors either, as the JPY merely went down in value for 8 years (so far so good) and then rocketed back again to where it was 8 years ago last month (wiping out all the gains of the previous 8 years, and then some).

    Even if Keynes was wrong on this (which appears unlikely), this still does not answer the more practical point of how to force commercial banks to cut rates charged to borrowers, aka pushing a piece of string, which we have seen, is not happening.

    Here endeth.

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  • planning4acrash says:

    Keynesian policies are what extended the great depression. Keynes simply believes in printing money and spending out of a crisis. That is the bailout. We already have Keynes of steriods. If you want inflation, boom and bust cycles, I give you Keynes. Alternatively, we can give freedom a go and vote for mises.org – I think Gold, the great equalizer, has spoken already about the keynesian money supply growth of late, don’t you?

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