Debunking Keynesian economics
Writes National Post’s Kelly McPharland: “As the Keynesian revival sweeps the policy establishment, here’s a fine antidote. It’s a video on the Keynesian myths behind the global push to crank up government spending and the size of government to stimulate the economy. In less than 8 minutes, Dan Mitchell, a Senior Fellow at the Cato Institute, explains why it hasn’t worked in the past, and won’t work now. Complete with graphs, but best of all is Mitchell’s crisp, clear and steady delivery.”
Always glad to call attention to incisive conservative content on YouTube.
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BUT BUT that means having to do HARD stuff to fix the economy!!!
petulant liberal child mode off/
One of the main tenets of Keynesianism is it’s insistence of a central Bank. We have been in a Keynesian system since the inception of the Federal Reserve System in 1913. On a related note, the Federal Reserve will now be printing money and giving it away at 0% interest. It’s worth a post Michelle.
The YouTube link isn’t working.
Also the youtube link isn’t working for me.
http://www.youtube.com/watch?v=VoxDyC7y7PM
michelles link is a little too short, here it is.
Thanks Sonofdy.
The opposite of Keynsian theory can be found with Mises.
Fixed. Tnx.
FYI, the link is not working because of the period at the end. Thx sonofdy for posting correction.
Lion – bingo. The Creature from Jeckyl Island is not a 1950’s B-movie.
This is the problem I have with the concern over the UAW bailout. Its small change. Its like complaining about a pin prick in your left arm while your right arm is being forced into a meat grinder. It in the end is meaningless because 40 billion is nothing compared to 8500 billion being ignored over there.
Good call RTater, to fleece the American people by putting a private bank in charge of central economic planning (which is still completely unconstitutional), required quite a bit of political chicanery.
I agree that it’s ridiculous to the extreme, and it has definitely been used to cover up massive spending by the Fed/Treasury, but I don’t think the moral hazard caused by these bailouts can be ignored. The big 3 bailout is still wrong, but unfortunately it doesn’t help to expand the dialog into the bailout-culture (or neo-fascism) of the government’s overall actions.
I think it’s boils down to one thing: People don’t understand what the hell is going on.
In another year, we’ll be going through starbucks drive-thru with a wheelbarrow full of US dollars to pay for a latte’.
I can agree with that. At a certian point however you can understand the temptation to throw up your hands, buy guns and food, and just wait for it to fall apart.
Because clearly nobody in washington dc has ever cracked a book on basic economics, or history.
Or silver – prices are still low as massive deleveraging is still in effect.
Michelle finally listened to me and posted on the Federal Reserve’s evil shenanigans!
There is still some light at the end of the tunnel for fiscal conservatives.
MM posting catoite stuff? sweet.
Thank you, thank you, thank you Michelle.
That video should be required viewing for all high school students.
Then the NEA has been successful.
Excellent video. It will sound like Greek to the ignorant democraps but its a good aid to understanding the current economic calamity.
I think that most of Washingtonians are lawyers, and therefore sadly inept at making economic decisions.
I also think that even the people who have studied economics and monetary policy still think that they can be the exception to the rules.
They think that just because fiat currencies and debt economics have never, ever been sustainable, this time *they* can make it work. It isn’t that Keynes is wrong, it is just that it’s never been done right.
Socialists live under the same delusion. It wasn’t that Marx was wrong, it’s just that it’s never been done right.
Now, your next homework assignment is to look at the concept of competing currencies in lieu of a central banking system.
John Maynard Keynes is dead wrong…
Fixed.
Oh yeah…especially pure Keynesianism-which could be retitled “Economics for those who just want ONLY to be re-elected”. The reality of Keynesianism is that in order keep up a level of consumption in the populace you have to keep sending in wave after wave of stimulus packages..the problem is you have to tax or borrow those funds from somewhere and that aspect has its implications upon an economy-all negative.
The truth is this bout of Keynesianiam is economic Fascism in the classical sense…can political Fascism be far behind?
As the government, I have to take money out of your right pocket, in order to put it in your left pocket. That’s supposed to “stimulate” you to spend it all. Someone has to be taxed in order to move that money, since I don’t make money myself. So, I raise taxes on corporations and businesses, plus raise tariffs. Who pays that tax? Not the businesses; they never pay taxes. Only the consumer pays taxes, through price increases. Price regulations? Well, a business owner may have to let employees go, in order to cover the loss. Investors certainly aren’t going to invest any money; worried as to what I (the government) would do next. Once again, we have the ’30s. Politicians want to be re-elected and the “useful idiots”, raised by an inept school system, could care less, as long as it doesn’t interfere with their own self-interests, and is in concert with society’s solution to every problem: instant gratification.
It’s statements like these that show the economic ignorance of the opposing viewpoint.
Taxing in and of itself is not negative to the economy and neither is debt. Both occur in growing companies (overhead and debt) and neither is automatically negative to the growth of a company. In fact, companies almost ALWAYS borrow to grow.
Governments can IMPROVE the efficiency of the economy through taxation and debt…..via security, infrastructure, education, benefits, etc. A some point those “services” help the rest of the economy grow faster than it would otherwise.
It’s EXCESSIVE taxing and EXCESSIVE debt that is the problem, defined as the point where they reduce economic efficiency. Our real debt is around 38% of GDP. As you saw in his video, Japan’s debt is creeping towards 140% of GDP. We aren’t excessive.
My problem with the video is the notion that economic stimuli don’t work. The goal of the recent stimuli was not to grow the economy as defined by the video, it was to help STOP the deterioration of the situation, which it did…..as did the tax cuts in 2002. Moving the money around via these mechanisms CAN help the situation…and has.
Moreover, pushing capital into the banks is a supply side tactic, is it not? The concept is to stuff the system with capital at the top and then let it trickle down through the system via investment.
We did this back in 1995. RIP Macroeconomics.
Lets also blame Richard Nixon for taking us (illegally) off the gold standard (to support globalism).
No it isn’t. Lowering taxes, especially capital gains taxes is a supply side tactic, not increasing the supply of money (which only reduces the value of the money already in cirulation).
thanks michelle for a real world economics lesson. if only our teachers would see and show this to our kids. if only our politicians would understand this, but i fear they do, they just spend opm because it feels good. i had a boy scout interview me for a merit badge the other day, and in his interview he told me his teacher of business and economics told them that profit wasn’t really a good thing and cited non profit businesses which were far more beneficial to society. i told him profit was the only thing in business, if you don’t have profit, it’s a hobby. i also told him that virtually all our nonprofit entities should be reclassified as s corporations and taxed, because all nonprofit means is you spend everything you take in that year. why are hospitals nonprofit? what is different between the ymca and ballys? isn’t your church a business? isn’t your school competing with other for profit schools? think of the tax revenue which must be paid by the rest of the workers because so much of our economy pays no taxes. how about museums, zoos, amtrack, metrolinks, …
I disagree with any of you who try to dismiss the UAW bail-out on the merits of its size. There is ground worth fighting for here.
The TARP money approved to date has been intended for the so-called “rescue” of the financial system. The idea is to prop up a necessary utility in the economy that provides for the circulation of money, improving velocity between traders on both streets. Allocating any of that money to a non-financial sector company like the autos sets a dangerous precedent. If we’re going to support one industry, why not others?
The UAW bailout does not end with a “bridge loan”. The big 3 don’t work. At least 2/3 of them are hopelessly lost. This first round of subsidy will be noticed by foreign competitors, but may go without a severe response. However, the eventual endgame to the current scenario where the auto makers are making cars they can’t sell – warehousing them on dealership lots and empty fields in the mid west – is to subsidize the manufacturer to the point at which they are selling cars BELOW THE MARGINAL COST OF PRODUCTION. It is then that foreign competition responds quite negatively, and it is then that we have a new trade war.
Can anyone say deflation (or stag-deflation)? Enjoy!
yeah we’re going back to the 70s…polyester, bell-bottoms, disco…oh yeah lets party
Well, he was right about this:
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
That last line it telling. It proves that John Adams was right when he said this:
“All the perplexities, confusion and distress in America arise, not from defects in the Constitution or confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation.”
Which proves what AlohaGuy said when someone stated this – People don’t understand what the hell is going on.
Sorry, cheapseat. The “teachers” are too busy “teaching” kids this, and this, and this.