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  • Keynesian Economics Is Wrong

    Dan Mitchell of the Cato Institute does an excellent job explaining why Keynesian fiscal strategies do not work in this new video from the Center for Freedom and Prosperity Foundation. It’s more important than ever to combat the myths of Keynesianism with President-elect Barack Obama proposing a massive government spending plan, and even some conservatives promoting a tax version to boost economic growth.

    [youtube]http://www.youtube.com/watch?v=VoxDyC7y7PM[/youtube]

    Posted in Scribe [slideshow_deploy]

    6 Responses to Keynesian Economics Is Wrong

    1. Dave in Dallas says:

      The only way Keynesian spending works is if the government uses money to BUY THINGS, i.e. the things that customers are not buying anymore. Steel, concrete, retail products, all the things that keep businesses in business. Just spending it on 'the poor' or 'bailouts' does nothing for the businesses that are going to fail because there is no direct compulsive pathway for the money to go INTO the economic food chain.

      People hoard it. All it does is devalue the dollar and add to future taxpayer burdens. Businesses STILL go out of business, people STILL lose jobs, even with 'Obaman' (Keynesian) spending.

    2. duelles, Santa Fe, N says:

      The gov't redistirbution stimulus plan may give false hope to the stock market. My hope is that we will see a rebound in the DOW to at least 11,500 so I can get out prior to the complete collapse.

      SO pathetic is the understanding of our leaders. I refuse to be a lemming. The dilution of our worth, as Dave points out, will be very costly in the next 3-4 years.

    3. W. Bradley, Louisvil says:

      The reason why politicians continue to use this approach is because it is an extremely effective way of "buying" votes from those who see themselves as "have nots".

    4. Pingback: Keynesian Economics Is Wrong

    5. W Howard Baker, Bard says:

      We are going to use Keynesian economics to go into an INFLATIONARY DEPRESSION. The last western economy that did this was the Weimar Republic and it is currently being done in Mogodishu in Africa. Inflation hits millions of per cent per day and you can't afford anything even though you have millions or billions of whatever currency the country uses. It takes almost no time at all to have anarchy. It is being foreseen that with Obama's tax and spend philosophy and with the size of the spending, we will be in the inflationary depression by the end of 2009. The question is, HOW LONG BEFORE ANARCHY WILL PRESUME?

    6. L. Mailaender, NYC says:

      A poor video, because it does not address the central question of whether "Keynesianism" can be used during crisis periods, such as we have now in 2008. According to the video, government spending is always a negative influence. So, let's just set it to zero and be done with it! (Reductio ad absurdum). Obviously, we do need government to ensure a fair, competitive market. No solution was given as to the right level of government spending, nor how to handle a crisis.

      Further, monetarism has no proposal besides lowering taxes. Why would that work? It would put money in the hands of people (usually, that's good!) but during a crisis, they are afraid to spend, and nothing happens. That's why direct spending, by the government, is a potential solution. Spending on roads, schools, research, which involves employing people, keeping factories open, and building what will be useful to free enterprise in the future.

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