The View From 1776

Keynesian Predictions

A cornerstone of liberal-Progressive economic theory turns out to be fatally flawed, bringing the whole structure crashing to the ground.

Posted by .(JavaScript must be enabled to view this email address) on 06/26 at 12:36 PM
  1. It may soon "appear" he was right as we enter a recession due to the declining dollar and rising interest rates that the Fed is responsible for due to increasing the money supply to create a bubble in housing.

    However, tax cuts on business along with reform in regulation and compliance would have avoided this coming problem and encouraged business to return to the U.S. instead of continue to leave.

    Whatever advantages the Bush tax cuts have provided are being eroded both by Democrat threats to raise taxes again and the lack of reform which democrats were also opposed to that would have made the U.S. tax competitive with other nations.

    We are no longer "the place" to start a business and now like all nations, have to compete if we want business to come here or stay here. Whether that is "fair" or not, it is reality. We are rapidly losing ground to the growing consumer base in South American, Asia and other rising economies. From literally a handful of middle-class in China and India, they have gone to 500 million or 200 million more than our entire population. We have to compete or we will be buried economically by the consumers of the world.
    Posted by JanPBurr  on  06/26  at  11:23 PM
  2. " The New Deal prolonged the Depression for eight years,"

    This is another outlandish remark. It is a remark that can only be made in hindsight, with no experience of the times. Immature and unsophisticated economic policy, throughout, led to the depression. Economists were still learning the ropes of modern economics in those days. The View is thinking that economist in those days were as knowledgeable as they are today in macro and mini economics. What nonsense.

    Anyway, something must have gone right during that period because America was certainly prepare economically in gearing up for WW2. The New deal prepared the industrial base to fight and win the war.
    Posted by .(JavaScript must be enabled to view this email address)  on  06/27  at  10:11 AM
  3. It is a remark that can only be made in hindsight,
    ==========================

    Well, since that is the purpose of recording history, so we can avoid making the same mistake, yes, it is made in hindsight and accurate and useful and true.

    You also said, David,
    Anyway, something must have gone right during that period because America was certainly prepare economically in gearing up for WW2
    ==================================

    Actually, no, we weren't prepared and our debt rose to over 100% of GDP and we had rationing and many personal sacrifices required that weak, unethical and immoral Americans wouldn't be willing do now for a "war effort," that took away from social spending they depend on.

    The New Deal didn't prepare the industrial base but rather the industrial base and a war saved the New Deal.

    Spending your way to prosperity doesn't work if you don't follow up and pay the debt off when the markets turn up. And, depending on the type of spending, can actually do more harm than good if it isn't very "temporary" in nature. We have depended too much on a "war economy" too often, because of what WW II seemed to indicate was a way to return to prosperity. We have also depended on too much "social spending" that creates jobs and a false sense of job growth and tax revenue increases when in fact tax revenue increases are on paper only since they came from tax revenues in the first place as those tax revenues paid the salaries of those in the social programs. Their taxes weren't "new tax revenues," just a return of some of the taxes they received but on paper it looks like higher revenues.

    You could lower the salary by the amount of taxes they pay, not collect the tax and the worker would still have just as much to spend, but, tax revenues would look smaller. Of course spending would also be reduced by that amount as well, but, the goal is to make it appear jobs are growing and so are tax revenues. Smoke and mirrors in the long run don't make the nation better off.
    Posted by JanPBurr  on  06/27  at  10:51 AM
  4. Mr. Airth:
    The New Deal did indeed extend and exacerbate what was a recession (or a market correction to the excesses of the Federal Reserve in the 1920's with their incredibly loose monetary policy).
    That you dismiss that fact with a flip single sentence and then excuse government meddling with, in essence, a statement that "well,they didn't know better and were doing the best they could" and were learning as they go along misses the point in a gross fashion.
    I'll point you to http://www.mackinac.org/article.aspx?ID=4013 where the early bunglings of the Hoover administration were compounded by the FDR administration.
    The economy was recovering quite nicely until the Feds thought they were smarter than millions of people making independent decisions.
    The concept of "do no harm" is always missed by the "we need to do something!!" class.
    Read Mr. Reed's excellent analysis.
    Posted by Amendment X  on  07/05  at  06:06 PM
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