Keynesian Nonsense Falls Out of Favor in UK – Thank God!

At long last, Keynesian nonsense is recognized for the nonsense that it is. The New York Times reports In Britain, Keynesians Fall Out of FavorIn Britain, George Osborne, chancellor of the Exchequer, delivered a speech on Wednesday that would have made Keynes — who himself worked in the British Treasury — blanch. He argued forcefully that Britons, despite stumbling growth and negligible bank lending, must accept a rise in the retirement age to 66 from 65 and $130 billion in spending cuts that would eliminate nearly 500,000 public sector jobs and hit pensioners, the poor, the military and the middle classes because of what he insisted was the overwhelming need to reduce the country’s huge budget deficit.

In Ireland, where the economy is suffering through its third consecutive year of economic slump, Keynes is doing no better. Devastated by a historic property crash and banking bust, the Irish government is preparing another round of spending cuts and tax increases.

Combined with what Dublin has already imposed, the cuts could add up to as much as 14 percent of Ireland’s gross domestic product, an extraordinary amount for a modern industrial country. Ireland’s budget deficit reached 32 percent of total economic output this year.

Indeed, across Europe, where the threat of a double-dip recession remains palpable, what is most surprising is not simply that governments from Germany to Greece are slashing public outlays but that the debate hinges more on how fast to do so rather than whether such substantial cuts are the right thing to do under the current circumstances.

“Everything Keynes established about the primacy of maintaining demand at a steady pace is gone,” Brad DeLong, a liberal economist and blogger at the University of California, Berkeley, said mournfully.

Along with other noted liberal economists like Paul Krugman and Joseph Stiglitz, Mr. DeLong has long argued for more stimulus spending in the United States and abroad to lift growth, even if deficits rise temporarily as a consequence. Brilliant Idiots

Every day I ask myself how allegedly brilliant economists cannot see that continuing down the current path will lead to a situation similar to what happened in Greece.

It is impossible to spend one’s way out of a mess when the problem is unsustainable spending.

None of these Keynesian fools ever address the question as to what happens when the stimulus is cut off. None of them can see that Japan has proven in spades that neither Keynesian nor Monetarist solutions did anything for Japan but increase debt.

More government spending cannot possibly work when the problem is too much government spending in the first place.

Finally let’s address Brad DeLong’s statement “Everything Keynes established about the primacy of maintaining demand at a steady pace is gone.”

To that I say Thank God!

The idea that governments or central banks can maintain demand at a steady pace is sheer idiocy. We have the dot-com bubble, the housing bubble, and the debt collapse to prove it.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Bookmark and Share
Posted by Michael Shedlock at 2:44 PM…. Print…. Email

To sign up for a free copy of our Monthly Client Newsletter, please register your email address at the bottom of the Sitka Pacific Commentary Page.

Buy Gold and Silver Online at GoldMoney
The Best Way to Buy Gold and Silver

Disclaimer:The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Comment Guidelines: Comments should be succinct, constructive and relevant to the story. We encourage engaging, diverse and meaningful commentary. Comments that include personal attacks, racial, religious, or ethnic slurs are not permitted. We continuously review and remove any inappropriate comments.

Comments(0)

Newer PostOlder PostHomeSubscribe to:.About Mike Shedlock Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Continue reading…    
 Mish Audio VideoMish with Marc Faber 2010-03-12
“Inflation or Deflation?” Debate: Mish vs. Dr. Doom

On the Edge with Max Keiser 2010-02-12
Spotlight on China, Japan, Jobs, Pensions, Part 1

Spotlight on China, Japan, Jobs, Pensions, Part 2

Tech Ticker 2009-12-09
“Bank Lending, Jobs, The Great Retrace

King World News October 30 2009
Mish and Eric King discuss Gold, the Stock Market, the US Dollar, Sideline Cash, China, and US real estate

May 2009: My Speech at Google – on Blogging and the Economy
Thoughts on Blogging and the Economy – Speech at Google

Podcasts Every ThursdayHoweStreet

May 18, 2009Jay Taylor and Mish discuss deflation and other issues on Voice America

April 27, 2009
The Lew Rockwell Show – “It’s Fallen and It Can’t Get Up”

April 26, 2009
TDI Podcast 106: ZeroHedge and Mish-O-Nomics

January 25, 2009TDI Podcast 92: An Unavoidable Depression? (Dent and Shedlock)

January 7, 2009Commodity Watch Radio – 2009 : Mish and Mike Hampton Give Their Views

November 12, 2008
The Lew Rockwell Show

October 23, 2008
TDI Episode 80: Predicting another 40% DOWN

October 17, 2008
Commodity Watch Radio – A look at the markets Michael Hampton, Mish

August 24,2008
Commodity Watch Radio – Inflation or Deflation? Part 1 James Turk, Michael Hampton, Mish

 John Dennis Beat Pelosi Mish Endorsement of John Dennis  Lawson for Congress Mish Endorsement of B.J. Lawson  Doug Cloud For Congress Mish Endorsement of Doug Cloud  
 
 
Calculated RiskLoading…naked capitalismLoading…Steve Keen’s DebtwatchLoading…oftwomindsLoading…Acting Man Austrian Economics DiscussionLoading…Copyright 2009 Mike Shedlock. All Rights Reserved.View My StatsHomeAboutContactSitka Pacific.js-kit-comments { background-color: #ffffff; } white-space: nowrap; color: #ff0000; margin: 0px 0px 0px 0px; padding: 0px 0px 0px 0px; }.js-singleComment { font-size: 9pt; color: #000000; line-height: 1.0em; margin: 0px 0px 0px 0px; padding: 0px 0px 0px 0px; font-family: Verdana, Helvetica; border: solid 1px #c0c0c0; text-align: left; }

View the Original article

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s