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Democrats Are at Odds on Relevance of Keynes
New York Times ^ | October 18, 2010 | SEWELL CHAN

Posted on 10/20/2010 12:18:14 PM PDT by reaganaut1

A rift has emerged within the Democratic Party between liberal economists, who generally view the 2009 stimulus package as a success and say that Keynesian economics should remain the heart of the party’s economic policy, and elected officials, who in growing numbers have shunned affiliation with the $787 billion effort and are expressing doubts about the effectiveness of fiscal intervention.

For decades, Keynesian policies, which call for government spending to make up for the shortfall in private-sector demand during an economic downturn, have been a central element of the Democratic tool kit and a principle of the party’s identity. But the unpopularity of the stimulus package signed into law by President Obama has left many Democrats in competitive races distancing themselves from such programs, raising questions about whether the party is beginning a more fundamental rethinking of its approach to the economy.

The implications could extend well beyond this election cycle. To the extent that faith in deficit spending during downturns is eroded, the Federal Reserve could face increasing pressure to deploy monetary policy to lift the economy out of a rut — a prospect that has unsettled officials at the central bank. A shift among Democrats could increase pressure in Congress to rein in the growth of government spending, slash the budget deficit and reduce the national debt — even during a period of weakness that traditional Keynesian theory would say requires more deficit spending.

Ambivalence about using government borrowing and spending to spur the economy is longstanding. During the Depression, President Franklin D. Roosevelt wavered repeatedly over the size of the New Deal; budgetary retrenchment helped set off a second deep recession in 1937-38.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy
KEYWORDS: economics; keynes; keynesian; stimulus
Most Rats accepted Keynesian theory not because they ever studied economics but because it gives them an excuse to do what they want to do anyway -- tax, spend, and "redistribute".
1 posted on 10/20/2010 12:18:17 PM PDT by reaganaut1
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To: reaganaut1
Some democrats are ‘shunning’ Keynesianism because its an election year, not because of any change of heart.

Every damn one of em, and most republicans, needs to go.

2 posted on 10/20/2010 12:22:15 PM PDT by skeeter
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To: reaganaut1
Exactly right! It's unlikely that Keynes himself would be a Keynesian today. As he once said: “When the facts change, I change my mind. What do you do?” The facts have changed from the 1930’s — and the medicine should have changed too.
3 posted on 10/20/2010 12:22:49 PM PDT by USFRIENDINVICTORIA
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To: reaganaut1

When they quit blaming Bush, they’ll blame Keynes.


4 posted on 10/20/2010 12:24:42 PM PDT by Spok (Free Range Republican)
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To: Spok

Frankly Keynes sucked have you ever read about what a weirdo he really was not to mention how using his idea’s is what allows them to keep us saddled with debt?


5 posted on 10/20/2010 12:39:01 PM PDT by FromLori (FromLori)
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To: FromLori

When I was in college, I thought of Keynes as a communist without cajones.


6 posted on 10/20/2010 12:41:58 PM PDT by Spok (Free Range Republican)
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To: reaganaut1

And Democrats didn’t apply their Keynes theory right either, it should have been Government spending during a depression, not a recession;

http://www.huppi.com/kangaroo/Keynesianism.htm

Keynes believed that depressions were recessions that had fallen into a “liquidity trap.” A liquidity trap is when people hoard money and refuse to spend no matter how much the government tries to expand the money supply. In these dire circumstances, Keynes believed that the government should do what individuals were not, namely, spend. In his memorable phrase, Keynes called this “priming the pump” of the economy, a final government effort to reestablish the circular flow of money.


7 posted on 10/20/2010 1:04:15 PM PDT by Son House (Democrats Starve The Private Sector, Yet Expect The Economy To Grow. The Recovery to Nowhere!)
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