No, Keynesian economics revolves around the basic concept that depressions and recessions are a demand problem.

Thats what "stimulus" tries to address.

Now, it is technically possible to do a "stimulus" without being Keynesian per se... but that isnt the case in modern economics which has been dominated by Keynesian thinking. The "non-Keynesian" type of stimulus is basically boiled down to "times are tough so I am going to hand money to my allies". Maybe this is what you are referring to?

Either way, its justified by Keynesian thinking - the claims are that it will help the economy.

Keynesian economics revolves around the basic concept of the "demand problem" - that is, that there is insufficient demand. To combat this, Keynes recommended two courses of action.

1) Tax those that "have", and redistribute to those that do not. This is to "free up" idle capital and inject it back into the market.

2) Run deficit spending, to put money in the hands of those who do not have it - and thus "create" capital , and increase aggregate demand.


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Please, tell me how our stimulus efforts are not Keynesian and how I am stretching the word. Because I am not, I actually know exactly what I am talking about when it comes to economics.

Austerity is not necessarily the best policy in "all" crisis situations. Because "all" is a pretty encompassing word.

I realize you are trying to make a comparison between the GreatD and 2008-now.

What I was pointing out to you earlier in the euro example, is what happens when the deficit spending tactic to keep demand up finally runs its course... people stop loaning you money. That is why Germany was the source of all that hubbabalooo - everyone was wanting Germany to keep bailing out the failed Eurozone countries... which would basically require Germany to embrace the same types of deficit spending policies.. and Germany has understandably been giving them the finger. Because what is the point, if the people you are bailing out refuse to get their heads on straight? As soon as Germany ruined itself , then they would all be hosed.

So Germany said "no cash for you, unless you adhere to a budget that is actually reasonable" which was massive austerity compared to the prior bouts of spending. The resulting pain induced is not because "austerity" isnt needed, but rather illuminates how unsustainable the previous spending was. In simple terms, its what happens when a normal guy makes 30k a year and puts 60k a year on his credit cards. Eventually... his credit dries up/becomes to expensive to sustain... except where an individual would just declare bankruptcy a country typically wants to avoid that at all costs.

The Euro zone is our ultimate fate if we continue with our current policies.


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Now, talking about no bailouts = lights out @ banking system.

This is really pretty inaccurate. There were actually plenty of healthy banks... even though the Govt tries very hard to makes banks unhealthy. ( See things like EHL / HUD /etc regulations )Also, many people think that the default swaps would have worked just fine had they been allowed to take their course.

I am really not sure what basis you have for saying that we would have faced 50% unemployment and no banking industry without bailouts. Sure, thats what the bailoutees claimed... but I hardly feel inclined to take *their* word for it.

There are plenty of well thought out rebuttals of that assertion out there. Maybe you will get interested to read some of them.

For who could be free when every other man's humour might domineer over him? - John Locke (2nd Treatise, sect 57)