What is Keynesian Economics and why is it so destructive to America’s recovery?

You are very correct, GoSlash27.

All Keynesian Economics does is take water from one end of the pool and pour it into the other end of the pool. And the liberals have the audacity to tell us this practice actually creates jobs! ... Liberals do not understand basic economics!

Please check this out.

 

Exactly the two partys' positions boil down to this:

Democrats think we are here to work for the govt's benefit

Republicans beleive the govt should be here to work for our benefit

 

Ah yes, the old idiot DNC talking point that tax hikes equate to balanced budgets and good economies along with the equally idiot DNC talking point that Supply side theories are bad and the Keynesian policies Obama set in place have not led us to the current stagnant mess we are in with $1.6 trillion deficits, double digit unemployment with no end in sight and $14.6 trillion and climbing debt.

 

Talk about deliberate lies; here's the date of that article: April 27, 2001

Gosh, that would be prior to 9-11; what a shocker.

Of course Heritage would not make sense to people who parrot idiot DNC talking points and make the laughably stupid claims that raising taxes are good for Americans, good for the economy and lead to balanced budgets.

 

I am hardly surprised that someone who parrots idiot DNC talking points would make such a laughably stupid claim. Government spending absolutely is a zero sum game in that it first requires the Government to take from those who are creating the wealth to then RE-DISTRIBUTE it. The multiplier effect on such money is negligible and there are not a lot of credible Economists who would argue this.

The notion that money that sits in a bank does not do anything is an equally lunatic claim that can only be made by those who parrot idiot DNC talking points in a vacuum of the facts and reality.

Banks can take money that is placed in them and loan out 90% which is how 98% of the increase in money supply is created.

But it is equally idiotic to claim that the wealthy just have piles of cash doing nothing sitting in banks. But then, this is what we can expect from those who mindlessly parrot idiot DNC talking points lacking anything factual or related to reality.

 

You are very correct, Truth Detector.

If it were not for quoting verbatim the DNC talking points, "Iriemon" would have absolutely nothing to add to the thoughtful discussions in this political forum!

This review was very good.

 

Keynesian economics is the only way the insane system can ever be got to work. Let's hope the silly right-wing ranters prevent its doing so this time.

 

You are funny, Iolo.

If it were not for quoting verbatim the DNC talking points, you and "Iriemon" would have absolutely nothing to add to the thoughtful discussions in this forum!

 

What is DNC?

 

Stated like a true leftist lacking any facts or reality and mindlessly parroting the idiot DNC talking points.

The massive deficits under Reagan can be directly attributed to the Democrat led through strong arm tactics by Tip O'Neil who happily declared all of Reagan's budgets DOA.

Under Bush senior again you had an intransigent Democrat congress led by Jim Wright and then Tom Foley. Their only solution to anything was always to raise taxes and spending.

The economy left by George W. Bush was the result of idiot policies and politics from Democrats while their cronies ran Fannie Mae and Freddie Mac into the ground.

If Liberals did a little more fact checking and reading instead of mindlessly parroting the idiot DNC talking points we wouldn't have to constantly remind them of the historic facts.

Does this sound familiar?

In the wake of a struggle with Congress, Bush was forced by the Democratic majority to raise tax revenues; as a result, many Republicans felt betrayed because Bush had promised "no new taxes" in his 1988 campaign.[11] Perceiving a means of revenge, Republican congressmen defeated Bush's proposal which would enact spending cuts and tax increases that would reduce the deficit by $500 billion over five years.[11] Scrambling, Bush accepted the Democrats' demands for higher taxes and more spending, which alienated him from Republicans and gave way to a sharp decrease in popularity.[12] Bush would later say that he wished he had never signed the bill.[11] Near the end of the 101st Congress, the president and congressional members reached a compromise on a budget package that increased the marginal tax rate and phased out exemptions for high-income taxpayers.[12] Despite demands for a reduction in the capital gains tax, Bush relented on this issue as well.[12] This agreement with the Democratic leadership in Congress proved to be a turning point in the Bush presidency; his popularity among Republicans never fully recovered.[12]

So what happened after all these tax increases were put into place?

Budget Deficits

1989 -152,639
1990 -221,036 Omnibus Budget Reconciliation Act of 1990 passed
1991 -269,238
1992 -290,321
1993 -255,051

As is typical with Liberal idiot talking points; the increases did NOTHING to reign in deficits because Democrats continues spending way more than they were taking in.

Lets look at revenues during the same period:

1989 991,105
1990 1,031,958 Omnibus Budget Reconciliation Act of 1990 passed
1991 1,054,988
1992 1,091,208
1993 1,154,335

Revenue increases were anemic at best. So even with tax increases, revenue did not accelerate and spending still super exceeded the revenue being taken in. So much for that tax increase argument.

 

Ha-Ha!

You are being coy!

Iolo, you know exactly what the DNC is!

It is obvious you and Iremon are both on its frequent mailing list!

Your responses are much too close to their suggested talking points!

 

This is an excellent response, Truth Detector.

Especially when we read, "Bush accepted the Democrats' demands for higher taxes and more spending, which alienated him from Republicans and gave way to a sharp decrease in popularity. Bush would later say that he wished he had never signed the bill. This agreement with the Democratic leadership in Congress proved to be a turning point in the Bush presidency; his popularity among Republicans never fully recovered."

Thanks for sharing!

 

Yep, those old idiotic DNC talking point that increasing revenues reduces deficits.

where do they come up with such nonsense, eh?

PS the deficit is nowhere near $1.6 trillion.

 

Gosh, only a $13 billion dollar error by Heritage.

What a shocker.

 

Where are these DNC talking points you idiotically claim I parrot?

 

You are very correct, Truth Detector.

Especially when you say, "Stated like a true leftist lacking any facts or reality and mindlessly parroting the idiot DNC talking points."

Thanks for sharing!

JC

 

The following discusison is very revealing and very good.

 

Wrong again; but at least you are consistent. We are talking about the idiot DNC talking point that raising taxes equates to balanced budgets.

I suppose you gullibly believe the CBO's projections they will only be $1.3 trillion. I am happy to take all bets that it will far exceed this estimate. Like most of CBOs estimates, they are typically way off and DOA.

Carry on; I look forward to more laughably stupid claims about how tax increases solve our budget problems and are panaceas to wasteful Government spending.

 

Originally Posted by Truth Detector
Talk about deliberate lies; here's the date of that article: April 27, 2001

Gosh, that would be prior to 9-11; what a shocker.

Of course Heritage would not make sense to people who parrot idiot DNC talking points and make the laughably stupid claims that raising taxes are good for Americans, good for the economy and lead to balanced budgets.

Deflections don't make your mindless parroting of idiot DNC talking points any less disingenuous.

 

Do you ever do anything other than troll and spam posts with your utter nonsense?

 

That's a good question, Truth Detector! Thanks for asking!

Could you explain how I am trolling, spamming, or what utter nonsense you are referring to?

 

Ha-Ha!

You are funny, Iolo.

Your well rehearsed DNC talking points have been disproven time and time again!

With these latest comments, you now sound like a broken record!

 

What you seem to be missing is the idea of deficits. Deficits stimulate the economy, surpluses don't. YOu say the money needs to come out of the economy, but it doesn't. It also can come from borrowing, which is taking it from the future economy.

The country should run deficits when in recession and then pay back the deficits when times are good. Just like a household rainy day fund.

The problem is that the republicans are trying for reverse timing... When the economy is good, they have cut taxes and increased spending and created large deficits... Now the economy is bad, they have decided it is time to cut deficits.

This would be like someone who had a good job deciding to run up their charge cards... Times are good, they get a new flat screen and a new car. They are living large, but it is on debt. This is foolish, and this is what the last 3 republican presidents did. Then when this guy loses his job, that is when they have decided to not borrow anything and try to pay back his bills from when times were good, which would make the bad times even worse.

But now it is too late. We are already screwed. Now we have a huge debt borrowed when we had a good job. And now that we don't because of a recession, we have to borrow even more or really starve. We do need to cut our spending, live within our means. But we also need to grow the economy to make the money we need to pay back our bills.

So while we need to try to live within our means, we also need to spend money on a new suit and resumes and so forth to try to get the job we need to get back to where we were. And it would be foolish to say, now I can't charge a suit I need for an interview. What we need to try to do is live smart now, but not be drastic and shoot ourselves in the foot further by not spending on what we need to spend on. But when things get better, we should be smarter and start paying back all the debt we racked up during our job loss and before when we were living beyond our means.

 

Oh like Clinton's tax increase was responsible for the budget surpluses and that it was Clinton who cut spending. Both fallacies.

Revenue growth went from 9% (on an upswing from 2% then 5% as the recovery was starting) down to 7% WITH his higher tax rates. And Clinton every year called for and fought for HIGHER spending than Congress authorized.

 

~_~ Dude, that's the list of house Republicans who voted against the final compromise legislation to raise the debt ceiling. Some of them (notably Bachmann) vowed to never, under any circumstances, vote to raise the debt ceiling. So yeah, trying to blow up the economy is exactly what these folks were trying to do.

DNC = Democratic National Committee. Basically, the official organization of the national Democratic Party. Counterpart of the RNC, Republican National Committee.

Actually, yes, Keynesian policies did indeed lead us into the current situation, and out of a major recession with a shrinking economy, massive layoffs, and rapidly increasing unemployment. Or would you have preferred that unemployment kept going up and up and up? Remember when we were being warned of a second great depression? Great Depression levels of unemployment are around 30%, not 9%

Okay, first thing is that data trump theory, always.

Before the Great Depression, when US economic policy was solidly laissez faire, we spent 45% of the time in recession. Since WWII, when Keynesian policies have been used, we've spent 15% of the time in recession.

In 1937, Congressional Republicans pressured FDR into doing exactly what the Tea Party wants now, drastically cutting spending to try to balance the budget. The economy promptly tanked and unemployment jumped by nearly five points.

Since the end of WWII, every President faced with an economic downturn has turned to Keynesian stimulus, regardless of party.

According to the CBO, 1 - 3 million more people have jobs then would have otherwise thanks to the Recovery Act.

The primary argument for Keynesian policies has nothing at all to do with theory, it is that they simply work better then laissez faire, and 80 years of economic history say so absolutely unequivocally.

However, there is also a theoretical basis to answer your specific question. The economy is currently in what's called a liquidity trap, where people with liquid assets are unwilling to invest them due to expectations of adverse events. In this situation, monetary stimulus is ineffective because no matter how much the Fed lowers interest rates or increases the money supply, business still can't obtain capital because it simply isn't available.

Right now, due to the expectation of a double dip recession, consumers are unwilling to spend and investors are unwilling to invest. It should be noted that the expectation of a double dip is largely due to the deliberate actions of Fox News and other conservative media outlets, which have been talking down the economy since the day Obama entered office in the hopes of creating a self fulfilling prophecy that damages the economy and damages Obama politically. However, in the current climate, banks are not lending and businesses are sitting on large amounts of cash, so yes, as a matter of fact, the money is actually sitting around and gathering dust, as you put it. T-bills are the safest of safe haven assets, the actions of the Tea Party notwithstanding, so money going into T-bills is only one step removed from being literally stuffed in a mattress. If the government doesn't spend that money in fiscal stimulus, it may as well be stuffed in a mattress.

The bottom line is that almost everything Republicans and conservatives have been doing and advocating since the beginning of the Obama administration has been conclusively demonstrated to hurt the economy during a downturn. It seems to me that the only viable interpretations of that are that either Republicans are amazingly stupid, or that they are purposefully trying to create a double dip recession for their own political benefit.