[quote]pat wrote:
[quote]LIFTICVSMAXIMVS wrote:
[quote]pat wrote:
Ahhh, Keynes…What a disaster this philosphy turned out to be. The fatal flaw in Keynes theory is that he thought cycle of money hoarding would continue endlessly until the system came to a complete halt. It’s an easy fear to have when your in the midst of a crisis, but the reality is simply that in recession, people do save more and spend less, but eventually people have to spend. You need things eventually.
The vicious cycle does end. When you keep throwing money at it, you keep it running, but just barley. But it’s better when people can feel the bottom with their feet, then they know what they have and know what they can do. If you keep tossing them scraps they never really know where you are at financially and you end up depending on the good graces of those in charge. That’s one flaw.
Second, flaw is that the Keynesian model can actually work, but it has to be done correctly. You can’t just borrow a bunch of money, throw it at your friends and constituents and hope the economy bounces back. First, you have to have the money, it’s better not to borrow; but I understand sometimes you must. Second, you have to use the money to invest in goods and services and have a chance to earn that money back from the recipients, not the tax payers.
In other words, if you are going to use a Keynesian model the use of the money has to be specific, and the gov. has to get something in return for the money that is useful.
Economy is stupidly simple. Lot’s of money circulating, good economy. Little money circulating, bad economy. Things that put money in to circulation helps, things that take money out, hurt. You have to do both, you just have to balance what you take out with what you put in.[/quote]
Money has little to do with a good economy.
It is more basic than that. It’s all about productivity.
Where Keynes goes wrong is in his idea that government consumption will always positively impact the economy; neglecting the fact that consumption can only happen while there are goods to consume. Where the government spends there is over consumption and malinvestment because many people treat the US Treasury like a magic piggy bank that never runs dry of funds.
Where investment is not based on real savings (i.e., when it is based solely on inflation) there is a tendency for malinvestment because resources get depleted which then become more expensive to the actual sectors of the economy where that investment would have been more beneficial. For example, the housing boom drove up prices for homes when it would have been better had the resources been used for something else like building factories or whatever. Now there are nothing but a bunch of empty homes sitting unproductively on the market.[/quote]
Money is representative of goods ans services, and that has everything to do with economy.
And if the governement were consuming that would be better than what it is doing right now. Only thing infrastructure spending consumes is money. Once the job is finished, there’s no more work and there is no return.
And I definitely want my 4.1 billion dollars to ACORN back.
At least Nasty Pelosi is consuming…copious amounts of alcohol and flowers.[/quote]
But underlying the value of money is production. As long as money supply remains relatively constant goods and services become cheaper as they become more abundant.
Everything depends on production.
None eat until the work is done.
