Keynesianism Explained (Krugman)

[demmiblue]

Source: NYTimes

<snip>

I would summarize the Keynesian view in terms of four points:

1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond.

2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain.

3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down.

4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses.

Read more: http://krugman.blogs.nytimes.com/2015/09/15/keynesianism-explained/?utm_source=dlvr.it&utm_medium=twitter

[djean111]

1. And this is what makes the 1% slaver and grin with anticipation:

And conversely, fiscal austerity in a depressed economy imposes large economic losses.

[Recursion]

2. You know, I've read "Economic Consequences of the Peace"...

And Keynes wanted completely counter-cyclical spending, ie, run a surplus by cutting spending in "hot" years to brake growth. I don't know of anybody today who thinks a fiscal brake is better than a monetary one.

[kimbutgar]

3. I am putting together a fact based notebook to use against right wingers

And this article is going into the book.

Thanks for sharing