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Using the Keynesian Economic Theory to fix our Economy, really?

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Keynesian Economic Theory: The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession. (Written by John M Keynes in 1936.

Let us not forget that both tried using the Fiscal Policy to fix the economy as well.

Perhaps the reason why we are failing to fix our economy and government issues is because we are stuck in old fashion mode which was created long before the modernized and technical advancement century.

Thoughts?

I think our politics are having a very difficult time or unable to find a real solution for current times. Maybe there isn't one or no one is bright enough these days to find one?



by on Jun. 2, 2012 at 10:20 AM
Replies (41-50):
yourspecialkid
by Platinum Member on Jun. 2, 2012 at 2:47 PM

 

Quoting iluv2meow:


Quoting yourspecialkid:

 

Quoting jaxTheMomm:

Like you, I try to learn more about the economy and like you, it's hard to make time to really dig in!  I wish I remembered more from my college economics class.

Anyway, remember that we had a surplus not that long ago.  I don't think (what with all my mighty knowledge on the topic, lol) there's any one magic bullet. 

But we will get nothing done as long as the politicians have ONE goal in mind - their own careers.

I've heard a lot of economists on various radio programs state that we must end the tax cuts, and investing in new technology is always a gamble, but we've always done it to stimulate new growth areas.

Quoting iluv2meow:

Our problem is due to the fact that we keep trying to run our economics based on theories and ideas instead of being realistic and adapting to change and keeping up with change, technology for example. There are some extremely bright people out there, and yet we will resort to putting our problems in the hands of idiotic politics.

Quoting JakeandEmmasMom:

I don't think our situation is due to Keynsian policies so much as: moving from a manufacturing economy to a service economy, low regulation of certain areas of the financial sector and the privatizing of gains but socialialization of losses, and the globalization of the economy.


 

 We didn't really have a surplus though.  If there was a real surplus the debt would not have increased each year.  http://www.craigsteiner.us/articles/16  Clinton was good at moving money around though.

You can't invest with borrowed money.  Ending the tax cuts won't help either...their value is in the billions...our debt/liabilities is more than 130 trillion...see the us debt clock.

You seem like a smart girl and I love that you are thinking...you just need the whole picture to look at...more than what the politicians...who ARE only thinking of themselves...are showing you.

This country is in a heap of trouble.  What is going to happen when today's 50 year olds get ready to retire..with no money saved and no social security to catch them?  The SS/Medicare obligation is more than 119 trillion dollars today!  If we took every penny of assets from everyone we would only have 84 trillion dollars.  Millions are going to be left without a safety net.

The govt has got to stop spending, they have got to reduce there size and they have to take the stranglehold off of businesses...I am not talking corporations..I am talking the Mom & Pops that make up more than 75% of the workforce.

Okay...off the soapbox now!  I just remember my grandmother talking about this mess..that it was coming when I was a kid.  I am grown and it is here...with worse to come.

I think people want to believe that theorist have solutions to our problem, who doesn't? Clearly no one has any real definate answer to our problem and for some odd reason people panick and seem to think that is bad, when reality not neccessarily. For many people that have entered college or started a business there were not absolute guarentee they would succeed. Solving issues as they go dealing with cons as they came is always a challenge but how one deals another succeeds another way.

I think  people see things as a single one for all, this is the same mistake the government keeps making over and over again. Until we realize that perhaps some things need to be helped others be left alone and solve our problems accordingly to worse to least, we will see more improvement.

But for now we keep doing the same thing, for example... The housing market crashed in several states, not all, but many. In Montana the housing market came to a halt due to panic but not because of foreclosure or other issues that became part of the problem in other states. So the government does a whole nation fix, where they try to fix one end, only to break the other, instead of just focusing on the area that is affected and letting the unaffected area be. But then again, FEDERAL means as a nation, I understand that, but that does seem to be rooting the most problems with most things about our government.

Then again I can also see where we are hesitating allowing states to take on their own rules and government, although this happening more and more. This can also can be good or bad, really it depends.

Until we change our mind thinking and our politicians start caring about who and what they are, we are not going to see any real good solutions or improvements. I do think we have a long struggling journey ahead of us, a lot of fixed here, but broken over there problems. I find it crazy and it makes me dizzy thinking about it.

 I think the fed govt would do well to take a look at the states that are doing well...and find out WHY/HOW they are doing well.  Wyoming, where I live is doing very well....5% unemployment and the housing market is very good.

iluv2meow
by on Jun. 2, 2012 at 3:31 PM


Quoting yourspecialkid:

 

Quoting iluv2meow:



I think people want to believe that theorist have solutions to our problem, who doesn't? Clearly no one has any real definate answer to our problem and for some odd reason people panick and seem to think that is bad, when reality not neccessarily. For many people that have entered college or started a business there were not absolute guarentee they would succeed. Solving issues as they go dealing with cons as they came is always a challenge but how one deals another succeeds another way.

I think  people see things as a single one for all, this is the same mistake the government keeps making over and over again. Until we realize that perhaps some things need to be helped others be left alone and solve our problems accordingly to worse to least, we will see more improvement.

But for now we keep doing the same thing, for example... The housing market crashed in several states, not all, but many. In Montana the housing market came to a halt due to panic but not because of foreclosure or other issues that became part of the problem in other states. So the government does a whole nation fix, where they try to fix one end, only to break the other, instead of just focusing on the area that is affected and letting the unaffected area be. But then again, FEDERAL means as a nation, I understand that, but that does seem to be rooting the most problems with most things about our government.

Then again I can also see where we are hesitating allowing states to take on their own rules and government, although this happening more and more. This can also can be good or bad, really it depends.

Until we change our mind thinking and our politicians start caring about who and what they are, we are not going to see any real good solutions or improvements. I do think we have a long struggling journey ahead of us, a lot of fixed here, but broken over there problems. I find it crazy and it makes me dizzy thinking about it.

 I think the fed govt would do well to take a look at the states that are doing well...and find out WHY/HOW they are doing well.  Wyoming, where I live is doing very well....5% unemployment and the housing market is very good.

I understand what you are saying btw I am in Montana, but I also realize how we do things in Montana will not work in other states, for many reasons and factors. You do have to understand that WY and MT have very low population and many things we don't deal with it verses a state like California. While I do agree they could learn how to succeed by looking how individual states deal with their individual issues successfully and perhaps attempt or try and find similar solutions to apply to the nation but you still have a problem though... What works for one may not work for the other. We are talking government (Federal here) nation as a whole. There is no such thing as a one for all when it comes to fixing the nation.


GLWerth
by Gina on Jun. 2, 2012 at 10:24 PM

And what leads larger companies to hire more people? Demand for their products.

Demand is increased when people have disposable income to purchase products and services. Thus, a large and thriving middle class creates demand, allowing businesses of all sizes to hire more people.

Businesses don't exist in a vacuum and they don't "supply jobs" out of altruism.

Even the biggest business is reliant on someone purchasing their product or service. Without customers, no business will succeed.


Quoting iluv2meow:

The middle class are not the main driver of mass number of employment or workers. Many middle class businesses are based on sole ownership and hire minimal employees.

While I understand what you are saying, at the same time the bigger companies beyond the middle class wages (business ownership wise and wealth) do provide the most jobs. They may not always be the highest paying (Wal mart for example) but they do supply more job positions verses smaller businesses under the corporations and wealthier businesses.

The problem isn't so much who employs the most people, the problem is related to the mass amount of taxes the middle class business owners are paying to make up for the excessive tax cuts the wealthy are getting. This is a real downfall not only to employment but the government as well. They just refuse to admit it because it is all about individual profits when it comes to politics on the expense of others.

Quoting GLWerth:

I agree with this, especially the part about privatising gains and socializing losses from the business sector.

The casualty is the middle class, which is the driver of the economy. The real job creators are the middle class...if we look back at history, the times of greatest economic growth are those where the middle class is strong. Now, those at the top are doing their level best to destroy those very people, in order to fatten their own bank accounts, with the tacit (and in some cases overt) approval of both political parties.

Quoting JakeandEmmasMom:

I don't think our situation is due to Keynsian policies so much as: moving from a manufacturing economy to a service economy, low regulation of certain areas of the financial sector and the privatizing of gains but socialialization of losses, and the globalization of the economy.

 



Raintree
by Ruby Member on Jun. 3, 2012 at 12:00 AM

I think that the keynesian theory doesn't take into account that individual people will change their behavior based on whatever is going on- if the government has a melt down over a financial crisis and tells us we're all doomed, essentially, guess what people are going to do? They're going to stop spending money- even if there is a stimulus. This is why a stimulus will have a positive effect at a time of slight recession when people aren't feeling threatened- they'll go out and spend it.

I don't think there is a way to 'fix' the economy in a coherent, controlled fashion.

PurdueMom
by Sherri on Jun. 3, 2012 at 12:19 AM


Quote:

People criticize Keynes without reading what he wrote or understanding his principles.  He advocated keeping spending relatively constant between growth and depression.  The idea was to keep people employed so they had purchasing power that would keep businesses from going out of business.  It was a way to counteract negative growth and prevent decline from feeding on itself.  Keynes wanted tax rates to lower during a depression and a nation would run a deficit, but when growth returned taxes are supposed to increase so the debt can be paid off out of a period of prosperity.  Most nations do a good job of the debt spending stimulus part and then never pay the debt down, instead succumbing to calls for "tax relief" or to "give us "our" money back".  There is no fiscal discipline during periods of prosperity, no willingness to sustain higher taxes to pay down debts.  That was not what Keynes advocated or envisioned.  People only are aware of half of what Keynes advocated and criticize his theory on incomplete information.

This from a friend.

Sherri

grandmab125
by Gold Member on Jun. 3, 2012 at 12:53 AM

Between every new Fed regulation that comes down the pike and the Frank/Dodd banking disaster bill, it's nearly impossible for small businesses to open  up or enlarge themselves.  Even Bill Gates has been quoted as saying that because of all of the Fed and banking regs he would not be able to start up his same company today.

jesusismyfriend
by Silver Member on Jun. 3, 2012 at 10:56 AM


Quoting iluv2meow:

*Sighs*

I have to confess I am extremely disappointed... Considering I am not one that is very knowledgable in politics and government (not because I am dumb or anything) but it is just not an area which I input enough time to educate and keep up with education on political affairs and know my basics.

Mind you I am currently taking Intro Business (required course for my degree) and saying that much this post is really basic intro politics and business which many here have claimed they have masters, bachelors and yet no comment on this post....

I have been belittled based on my lack of "education" but yet when i post something truely scholistic, no one has a single damn thing to say....

I have lost my faith..... *sighs* i have....

As for the post itself LOL and replying...

I think it is silly we are so hung up on trying to fix something the old fashioned way when clearly we cannot deny that just the past twenty years alone has changed so dramaticly not only in politics but our lives as citizens as well due to technology.

As for the budget, spending, fiscal policies, I dont understand how they can even work at all when we are simply so far in debt we can't afford to wipe our asses. I do not see America ever getting out of debt but I have yet to recognize government cutting back on THEIR spending, rather than cutting back on resources that help keep our communities flowing.

Quoting yourspecialkid:

 I think your second reply is the right one...it went right over their heads!

That might be helpful if our govt was as expensive and sprawling....based on a much smaller govt and little debt this theory could possibly help a small recession.  We don't have a small govt, little debt or a small recession.  We have a 500,000 acre wildfire we are trying to put out with one bucket and a shovel.

In order to truly help the govt & it's expenses is going to have to shrink, dramatically.


I have always looked at it this way:  You learn from past mistakes not keep making them, which is what govy is doing.  We need cuts.  We are going to come to a day that we will be backed against a wall and we will I believe have austerity.We need to get rid of a few offices of the government that really should not be around, we need to  slowly  phase out ss (by upping the age and putting a cap on anyone that is not a certain age by a certain year that people that are not that age ie. 30  that they will not get ss), we need to end the wars and cut defense, we need to reform medicaid, we need to reform welfare ( I am not against it but the ones that truly need it are truly being left out of the loop).  We need to tax extra on business that take jobs overseas and give a lower tax rate to those that keep jobs here.

Machelle669
by on Jun. 3, 2012 at 11:06 AM
BUMP!


collectivecow
by Gold Member on Jun. 3, 2012 at 11:12 AM

Or .. because we're stuck other posts that are going crazy and haven't gotten the chance to check this or other posts yet.

Quoting iluv2meow:

i am going to guess that the POLITICAL debaters are avoiding this post because they have no idea what it is... Sad.



"The right to be heard does not include the right to be taken seriously."

collectivecow
by Gold Member on Jun. 3, 2012 at 11:18 AM

The problem with your theory is that Obama's Administration was supposed to institute the use of Keynesian economics to help bolster the economy. 

Actually, it was one of the main points during the election: Provide more jobs, through the use of building infrastructure. The people working those jobs will end up spending money and boost the economy.

So, what the heck happened?

It just didn't happen.  Now, it's not exactly like trickle down economics has been successful over the year (actually there was only one Administration that I can think of where it actually worked to profit the country). EG. by lessening taxes on the rich, they will spend more in business and job growth and that money will eventually profit the poor and provide jobs as a result.

I think the reason people are preferring trickle down is because they want corporations to bring jobs back from overseas: They are hoping that tax cuts will mean more labor in the states as a result.

What do I know though? I'm just a dumb single-mom on food stamps.


"The right to be heard does not include the right to be taken seriously."

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