[bayourod]

Nixon proclaimed "We're all Keynesians now." But fortunately, when Reagan studied economics in college they hadn't heard of Lord Keynes yet. They were using that textbook The Wealth of Nations

[Brilliant]

So, if the excess savings view is right, the key question for investors is: how long will the flow of savings from Asia go on funding the US current account, US consumption and investment and world growth?

Answer: until they study economics and realize that they are giving away the store.

[Borges]

93 years old and counting.

[Moonman62]

Keynesian economics is so popular because is requires massive government and armies of economists.

[Uncle Miltie]

Keynes died in the '60 when Uncle Miltie killed him. Everything else is just catch-up.

[GOP_1900AD]

Again, we agree. Keynesian economic theories are a steaming crock of .... (!)

[USFRIENDINVICTORIA]

It is doubtful that, had he lived beyond 1946, Keynes would have been a Keynesian.

Keynes' diagnosis of the world's economy in the Great Depression was that it was suffering from a "liquidity trap". That is, regardless of how low interest rates went, most people had become so risk-averse that they would prefer liquidity (cash) to investments, or consumption.

Keynes' prescription was for a short-term increase in public spending. Specifically on infrastructure that would be needed to be built eventually. This so-called "counter-cyclic" investment was intended to prime the pump, and get the economy working again.

The deficits involved were to be paid back by reducing government spending during the good times.

Unfortunately, Keynes was willfully misinterpreted for decades by "tax and spend" liberals, and other "big-government" types.

Keynes certainly would not have approved of the decades of high inflation, which were largely caused by ever increasing government deficit spending during the '70's and 80's. (Along with other factors, such as the OPEC-driven oil crises of the "70's.) About inflation, he said: "The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens."

Keynes emphasized the importance of investor and consumer confidence. He was opposed to taxes on capital -- including estate taxes. He probably would have been a supporter of the "Laffer curve", which was the foundation of "Reganomics", and the recent Bush tax cuts -- i.e. the economic stimulation effect of lower taxes means that tax cuts actually more than pay for themselves. (Provided they are too high to begin with.) Despite the howls from the "progressives", loath to reduce the size of the government trough, Laffer has been proven correct.

In his day, Keynes was known as a "Liberal" -- a term that has become twisted beyond recognition. In today's terms, he would have probably been known as a "neo-conservative". It is a shame that he is more known for the disastrous economic policies carried out by those who misappropriated his name, and subverted his ideas; than by what he actually thought, wrote and advocated.

[Clemenza]

"In the long run, we are all dead" --- JM Keynes

"We are all Keynesians now" --- RM Nixon