Skip to main content

In recent American history, two schools of economic thought have dominated the political landscape – Keynesian Economics and Supply-Side Economics. This is my rudimentary explanation of both.

We are all familiar with the basic concept of supply and demand. Let us substitute those words with “consumption” and “production.” Supply-Side economics focuses on production. Keynesian economics has never formally been referred to as “demand-side,” but it could be. It focuses on consumption.

Supply-Side suggests that the economy can be stimulated by incentivizing producers to produce more. Keynesian (demand-side) economics suggests that the economy can be stimulated by incentivizing consumers to consume more. Neither are correct.

It is not the governments' role to incentivize either production or consumption. Government interference is the sole reason that we have recessions. Production and consumption, in the absence of a government, would be close to equilibrium. When governments encourage inflationary monetary policy, they facilitate recessions. Inflation causes expectations of both consumption and production to be mis-calculated. This mis-calculation leads to anomalies in prices. When prices exceed real market value, the market eventually corrects itself. When the market acknowledges that production and consumption have exceeded realistic expectations, an adjustment occurs, and we enter a recession. The only way to endure/correct this recession is to let the market adjust. When the government gets involved, this cannot happen.

The solution is to stop allowing the government to inflate the money supply. In fact, we should fully allow the market to decide what is, and isn't, money. Out current crisis is, and always will be, a result of incompetent government.
Original Post

Replies sorted oldest to newest

Well written post dolemite but it is the same conclusion that government is always the problem.

Communist China uses Central Planning with a certian amount of economic freedom and autonomy but still manages the economy from the Central Government. They have the fastest and greatest growing GDP in the world.

Also Obama's stimulous plan did help the recession from going deeper and avert a collapse of the banks and a real depression.

And just to let you know I have articles on the New Deal and how it was working in my old computer and it will take some time to find them again. I think one was by Paul Krugman, I need time to do a search.
quote:
Well written post dolemite but it is the same conclusion that government is always the problem.


When something is true, it's true.

quote:
Communist China uses Central Planning with a certian amount of economic freedom and autonomy but still manages the economy from the Central Government. They have the fastest and greatest growing GDP in the world.


There is very little economic freedom in China, or personal freedom for that matter. They are experiencing the temporary benefits of mercantilist policies, which will work temporarily in their case because they meet the world demand for cheap exports, but that course cannot be maintained.

quote:
Also Obama's stimulous plan did help the recession from going deeper and avert a collapse of the banks and a real depression.


There is no proof of this.
I've warned about this before, but one more time.

China's population is the second fastest aging one, with Japan being the first. Already, Japanese workers are rated at 70 percent of the efficiency of US workers. China will be stuck an older populace. Millions of old Chinese elders will be stuck with only one child to support the both of them. Young Chinese couples will be stuck with two sets of parents and perhaps even grandparents.

Good luck with central planning. The banks have large debts caused by state supported industries that went belly up. US treasuries are used to paper over those debts.
quote:
Originally posted by Pogo142:

And just to let you know I have articles on the New Deal and how it was working in my old computer and it will take some time to find them again. I think one was by Paul Krugman, I need time to do a search.


Don't bother, they'll be inaccurate, distorted politically motivated that have little to do with economic facts.

PK may or may not once been some sort of unbiased economic writer...today and for many years he's has been no more than a lefty political hack.

For economic learning, facts, truth, etc.:

mises.org
________________________________________________________________________________________________________________


dolemitejb

(Pogo)[quote]Also Obama's stimulous plan did help the recession from going deeper and avert a collapse of the banks and a real depression.


________________________________________________________________________________________________________________

dolemitejb

There is no proof of this.


________________________________________________________________________________________________________________


Excerpt from an article by David Corn. Not only has "IHS Global Insight and Moody's Economy.com have estimated the stimulus has added 1.6 to 1.8 million jobs to the economy," a number of the Republicans who voted against the stimulous bill then used the money for projects in their states and took credit for it.

Are GOPers Deliberately Lying About the Stimulus?

http://readersupportednews.org...g-about-the-stimulus


David Corn
Columnist
Are GOPers Deliberately Lying About the Stimulus?
Posted:
02/19/10


For days, Republicans derided the stimulus, which they had voted against, as a flop that has achieved nothing. Independent sources, though, say that's not so. IHS Global Insight and Moody's Economy.com have estimated the stimulus has added 1.6 to 1.8 million jobs to the economy. And the non-partisan Congressional Budget Office put this number at 2.4 million. And throughout the week, the Democratic Party sent out e-mails to reporters documenting instances when leading congressional Republicans who denounced the stimulus have taken credit for stimulus-funded projects in their districts or states. This list of GOP hypocrites includes Senate Minority Leader Mitch McConnell, House Minority Leader John Boehner, Sen. Lamar Alexander, Sen. Kit Bond, and nine other senators. (The Center for American Progress, a liberal group, issued a report noting that 111 House Republicans who voted against the Recovery Act have claimed credit for projects it has financed.)

Beyond this rank hypocrisy -- which is par for the course in Washington -- the issue is whether the Republican Party is knowingly pushing a lie. There's no doubt that the party's leading lights have spoken falsely about the stimulus. But have they been deliberately lying? Recently, newly elected Sen. Scott Brown declared that the stimulus bill "didn't create one new job." Politifact.com, an independent fact-checking outfit, branded that remark a "pants on fire" lie.

And look at a statement House Minority Leader Eric Cantor zapped out this week. It proclaimed, "1 Year, $862 Billion, 4 Million Jobs Lost." Cantor maintained that since the stimulus was enacted, there has been "no job creation." Poltifact.com could award him its lowest honor, as well. But Cantor went beyond that false statement. He fiddled with the numbers. According to Bureau of Labor Statistics data, in the year prior to passage of the Recovery Act, the nation lost 5.9 million jobs. In the year, since then, the rate of job loss has fallen dramatically, with the economy shedding about 2 million jobs. That's a lot of jobs, but it's half the number that Cantor claimed, and one-third the number of jobs lost prior to the stimulus. If you click to this chart of job losses over the past year, you'll see that job loss peaked shortly before the stimulus passed and steadily decreased in the months afterward, almost reaching zero in December.

Critics can challenge various aspects of the stimulus bill; they can argue that perhaps there are better ways to use this money to boost the economy. But Cantor's attempt to connect the stimulus bill to the loss of 4 million jobs is utterly disingenuous. By the way, last year, Cantor tried to win funding from the stimulus program for a high-speed rail project in Virginia, noting that this would lead to "economic development and job growth."

Obama has indeed lost the message war, and he and his crew can be slammed for that. But a more serious matter is how Republican officials are poisoning the national discourse with demonstrably false information -- which undermines policymaking and, thus, the potential for economic recovery. The real narrative is not how Obama has bumbled the politics, but how the Republicans are killing the truth.

You can follow David Corn's postings and media appearances via Twitter.

Add Reply

Post

Untitled Document
×
×
×
×
Link copied to your clipboard.
×