The 'mainstream economics' I've seen is just some combination of Keynesian and Monetarist drivel. Since money supply is backed by government debt
Oh my, you go off on the same mistakes and single-minded delusion as bytemaster and goldbugs with their "tinfoil hats". Read Armstrong more carefully and thoroughly.
First of all, you don't understand what Keynesian economics really is, because vested interests have distorted his theories for their own use. Here are some quotes from a blog and the comments that you should study. Make sure you read the comments from me that are bolded, as I don't agree with Keynes.
http://blog.mpettis.com/2013/08/the-urbanization-fallacy
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But what if you are Keynesian? Didn’t Keynes say that simply creating work would make an economy richer, even if that work consisted of digging holes and filling them up again? Isn’t it better to build an apartment building than to dig a hole and fill it up again?
No, and Keynes never said that. Keynesian pump priming only works if there is high unemployment caused by the self-reinforcing tendency of lost jobs leading to lower demand leading to more lost jobs as factories fire workers. Spending in itself does not create wealth, and Keynes never said that it would. Spending can create a process that under some conditions can cause the economy to grow faster and under other conditions simply creates an unnecessary expense.
No, and Keynes never said that. Keynesian pump priming only works if there is high unemployment caused by the self-reinforcing tendency of lost jobs leading to lower demand leading to more lost jobs as factories fire workers. Spending in itself does not create wealth, and Keynes never said that it would. Spending can create a process that under some conditions can cause the economy to grow faster and under other conditions simply creates an unnecessary expense.
http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-750
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In fact no, because the point is simply to reverse what is essentially a positive feedback loop. Rising unemployment causes declining demand which causes rising unemployment. By hiring the workers that are fired, you break the loop. This is really the Keynesian point. He never said that government spending was always good, even when non-productive.
http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-752
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He never argued that free markets are bad. He argued that they are the best system ever devised for generating wealth but that, among other things, they are prone to disorderly behavior and brutal adjustments from time to time, and that these can have such a heavy social cost that the market system can itself can be rejected. Remember that he was writing at a time when communists and fascists were mounting a serous attack on what seemed like an enfeebled capitalism.
http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-574
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Keynes has been misunderstood as politicians around the world have routinely abused the argument for “Keynesian spending” to justify poor government policies sometimes very blatantly.
http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-581 (my comment)
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I have not read Keynes, but I think his theories were twisted by those who wanted to misapply them for their own vested interests.
http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-637
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Here’s a great article by Keynes on his views of inflation and governments resorting to money printing to finance a funding gap. Quite simply, he wasn’t too fond of it. Keynes hated deflation, but he also hated inflation and he certainly wasn’t this big government guy that the “Keynesians” always paint him out to be. He felt that government budgets should be balanced most of the time, he didn’t like freely floating exchange rates(he wanted fixed, but adjustable pegs), and he felt that taxation should never be above 25% of the total economy.
http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_inflation.html
http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_inflation.html
http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-615
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Keynes was a believer in free markets. However, he also believed that government should and could play a role in moderating boom and bust cycles. I think some of Mr. Pettis’ prescriptions for the U.S, Europe and China could be described as Keynesian in nature.
In my mind, simple Keynesian philosophy would be to repair (or build in countries lacking infrastructure) necessary roads and bridges at the onset of recession. Conversely (and this is just as important) when the economy is heating up, slow down the amount of government spending on road and bridge projects, Simple isn’t it? However if look at the nature of governments and politics it isn’t so easy in practice. Many governments can’t seem to pull away the fiscal stimulus when the economy starts to heat up. Running deficits year after year was never what Keynes prescribed.
In my mind, simple Keynesian philosophy would be to repair (or build in countries lacking infrastructure) necessary roads and bridges at the onset of recession. Conversely (and this is just as important) when the economy is heating up, slow down the amount of government spending on road and bridge projects, Simple isn’t it? However if look at the nature of governments and politics it isn’t so easy in practice. Many governments can’t seem to pull away the fiscal stimulus when the economy starts to heat up. Running deficits year after year was never what Keynes prescribed.
Rest of the comments below are from me.
http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-621
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Indeed government can never be the solution, thus seatrus’s idea that the government could subsidize just the right things and pick the winners in the future economy, is fantasy.
We programmers have a saying “talk is cheap, show me the code”
We programmers have a saying “talk is cheap, show me the code”
http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-516
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Keynesian pump priming only works if there is high unemployment…
I have to question the assertion.Backstopping people so that 33 – 50% of the population doesn’t starve, become sickly, stop educating their children, etc.. is more productive than letting the economy spiral into an abyss. But taking it too far to protect 100% of the people from 100% of outcomes is unproductive.
WW2 pretty much destroyed the productive capacity of the rest of the world and left the USA with the best infrastructure remaining (sans Pearl Harbor).
In theory the free market would work best, except that a large society (much inertia in top-down) doesn’t respond as a free market even if given the opportunity. We have to live with what works. But preventing fine-grained annealing of the private sector while responding with appropriate Keynesian spending, which is what is developing now in most of the world developed and developing. For example, I read yesterday India has banned gold imports and made it illegal to transact on gold without a license.
Want to know why the G5 is going to make a war now, read the following comment.
http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-559
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However, I don’t see Japan(4% unemployment) or even the US today as extremely depressed.
Agreed that is why I wrote upthread that Michael’s Keynesian stimulus only applies to the minimum social welfare, not to giving people 100% of everything. Stimulus is much more productive too when it is difference between wasting away in squalor picking your nose all day or maintaining primary+secondary school education (post-secondary education is more dubious since the benefits only surely apply in the STEM fields). Agreed in the USA, the boomers refuse to lower than standard-of-living in order to write-down the capital stock. Ditto what happened to Japan over past 23 years. Japan had the benefit of an trade surplus. The USA has a trade deficit. My understanding is that Japan was forced to Abeconomics when they moved into trade deficit this year. The USA has the benefit of being the reserve currency with the strongest military. So the western boomers (and their guaranteed Medicare $5 trillion per year accrual-based budget deficit, etc) will not go down without a fight– the USA Laffer-limit-be-damned, taxman cometh with an M14.http://blog.mpettis.com/2013/08/the-urbanization-fallacy/#comment-760
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Agreed in the USA, the boomers refuse to lower than standard-of-living in order to write-down the capital stock. Ditto what happened to Japan over past 23 years. Japan had the benefit of an trade surplus. The USA has a trade deficit. My understanding is that Japan was forced to Abeconomics when they moved into trade deficit this year. The USA has the benefit of being the reserve currency with the strongest military. So the western boomers (and their guaranteed Medicare $5 trillion per year accrual-based budget deficit, etc) will not go down without a fight– the USA Laffer-limit-be-damned, taxman cometh with an M14.
Could that be why the G5 appears (to me and others) to be hellbent on inventing a false-flag to start a war in Syria?The G5 has no other option to maintain control as it spirals the global sovereign debt toilet bowl.
If there is an opportunity to profit, someone will find it.