Let me reproduce in full the abstract to that paper below:
"Stone dead."
Needless to say, I got nowhere, and it wasn't until Mrs. Angus came on board that a much revised, improved and toned down version got published in the Journal of Development Economics.
Undaunted, I rise this lovely morning to proclaim that Keynesian economics, despite recent wide spread reports of its revival, is indeed, "Stone dead".
People, we have seen a literal mountain of government spending around the globe. And what do we have to show for it? An avalanche of unsustainable deficits and sovereign debt levels.
In the long run, it is true that we are all dead. But meanwhile, until that blessed day arrives, we are all broke!
The smartest thing many countries could do right now is the old double D; Default and Devalue. However, the likely result will be a "lost decade" of immiserizing policies undertaken at the behest of Keynes' most horrible creation, the IMF.
10 comments:
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we have seen a literal mountain of government spending around the globe. And what do we have to show for it? An avalanche of unsustainable deficits and sovereign debt levels.
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We had a literal mountain of defense spending around the globe during the cold war. And what did we have to show for it? An avalanche of unsustainable deficits and sovereign debt levels.
um... eightnine, you are quite right. That was ANOTHER stupid thing government did.
What is your point?
Angus said, "Government is failing."
You responded, "Oh, yeah? Government also did ANOTHER stupid thing."
Nobody disagrees. That's a non sequitur, pumpkin. Try to pay attention.
Well, we, the west didn't have to show 20 million killed in the Cultural Revolution, nor repeat WWII, no live in moral, ethical, spiritual and material depredations of aggressive Soviet and Chinese socialist Utopian theory.
So, not having that to show upon us, or something like it, or an out and out World War III, is something. Sometimes you have to pay so that you don't get things, bad things.
The irony you don't mention is that the reason Keynes created the IMF, of course, was to avoid precisely the policy course you now decry. Does this make you a Keynesian?
TO
What will it take for people to stop buying government debt?
Default and devaulation
I'd rather thing it makes Keynsian an optimist ;) I also don't think the IMF is a solution, actually we already see a crowding out of the IMF credit market. Aside from long-standing IMF customers in Latin America, we now see even industrial countries like Greece applying for it...
The argument doesn't have anything to do with a so-called failure of Keynesian economics. It's not like the failing countries were austere during normal times, and then came in with large counter-cyclical fiscal spending when the downturn came. Rather, they were just spending a lot and running up deficits all the time and when the downturn came, the revenue shock was large enough to make the profligacy unsustainable.
Where is this Keynesian policy you speak of happening?
Also, aren't you just saying rather than wait for prices to fall and clear the market, devaluation is preferable?
Isn't that what Keynes argued in A Tract on Monetary Reform?
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate" -- Andrew Mellon
" . . but the trick is not to get liquidated oneself." -- Not-Ernest Hemingway
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