I really dont understand it. Any recommendations or books to understand it,for someone with no backgriund in economics?Seems pretty stupid at first
>>1095306
During times of economic disparity you are supposed to borrow money.
During times of economic prosperity you are supposed to pay off the depts you acquired.
The current economic model the government runs off is not keynesianism because they skip the pay depts part. What it has a is a model of bribing voting by stealing from future generations.
>>1095306
I don't see what is complicated to understand. When you give people money, they spend it, and it allows growth.
At least... It used to. It used to at a time when people were still mostly rural and unemployed. Today, everyone has a washing machine, a car, a house, a computer and a television, so putting more money in the economy will be totally useless.
Also, Keynes thought that spending had to be short-term, and that as soon as everything was fine, the governement had to cut down what they gave to people to stabilize everything. Except they never do that.
>>1095314
But how is giving money to people do anything? Wouldnt prices just go up? Wouldn't the currency lose all its value?
Spend, print currency, borrow, spend, keep spending until you die
>>1095322
Of course. Maynard Keynes, in all of his writings, talked about inflation. But contrarly to what most libertarians think, the economy is not some graphs where every mecanism is automatic. When the consumers are consuming more, the first reaction isn't inflation ; The first reaction is that companies produce a lot more to answer to the increased demand and make their profit. However, it only lasts for so long until inflation is kicking in. That's why Keynesianism is only thought as a short-term strategy, and not something an economy can sustain on.
The problem isn't Maynard Keynes. He had the right idea. The problem is, a lot of politicians are happy to think of him as some sort of messiah that justifies them giving a lot of money to people (And that means, a lot of votes).
>>1095333
Nah dawg, the problem really was Keynes
>>1095322
Exactly. Monetary illusion caused by giving money to people makes them demand more goods, this creates inflation.
Now, the supply sees this inflation as a sign to increase production, to do that, they increase their own demand of capital goods and labor.
Printing money stimulates demand and demand stimulates supply.
Sometimes, there is unemployment due to a lack of demand. So, to increase demand, the government spends more. Eventually, this makes people spend more, reducing the unemployment and giving a boost to GDP in the short run.
But as it turns out, this is only for those circumstances. In the long run, up to a certain rate, higher saving rates are better for the economy. So, in normal circumstances you don't want the government to do that.
Even more so because when you increase demand without cyclical unemployment, the result is larger debt, more inflation and the same GDP (it increases in the very short run but later comes back to its natural level).
In short, Keynesianism is focused on managing demand to control short run fluctuations of the GDP.
Also, eventually, with or without Keynesianism, the economy with a lack of demand goes back to the normal. But Keynesianism makes it go back to normal faster.
>>1095338
But if prices are just going up,wouldnt sellers wait,for the prices to raise? If I can buy something at a low price, and if I just wait,its price would just go uo increasing my profit. And wouldnt that mean that more failed investments may be created,creating another recession in the long run?
>>1095322
As someone with a bad understanding of it let me explian. Keynes models all deal with the short term economy, his models are all about stabilizing the economy in short term. He believed that to a large degree in the short prices are sticky meaning they won't change and in fact adding more money into the economy can cause a general rise in prosperity.
>>1095390
So keynes just wanted to intervene giving short boosts to the economy? But what would happen when you cut the incentive? Wouldn't that just hurt the economy again?
>>1095374
You are assuming that most new investments will fail but there is no reason to assume that.
>>1095419
Some could. When the central bank lowers interest rates,it encourages more risky investments. Basically the last recession happened because of that didn't it?
>>1095399
No, because at that point the economy's gained enough positive inertia that you can cut incentives and still have prosperity.
The basic gist behind Keynesianism is you want to make a sine wave into a line on the time versus wealth graph.
>>1095428
Not really., last recession occurred because of the lack of banking regulation. Large banks have a bigger incentive to take risky investments because of the too big to fail doctrine.
Basically, the FED fucked up but not because they increased money supply.
>>1095492
They lowered interest rates,which basically means cheaper money for banks. Which would obviously lead to riskier investments
>>1095555
But not that risky.
>>1095564
Well it seems that it did.
>>1095570
Like I said, too big to fail doctrine.
If low interest rates leads to such a thing, I have no idea why it doesn't happen in Europe or Japan where interest rates are fucking negative.
>>1095570
>>1095555
The "riskyness" of the investments didn't really matter since the banks were succesfully able to hide any inherent risk in their loans with insurrance companies owned by themselves and therfeore able to sell these essentialy worthless investments off for profit and when it turned out that this investments where worhtless the banks didn't care beacuse they didn't belong to them anymore.
>>1095604
Bubbles take time to pop. Look how long it took for the bubble to explote. Just looking at the history of the FED you can see that since the interest rate have fallen a fuck ton.
>>1095645
>>1095669
The drop in the interest rates has nothing to do with the housing bubble? That is new. Giving money to the banks from 20% interest to a 6% obviously leads to riskier investments.
>>1095698
I'm not saying anything about the intrest rate, it might be true or it might be not. i'm saying that the evidence you put foward implies much more than just intrest, it implies an entire change of policy. I'm not the poster you were orignally argueing with.
>>1095754
There are more factors,but los interest rates are obviously related. Taking a 20% interest loan is very different to a 4% one.
