Irish Liberty Forum

Keynesianism is Wrong, or, The Miraculous Exogenous ‘G’

with 4 comments

Here is Cato’s Dan Mitchell explaining the problems with Keynesian solutions to recessions.

Hat-tip to Krazy Kaju for his summary:

The idea that government fiscal stimulus can increase actual aggregate demand is false. That money needs to either be borrowed, taxed, or printed. If it’s borrowed, that’s less money that the private economy may borrow. If it is taxed, that is less money that the private economy has. If it is printed, that is less value per dollar that the private economy has. 


Written by 20000miles

April 7, 2009 at 7:15 pm

Posted in economics, inflation, money, news

4 Responses

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  1. problem is, every economic situation is different (one huge factor is technology) so the response has to be very adaptable. Simple ‘pump priming’ or “spend like no tomorrow” are gross simplifications.


    April 7, 2009 at 7:57 pm

  2. I dunno, every boom and bust have the same traits: an expansion of money and credit, misallocation of resources, lack of real savings.

    Keynes himself greatly oversimplified his economic ideas. It’s not difficult to demolish a theory that claims “the government might as well pay people to dig holes in the ground, and others to fill them back up again.”


    April 7, 2009 at 8:32 pm

  3. cato vid: this one is kinda cool

    karl deeter

    April 20, 2009 at 5:03 pm

  4. That video was epic. After watching it, I felt the urge to invade Poland.


    April 20, 2009 at 7:16 pm

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