Monday, December 19, 2011

Get it here first II

On Sept. 7th I wrote this on Keynes and stimulus spending:

For those of you following at home, you may have noticed that while I think Keynes' basic prescription for getting out of a recession makes sense in certain circumstances, I question whether it applies to current circumstances.”

In his recent column Bye-Bye Keynes?, Robert Samuelson writes:

When Keynes wrote The General Theory of Employment, Interest and Money in the mid-1930s, governments in most wealthy nations were relatively small and their debts modest. Deficit spending and pump priming were plausible responses to economic slumps. Now, huge governments are often saddled with massive debts.”

And he concludes the column with:

Were Keynes alive now, he would almost certainly acknowledge the limits of Keynesian policies. High debt complicates the analysis and subverts the solutions. What might have worked in the 1930s offers no panacea today.”

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