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  #11  
Old 09-06-2010, 08:29 PM
fabrej fabrej is offline
 
Join Date: Jun 2010
Location: Morris County, NJ
Posts: 1
Default Re: Keynsian Economics

All this talk of Keynesian economics by people that do not understand Keynes is incredibly frustrating. They should pick up Alvin Hansen's "A Guide to Keynes" from Amazon used for 5 bucks. The idea of stimulus in the Keynesian sense is all about the multiplier, but in the era of Keynes the multiplier would have been spent on goods and services produced mainly in the country where the stimulus was occurring. The multiplier, depending on whether it was a govt spending or tax cut multiplier may have been a factor of 2, 3, 4....etc. However, in a country that creates next to nothing and is outsourcing more and more of its medium to high wage jobs, the multiplier is closer to 1 or possibly even < 1. That is why government stimulus in our modern economy is having very little impact. When we actually made things, the multiplier worked and monetary policy could take over when fiscal policy would "heat" things up. The thought of our federal government wasting more of our taxpayer's money with the intent of "priming the pump" simply put us deeper in the hole and increasing the burden of debt service payments for the next generation.
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