Skip to comments.Sowell: A Return to Keynes?
Posted on 10/14/2013 10:11:16 AM PDT by jazusamo
The nomination of Janet Yellen to become head of the Federal Reserve System has set off a flurry of media stories. Since she will be the first woman to occupy that position, we can only hope that this will not mean that any criticism of what she does will be attributed to sex bias or to a "war on women."
The Federal Reserve has become such a major player in the American economy that it needs far more scrutiny and criticism than it has received, regardless of who heads it.
Ms. Yellen, a former professor of economics at Berkeley, has openly proclaimed her views on economic policy, and those views deserve very careful scrutiny. She asks: "Will capitalist economies operate at full employment in the absence of routine intervention?" And she answers: "Certainly not."
Janet Yellen represents the Keynesian economics that once dominated economic theory and policy like a national religion until it encountered two things: Milton Friedman and the stagflation of the 1970s.
At the height of the Keynesian influence, it was widely believed that government policy-makers could choose a judicious trade-off between the inflation rate and the rate of unemployment. This trade-off was called the Phillips Curve, in honor of an economist at the London School of Economics.
Professor Milton Friedman of the University of Chicago attacked the Phillips Curve, both theoretically and empirically. When Professor Friedman received the Nobel Prize in economics the first of many to go to Chicago economists, who were the primary critics of Keynesian economics it seemed as if the idea of a trade-off between the inflation rate and the unemployment rate might be laid to rest.
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Kensian economic theory should be thrown on the ass-heap of history. Another failed theory. Perhaps, all references to Kensian theory should be expunged, except to indicate that it is an abject failure.
Prophetic words. Count on it.
A return to Keynes?? Hell we are way way beyond Keynes to a fellow named Marx, and not Groucho!
But it isn't an intellectual triumph but a political one, which rides on the back (careful! </off Church Lady>) of Barack Obama's successes at imposing unconstitutional appointments and new laws, and his iron partnership with the State-Run Media which allows him to dominate political discourse like Alexander once did Persia.
Ms. Yellen asks: "Do policy-makers have the knowledge and ability to improve macroeconomic outcomes rather than making matters worse?" And she answers: "Yes."
This is called hubris. My question is, what is it going to cost us to find out that a) it's untrue and that b) liberals and Keynesians have a lot of swollen heads?
Keynes is a sort of midway "happy place" for liberal inner children, along the road to straight-up Stalinism, no chaser. It's a reminder of the halcyon days before reality parachuted into the party, in the form of the Vietnamese War and LBJ's "guns AND butter" orgy which caused stagflation.
Have no idea what it’ll cost but it’ll be a lot, Yellen will make sure of that.
What she is talking about is wealth redistribution as routine intervention.
I’d filibuster her.
Anyone who supports Free Trade has been practicing Keynesian Economics....Keynes was the Father of the current Free Trade system unleashed by him and FDR at Bretton Woods
And...Friedman is the one to thank when you look at your paystubs withholding tax taken....It was Friedman’s idea to take your income tax directly from your check
What is called “Kensianism” today is no closer to the policies that Keynes actually advocated, than what Americans call “liberalism” today is to classic liberalism.
Oh Mr. Sowell you are so right.
but did we ever get that far away from Keynes in the first place?
If the tyrant is pursuing Keynesian economics it is because his puppet masters know how destructive it is to the economy and the employment rate.
Everything they do is designed to dishearten, depress, outrage, and harm the American people to their ultimate goal of a total dictatorship over every last one of us in every thought, word, and deed.
Push back, my friends. It’s time.
Look how they back down when we stand up to them. Did you see the police wander off when the veterans confronted them with their peaceful protest and reminded them of their oaths to uphold the Constitution?
They’re wrong, and they know it. But their lust to strip the people of this country bare of our wealth, possessions, and prosperity to “pay us back for all the poor people of the world” — Translation: “We’re greedy bastids who have already raped the rest of the world, and it’s your turn now that Broncob has softened you up.”
Don’t soften up!! Push back.
And thanks for the ping, Jaz, my friend.
Well said, TOL!
I thought Keynes was just smoking something when he came up with his economic theory, but then when I studied philosophy I found out Keynes studied at the knee of G.E. Moore, a philosopher so bad that Wittgenstein reputedly said Moore was an example of how far you could get in philosophy without actually knowing anything. I have little doubt that Keynes learned his progressivism from Moore.
Moore was the master of the confusing argument and ethical relativism. His philosophy allowed his followers to justify anything. This is probably why Keynes could come up with such a crazy economic theory that others would sell as a means to cure the ills of the Great Depression, despite later economists showing it probably prolonged the Depression by seven years.
Sound familiar? Obamacare anyone?
Exactly. In 1932 the Chancellor of the Exchequer ask Keynes if they should start spending. His answer was, “No, you only have 16% unemployment.”
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