IMF: We were wrong about Keynesian Economics

[ScienceRocks]

The republican party would do this country good being the party of efficacy and getting us back to the 1950-1970's economically, infastructurely and innovativeness.

 

[Edgetho]

That's why you punish idiots that waste money. The government needs to hold a high standard to what project, research and infrastructure is done. Our government has become lazy....

So you want to drive across that 50 year old bridge? Or watch our first rate science programs be killed off. Well, you're not rooting for a strong America.

No. YOUR government has become lazy. Don't tie me to the lying, dishonest, corrupt scumbags in the White House. No way.

BTW, I have been for a form of mandated health insurance for over 25 years.

My greatest fear has always been that it would be left to dimocrap scum to create the system.

And, as was totally predictable, they FUCKED it up.

Just like you FUCK everything up.

You're like the idiot little brother that steals all his older brother's ideas and tries to imitate them, only to completely screw everything up. Like a sad TV sitcom.

All you people know how to do is talk, run your mouth, bitch, moan and complain.

It's all you can do.

Had you worked with Republicans, WE could have made it work. We wanted it to work. We've been pushing it since Teddy Roosevelt in 1906, Richard Nixon in 1947 and Nixon again in his 2003 State of The Union Address.

But every time we tried to get something going, you douchebags got in the way, killing it before it even got started.

Why? Because you don't want Health Care for Americans. You want socialism.

And power. socialism gives you the power you so desperately need in order to institute your diseased policies.

Which will fail. Like they have EVERY time they have ever been tried.

But you don't care about that. All you care about is what you can steal. Let your children worry about the collapse of civilization, right?

scumbags

 

[regent]

With a democracy we have politicians and to have politicians means to have graft and corruption, it can't be stopped. What can be done, however, is to try and keep the graft and corruption to a minimum.
With capitalism we have the business cycles and they can't be stopped. What can be done, however, is for government to keep the cycles to a minimum and their impact to a minimum. So far, no one has figured out a better method to treat business cycles than properly applied Keynes. Hoover and Republicans usually misapply Keynes using the trickle-down approach and it doesn't tricle down, it stops somewhere in the journey from government to business to buyers. The money has to be given to the poor, the buyers, the ones that put the money right back in circulation.
Another shortcoming with Keynes, is the money govenment spends during the recession is supposed to be paid back during a period of properity, and for politicians that's the hard part, and so far the impossible part.
We are still in the economic learning process and for some politicians economic-learning is a waste when reelection is the only thing on their mind.

 

[jasonnfree]

All nations invest in education, science, infrastructure and [email protected] nations that don't are piss poor and are a dream to all conservatives!

Piss poor and a dream to conservatives. Sounds like Mississipi, Alabama, South Carolina, Louisiana.... A pattern forming here.

 

[RandomVariable]

If one wants to read a really good book about economics in America they should try, How to Win Friends & Influence People by Dale Carnegie.

 

[bendog]

http://www.businessinsider.com/imf-admitted-their-economists-were-wrong-2013-1The IMF

Use to be such a staunch supporter.

Has Keynesian Economics ever worked?

The link actually runs counter to your OP! But, really, the IMF was preaching austerity for third world govts, which in many was morally criminal because of the effect of PEOPLE, as opposed to govts. But, that's another story.

 

[CrusaderFrank]

USA under Obama demonstrates the total Fail that is Keynsenian economics

 

[bendog]

USA under Obama demonstrates the total Fail that is Keynsenian economics

We should have liquidated everything and gotten rid of the rot. (there's a joke in there)

 

[jasonnfree]

With a democracy we have politicians and to have politicians means to have graft and corruption, it can't be stopped. What can be done, however, is to try and keep the graft and corruption to a minimum.
With capitalism we have the business cycles and they can't be stopped. What can be done, however, is for government to keep the cycles to a minimum and their impact to a minimum. So far, no one has figured out a better method to treat business cycles than properly applied Keynes. Hoover and Republicans usually misapply Keynes using the trickle-down approach and it doesn't tricle down, it stops somewhere in the journey from government to business to buyers. The money has to be given to the poor, the buyers, the ones that put the money right back in circulation.
Another shortcoming with Keynes, is the money govenment spends during the recession is supposed to be paid back during a period of properity, and for politicians that's the hard part, and so far the impossible part.
We are still in the economic learning process and for some politicians economic-learning is a waste when reelection is the only thing on their mind.

When bush took office in 2001 he went against Keynes. There was prosperity and he gave out tax breaks to good buddies. Like he said. "There are the haves and the have mores. My base is the have mores".

 

[regent]

With a democracy we have politicians and to have politicians means to have graft and corruption, it can't be stopped. What can be done, however, is to try and keep the graft and corruption to a minimum.
With capitalism we have the business cycles and they can't be stopped. What can be done, however, is for government to keep the cycles to a minimum and their impact to a minimum. So far, no one has figured out a better method to treat business cycles than properly applied Keynes. Hoover and Republicans usually misapply Keynes using the trickle-down approach and it doesn't tricle down, it stops somewhere in the journey from government to business to buyers. The money has to be given to the poor, the buyers, the ones that put the money right back in circulation.
Another shortcoming with Keynes, is the money govenment spends during the recession is supposed to be paid back during a period of properity, and for politicians that's the hard part, and so far the impossible part.
We are still in the economic learning process and for some politicians economic-learning is a waste when reelection is the only thing on their mind.

When bush took office in 2001 he went against Keynes. There was prosperity and he gave out tax breaks to good buddies. Like he said. "There are the haves and the have mores. My base is the have mores".

Bush and Reagan both practiced Keynes, Reagan tripled the national debt and Bush doubled it again. Where did all that money go, most to trickle-down and of course little trickled down, it is still up there in the upper brackets.

 

[CrusaderFrank]

USA under Obama demonstrates the total Fail that is Keynsenian economics

We should have liquidated everything and gotten rid of the rot. (there's a joke in there)

It worked for the USA under Mellon and Coolidge

Spending $1T a year to prop up bad loans....yeah, that's gotta work!

BTW bank execs started 2014 by selling more stock than they did in 2007

 

[bendog]

USA under Obama demonstrates the total Fail that is Keynsenian economics

We should have liquidated everything and gotten rid of the rot. (there's a joke in there)

It worked for the USA under Mellon and Coolidge

Spending $1T a year to prop up bad loans....yeah, that's gotta work!

BTW bank execs started 2014 by selling more stock than they did in 2007

It was mahvalous in 1930, simply mahvalous. But, assuming we had any intent of honest inquiry, the result would be that Keynes has some validity, as does Hayak, but mostly we follow monetarism in federal banking, and God only knows what our politicians are up to.

 

[CrusaderFrank]

We should have liquidated everything and gotten rid of the rot. (there's a joke in there)

It worked for the USA under Mellon and Coolidge

Spending $1T a year to prop up bad loans....yeah, that's gotta work!

BTW bank execs started 2014 by selling more stock than they did in 2007

It was mahvalous in 1930, simply mahvalous. but again, your OP is contrary to the link that you asserted supported it.

You're confusing Hoover "Boy Wonder" with Calvin Coolidge

 

[Toro]

http://www.businessinsider.com/imf-admitted-their-economists-were-wrong-2013-1TheIMF

Use to be such a staunch supporter.

Has Keynesian Economics ever worked?

The economies of the West have been Keynesian economies since 1945.

So the answer appears, generally, to be "yes."

BTW, the link doesn't work.

 

[Contumacious]

http://www.businessinsider.com/imf-admitted-their-economists-were-wrong-2013-1The IMF

Use to be such a staunch supporter.

Has Keynesian Economics ever worked?

Usually bureaucrats make statements like this ..." We were wrong about Keynesian Economics......but......but......but.....we had good intentions.

.

 

[RandomVariable]

With a democracy we have politicians and to have politicians means to have graft and corruption, it can't be stopped. What can be done, however, is to try and keep the graft and corruption to a minimum.
With capitalism we have the business cycles and they can't be stopped. What can be done, however, is for government to keep the cycles to a minimum and their impact to a minimum. So far, no one has figured out a better method to treat business cycles than properly applied Keynes. Hoover and Republicans usually misapply Keynes using the trickle-down approach and it doesn't tricle down, it stops somewhere in the journey from government to business to buyers. The money has to be given to the poor, the buyers, the ones that put the money right back in circulation.
Another shortcoming with Keynes, is the money govenment spends during the recession is supposed to be paid back during a period of properity, and for politicians that's the hard part, and so far the impossible part.
We are still in the economic learning process and for some politicians economic-learning is a waste when reelection is the only thing on their mind.

When bush took office in 2001 he went against Keynes. There was prosperity and he gave out tax breaks to good buddies. Like he said. "There are the haves and the have mores. My base is the have mores".

Bush and Reagan both practiced Keynes, Reagan tripled the national debt and Bush doubled it again. Where did all that money go, most to trickle-down and of course little trickled down, it is still up there in the upper brackets.

Reagan put a lot of money into defense spending. In that way it was big government, not capitalism, which defeated the Soviet Union.

 

[CrusaderFrank]

Obama can take his Keynesian Economics back to Kenya

 

[bendog]

When bush took office in 2001 he went against Keynes. There was prosperity and he gave out tax breaks to good buddies. Like he said. "There are the haves and the have mores. My base is the have mores".

Bush and Reagan both practiced Keynes, Reagan tripled the national debt and Bush doubled it again. Where did all that money go, most to trickle-down and of course little trickled down, it is still up there in the upper brackets.

Reagan put a lot of money into defense spending. In that way it was big government, not capitalism, which defeated the Soviet Union.

Well, the soviets couldn't compete with star wars, and that was the point. whether it worked or not was irrelevant to Reagan.

but trying to classify any of the recent potus's as adherents of one econ theory or another is hopeless, because, as Reagan illustrates, his fiscal policies flew in the face of monetarism, which was the theory he preferred. Though he did continue the macroeconomic fed theories started under Carter, which were an anathema to traditional liberals, like Ted Kennedy. But, his deficits were counter to what Friedman believed in.

 

[Toro]

When bush took office in 2001 he went against Keynes. There was prosperity and he gave out tax breaks to good buddies. Like he said. "There are the haves and the have mores. My base is the have mores".

Bush and Reagan both practiced Keynes, Reagan tripled the national debt and Bush doubled it again. Where did all that money go, most to trickle-down and of course little trickled down, it is still up there in the upper brackets.

Reagan put a lot of money into defense spending. In that way it was big government, not capitalism, which defeated the Soviet Union.

In some ways, Reaganism was Keynes in drag.

In Keynsian theory, you start with revenues of A and spending of X, then increase spending by Y such that total spending is X+Y. The deficit is X+Y-A.

To balance the budget, you would have to increase taxes by B such that revenues are A+B. With higher taxes, the budget is balanced when A+B=X+Y. That more or less describes fiscal policy up until 1980, excluding wars. When spending went up, taxes went up.

Under Reagan, Reagan cut taxes by B. Thus, the revenues looked like A+B-B, and the deficit became X+Y-A, just like under the Keynesian scenario.

 

[oldfart]

The new “IMF Working Paper,” titled “Growth Forecast Errors and Fiscal Multipliers,” prepared by Blanchard and Daniel Leigh of their Research Department, reports that whereas the IMF had been accepting conservative economists’ estimates that the multiplier was “about 0.5” percent growth, the “actual multipliers were substantially above 1 early in the crisis,” which was the period when the IMF was recommending and pursuing “fiscal consolidation,” which is called in the United States “austerity.”

In other words, the policy recommended by the Republican Party’s economists, and which has actually been tried especially in Europe, has failed miserably.

Here are some of the things the IMF study reports:



Read more: The IMF Admits It Was Wrong About Keynesianism - Business Insider

So what did they finally determine?

That Keyneisan spending during a serious economic downturn is FAR MORE EFFECTIVE than they're originally thought.

Cracks me up.


However what this fails to say is that the Keynesian spending means SPENDING not giving trillions to BANKS.

Which is what both Bush II and Obama mostly have done.

You make an excellent point. The measures taken in 2008 and early 2009 to stabilize financial markets (bank bailouts, auto bailout, AIG bailout and paying off their CDS at 100%, the commercial paper liquidity program, and subsequent QE) may have been necessary, or a good ideal, or unavoidable (take your pick); but they were not Keynesian stimulus. They were intended to stay in the banking sector to provide liquidity, not be loaned out to support the economy.

The stimulus itself turned out to be heavily weighted toward tax cuts which had minimal effect as stimulus. The effective amount of stimulus spending was about a third of what Christine Romer had calculated as necessary at the start. So the folks in late 2008 and early 2009 who predicted that the financial stabilization and stimulus programs would prevent the financial collapse but would be inadequate to restore acceptable levels of growth were precisely right.

The IMF position at the time, which they are now recanting, was that tax cuts were just about as effective as direct spending (i.e. had the same multiplier) so weighting programs to tax cuts did no harm to recovery. The pivot in 2010 to deficit reduction cut off the recovery in both America and Europe and spawned several double dip recessions in Europe. It was the Ike years all over again. Reducing spending in a downturn historically raises deficits and tanks the economy. Ike was the last president to seriously try it.

In the relevant 2008-9 period there were only really three schools of economists: the New Keynesians whose models worked pretty well to predict but who ended up having no policy influence (Christine Romer, Joe Stiglitz, Paul Krugman), the Wall Street types who were scared shitless (Pete Peterson, Larry Summers, et al), and a nascient movement to blame everything on the deficit. When Wall Street got its bailouts, it switched gears to oppose any reform that might prevent another financial disaster if it took away their toys and ceased being worried about economic collapse so long as it only effected the little people. A very few who went back to paleo-Keynesian theory which had become intellectually unrespectable and unpublishable, did even better than the the New Keynesians. Stiglitz and Reich deserve credit for leading this charge.

So presently the debate has developed into an austerian party whose policies are abject failures, but who do not care, as broad based economic growth is not their agenda; and a mix of paleo-Keynesian and New Keynesian thought which has no effect on policy in either political party. The austerians lose every battle on the intellectual front (no one can really identify what model they are using now that A & A and R & R are thoroughly discredited), but control the policy war.