Keynesian Nonsense Falls Out of Favor in UK

globaleconomicanalysis.blogspot.com...

Thank God - about time!

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"In Britain, George Osborne, chancellor of the Exchequer, delivered a speech on Wednesday that would have made Keynes — who himself worked in the British Treasury — blanch. He argued forcefully that Britons, despite stumbling growth and negligible bank lending, must accept a rise in the retirement age to 66 from 65 and $130 billion in spending cuts that would eliminate nearly 500,000 public sector jobs and hit pensioners, the poor, the military and the middle classes because of what he insisted was the overwhelming need to reduce the country’s huge budget deficit.

In Ireland, where the economy is suffering through its third consecutive year of economic slump, Keynes is doing no better. Devastated by a historic property crash and banking bust, the Irish government is preparing another round of spending cuts and tax increases.

Combined with what Dublin has already imposed, the cuts could add up to as much as 14 percent of Ireland’s gross domestic product, an extraordinary amount for a modern industrial country. Ireland’s budget deficit reached 32 percent of total economic output this year.

Indeed, across Europe, where the threat of a double-dip recession remains palpable, what is most surprising is not simply that governments from Germany to Greece are slashing public outlays but that the debate hinges more on how fast to do so rather than whether such substantial cuts are the right thing to do under the current circumstances.

“Everything Keynes established about the primacy of maintaining demand at a steady pace is gone,” Brad DeLong, a liberal economist and blogger at the University of California, Berkeley, said mournfully.

Along with other noted liberal economists like Paul Krugman and Joseph Stiglitz, Mr. DeLong has long argued for more stimulus spending in the United States and abroad to lift growth, even if deficits rise temporarily as a consequence."

Originally posted by leo123
Along with other noted liberal economists like Paul Krugman and Joseph Stiglitz, Mr. DeLong has long argued for more stimulus spending in the United States and abroad to lift growth, even if deficits rise temporarily as a consequence."

It seems a bit like they have their head in the sand as to the real issue though. A "temporary" rise in deficits is interesting given that the economy, under Keynesian economics, ran deficits except for a few years but always maintained large debt. The real issue seems to be debt as money but no one talks about that. The bubble/burst phenomena won't go away as long as the supply of money is not under our control.

I see the socialists as trying to use the economic bursts to drive through governmental control and dependence programs that would not otherwise pass. The powers that be don't care about the social programs because they control the supply of money and therefore control the governments.

How can every person, corporation, and government be in debt at the same time? Thats the issue. The whole system relies on debt in order to drive the economy. Its ludicrous.