So, I have heard the term Keynesian Economics thrown around one too many times by people who have no idea what the hell his ideals were all about - other than government spending is required in some cases (which I wholeheartedly disagree with).

The core part of his argument in 'the general theory...' was that the free market, at it's peak efficiency, is still not reaching 100% employment (true full employment). We currently believe around 5% unemployment is still full employment due primarily to a mismatch of skill, location, or some other variable. for example, 10 construction jobs open in california does nothing for 5 local unemployed accountants and 5 construction workers unemployed in new york. There has to be this mismatch and it will always result in some unemployment.

Keynes' answer to this is active fiscal policy, primarily investing by the government in infrastructure. He argued that periodic downturns (like we are experiencing) can be controled by this fiscal policy where government spends in order to control unemployment, thereby increasing aggregate demand and keeping the economy out of a slump. (This is a very large simplification of course - the actual read is far more detailed and difficult to read)

Sounds all well and good. Except for the one fatal flaw when applied to today's economy: it is a sinking ship. You see, in order for this ideal to hold water, the government must work on a cycle in relation to it's fiscal policy and the economy. As the economy hits highs, the government must drastically pull back it's programs and save for the bottom where it can then invest in order to slow the fall.

This requires a level of dicipline that our lawmakers do not seem to have. By investing heavily at every downturn without soaking up that debt in the good times, we are simply digging faster than ever into the hole. So please, stop jumping on the bandwagon and telling me this is going to work based on some theory you have never read and do not comprehend because this is the fatal flaw in the stimulus package: we are fixing the here and now at the expense of the future.

great post

Here the results shown clearly



As of August 1st 2009 National debt

outstanding post.

The problem with being a light house in the storm...

Some people are to busy watching the storm to see the rocks OR the light house showing safer waters.