Sunday, August 28, 2011

The Many Collapses of Keynesianism-Commentary

"It should be obvious to everyone but the most dedicated adherent of Keynesianism that the stimulus did not accomplish its end. The combination of outright spending by Congress, the desperate schemes to reflate the housing market, the attempt to transfuse bleeding firms with other people’s money, and the creation of trillions in artificial money, has not done a thing to lift the US economy........... " Full article here


Onebornfree's brief commentary [updated 09/05/11]:

False Assumption?

The false assumption of Mr Rockwell's piece is that the stimulus "should" have worked by now, and because it has not, this somehow disproves "the Keynesian paradigm".

But it ain't necessarily so![Not that I am , in any way,shape , or form, a fan of Keynes' economic theories].

It might be just too early for the false stimuli to have worked yet. Actions by the Fed typically take an average of 3 to 5 years to have any effect- sometimes longer, sometimes shorter, it all depends.

Nobody can know for sure whether the fake credit/money created out of thin air by the Fed is going to work this time around or not- it is possible that the Feds actions have already been absorbed/offset by the market at large- it is also just as possible that enough time has not yet passed for those actions to have had any real effect in the market at large [hence the continued slowdown in economic activity].

Although it is reasonable and logical to conclude that the reason that the various QE's have not worked to date is because the Fed is [this time around] paying banks interest on access reserves, [therefor reducing their willingness to loan money to new business start-ups etc.], such reasoning and logic is _not_ infallible, [even though I lean toward the same conclusion]; there are simply to many unknown factors involved to know for sure, which is exactly why you need to keep the money you cannot afford to lose [i.e long term life savings] in a savings plan that does not attempt to predict the economic future.

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