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Melaschasm (88.21)

Keynesian economics sounds good to me.

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August 03, 2010 – Comments (16)

According to keynesian economics, the US government should cut spending, run a surplus, and pay off the debt during times of GDP growth.  That sounds great to me.  Since I have now converted to keynesian economics, let this be the first of many demands that the US government cut spending by 10% per year for the years 2012 - 2015.

My beloved fellow keynesian, President Obama, has released a budget that assumes we will have a blistering GDP growth rate during the years 2012-2015.  As a devoted follower of Keynes, I am sure that Obama's spending plan calls for double digit cuts during the fast approaching economic boom.

If you are also a fan of keynesian economics, then please join with me in demanding that the US government reduce spending during the fast approaching economic boom.  We must not let those evil conservatives and libertarians prevent us from fully implimenting keynesian economic theories.  For to long the US has been held hostage to the wasteful spending of these anti keynesian scum.

16 Comments – Post Your Own

#1) On August 03, 2010 at 4:34 PM, outoffocus (24.51) wrote:

http://caps.fool.com/Blogs/george-soros-we-are-just/406807 

1) On June 14, 2010 at 10:37 AM, outoffocus (22.02) wrote:

Keynes has taught us that budget deficits are essential for counter cyclical policies, yet many governments have to reduce them under pressure from financial markets. This is liable to push the global economy into a double dip.

I think the part that Keynes failed to take into account and inform his followers of, is when times are good, that is the time use the good times to save for the bad.  While times were "good" in the last decade, governments on all levels were running massive deficits, leaving no room to run up deficits during the bad times. 

Its a situation many Americans find themselves in now.  I actually read a Business Week article in 2008 that used the Bible story in the Old Testament of, I think it was Joseph, who had the dream of the 7 fat cows and the 7 skinny cows.  He was warning the king of 7 year famine.  They key was to store up food during the good years so that the kingdom could survive the bad years.  We as Americans did the exact opposite. Instead of paying off our debts during the "good years" we ran up more debt.  Now that we are going through the "famine", we have no more credit to use and are forced to pay our debts with less money.

This is why the Keynesian policies are failing.  Deficits wouldn't matter if we had run surpluses in the good times.  In all things economic there must be a balance. Yea we avoided one tragedy but we set ourselves up for another by simply being foolish.  And no good can come from solving foolishness with more foolishness.

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#2) On August 03, 2010 at 4:35 PM, chk999 (99.98) wrote:

I don't think they read that chapter.

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#3) On August 03, 2010 at 4:45 PM, NOTvuffett (< 20) wrote:

There is a quote by Alexander Hamilton and I will have to paraphrase... "a little bit of public debt is a good thing if it serves the public good"  The problem is they have borrowed money to pay for every jackass leftwing cause they can think of.

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#4) On August 03, 2010 at 4:52 PM, davejh23 (< 20) wrote:

"That sounds great to me.  Since I have now converted to keynesian economics, let this be the first of many demands that the US government cut spending by 10% per year for the years 2012 - 2015."

Sounds good...except we're also projecting $1 trillion+ deficits through the year 2020.  It's difficult to cut spending by 10% when minimal GDP growth is fueled by massive deficit spending...spending that should have GDP growth running at 5%+ if it wasn't for contraction in the real economy. 

"Instead of paying off our debts during the "good years" we ran up more debt."

Same situation...the "good years" were an illusion.  There was no money to pay off debts, because the "good" was fueled by debt. 

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#5) On August 03, 2010 at 5:01 PM, ChrisGraley (31.94) wrote:

They'll save trillions by forcing even more healthcare coverage on the masses in the up coming years.

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#6) On August 03, 2010 at 6:35 PM, Varchild2008 (84.38) wrote:

Just for the record..

Conservatives NEVER support running deficits.   

It amazes me that people think we do.....  And it is an unfortunate side effect of having Republican (RINOs) running deficits to please their constituencies back home in their state begging for Free Gimmies like Museums or Bridges to Nowhere.

Conservatism believes in running surpluses in Good Times and digging out of Recessions by cutting back on Regulations and anything that stymies the free market system from growth.

You need to read the WIKIPEDIA article or any article / book on Calvin Coolidge.

Calvin Coolidge =  Hard Core Conservatism at work.
LIke it or hate it.... He did exactly what Conservatism seeks to do with an economy and during his time he presided over a growing and prosperous economy..... 

Economy didn't take a dive until about 2 years into Herbert Hoover's presidency.... Herbert Hoover was disliked by Calvin Coolidge.

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#7) On August 03, 2010 at 8:13 PM, FreeMarkets (99.29) wrote:

Keynes biggest problem is reality.  If you tell a politician it is OK (even good) to run a debt during bad times, then it must be good to run a debt all the time.  Politicians concerned with reelection don't care about saving for bad times, they want to get elected this year.  Keynes gives them a great fall back position, because people don't care about problems during the "good" times, so the politician gets reelected easily during the good times, then when times go bad they can increase spending even more to "fix" the problem with the economy.

Friedman was also wrong, stating that trade deficits don't matter AS LONG AS you don't run a national debt.  Of course politicians only read the first part, just like they only read the first part of Keynes.  That's the value of a gold standard, not because gold has any real value, but it limits the money supply and limits politicians ability to be really, really stupid with money.

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#8) On August 03, 2010 at 9:11 PM, ChrisGraley (31.94) wrote:

Coolidge was a Libertarian Varichild.

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#9) On August 04, 2010 at 8:05 AM, Melaschasm (88.21) wrote:

It sounds like most people do not trust Obama and the Democrats to cut spending during the next period of economic growth.

Does anyone happen to remember which year was the last time the US government spent less than the prior year?

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#10) On August 04, 2010 at 9:05 AM, Turfscape (39.29) wrote:

NOTvuffet wrote:
"The problem is they have borrowed money to pay for every jackass leftwing cause they can think of."

Yeah! We hate those damn lefties! Always voting for those deficit spenders like Bush! Stupid lefties!

If more people simply hated the other side more, we wouldn't be in such a mess! What we need to do is throw more labels around and pretend that politics is a sport...like the Packers / Bears rivalry! That'll fix everything!

(Oh...just in case the sarcasm wasn't dripping with enough obvious clarity, I find your penchant for immediately turning an economic discussion into a low-grade political mudsling to be distasteful, counter-productive, moronic, and a general waste of time)

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#11) On August 04, 2010 at 9:07 AM, Turfscape (39.29) wrote:

Varchild2008 wrote:
"Conservatives NEVER support running deficits."

Please remind the candidates of that...they've seem to have forgotten over the last 65 years (as have the voters who label themselves 'conservative').

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#12) On August 04, 2010 at 9:13 AM, Turfscape (39.29) wrote:

FreeMarkets wrote:
"Keynes biggest problem is reality.  If you tell a politician it is OK (even good) to run a debt during bad times, then it must be good to run a debt all the time. "

Reality winds up being a problem for so many theories out there. Human nature will indeed destroy the most well-thought-out theory. But, if you stick to reality and actually tell people that we have to moderate spending AND increase taxes in order to dig ourselves out of this mess and clean up for the long-term...well, that just doesn't sound as nice as cutting taxes and spending a few hundred billion to speed up recovery and 'grow the pie' so we can all prosper.

Theories are always more fun than reality.

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#13) On August 04, 2010 at 1:39 PM, RootnToot (30.45) wrote:

It sounds like most people do not trust Obama and the Democrats to cut spending during the next period of economic growth. 

 Actually no, not any farther than I can throw them. Neither would I limit this statement to O and the Dems.

Additionally, with 70% of the US economy being derived from consumer spending, I find it next to impossible to believe that the US will run a surplus in the foreseeable future, at least not without massive spending cuts, which by the way is more than next to impossible. Unfortunately, as voters many of us judge our politicians by what they 'get' for us. Kind of a disincentive to cut anything IMHO.

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#14) On August 04, 2010 at 11:29 PM, NOTvuffett (< 20) wrote:

Turdscape,

I think you miss the whole point of this blog, he was trying to illustrate the the point that those that champion the theories of Keynes are only willing to embrace the things that are politically expedient in the theory.

I don't even totally discount the theories of Keynes. There are some on the Fool that I disagree with most ot the time, but they are intelligent and intellectually honest.  Just a different world view. You aren't one of them, lol.

When they said they were going to use stimulus funds for infrastructure projects I was all for that.  But we could ask why money was diverted for decades for projects like that.

 

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#15) On August 05, 2010 at 10:18 AM, Turfscape (39.29) wrote:

Notvuffett wrote:
"I think you miss the whole point of this blog, he was trying to illustrate the the point that those that champion the theories of Keynes are only willing to embrace the things that are politically expedient in the theory."

My point exactly. Conservatives and liberals alike. Tax money has been wasted on every jackass right-wing cause our politicians could think of just as much as every jackass left-wing cause, all in the name of sound economic theories...sometimes in the name of the exact same economic theory. But the good folks like you who tend to use economics solely to further political advantage tend to forget that.

 

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#16) On August 06, 2010 at 12:30 PM, Melaschasm (88.21) wrote:

RootnToot you make a good point.

If people are expecting republicans to win the congress this year, then the lack of trust would be in Obama and the republicans.

Either way, it would seem that economists almost universally support spending cuts during the next period of economic growth.  If the politicians really supported the economic theories they claim to support, then it should be easy to get bipartisan support for spending cuts during the years 2012 through 2015 (assuming we have GDP growth at that time).

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