By using this site, you agree to our Privacy Policy and our Terms of Use. Close
Kasz216 on 08 May 2010
Edit Thread
Akvod said:
Kasz216 said:
Akvod said:
Kasz216 said:
Which would be great... if you know... the vast majority of economists didn't disagree with you.

Like I said. You have a bad teacher.

So you deny that increasing G cannot shift the AD curve?

It can't shift it?  No.  That the shift will be near useless and lead to large problems in the future, yes?


If you'll go back to New Keynsian beliefs... the most dominate school of Keynsian's at the moment... you'll notice they argue what everyone else argues.

Using expnasive monetary polcies will only lead to inflationary expectations and only store up problems for the future.

You know... like what caused the US Recession.  You put off minor recessions and it leads to a big recession.  

 

Your own quoting of Keyenes puts it best "In the long run we'll all be dead."   Just with an added "So who cares if our children or grandchildren are screwed."  Old Keynsian economics is all about living in the now at the expense of the future.

 

We're paying the price for that kind of thinking.  New Keynsians believe more in altering the inflation rates and minor expansionary policies that lead to longterm benefits... usually only when it's a HUGE external shock.

 

Did you take a look at the graph? We're trying to get back to the original price level, not beyond it.

The reason why there was high inflation in the 70s was stagflation, and to combat that either requires lowering inflation but raising unemployment, or vice versa. But yes, there were also a lot of times when government engaged in inflationary policies when we didn't need to, and then the Fed had to cause a recession, in order to keep that inflation in control.

I still don't see how that denies using inflationary policies when there is an aggregate demand shock. I mean, there was fucking deflation in the great depression. Because of disinflation, using expansionary policy is a no brainer. It's stagflation that's a fucking headache.

But yes, there are also long term effects, as well as short term. There's crowding out, there's increased government debt, etc.

But that's why we engage in CONTRACTIONARY policies during EXPANSIONS. We fucking raise taxes, and cut government spending when the economy is doing good. That too, is an Keyensian belief.

 

Fine, let me even say this:

I am a counter-cyclicalists. I believe that getting the economy in long term output is the number 1 priority. I believe that by engaging in contractionary policy, we will prevent future recessions, or at least mitigate their deepness, and that with inflationary policy, we can prevent a recession from growing deeper, and get the economy back in the shortest and least cost.

Have I looked at the graph?  Yes.

Does that matter?  No. .

Does it matter that we're just trying to get back to square?  Once again, No.

Being a counter cycalist is fine... the problem is... you aren't doing it right.  Even New Keynseian's disagree with you.  Your beliefs aren't congruent with economic theory.  Counter Cyclaists believe in letting recessions pass without doing anything UNLESS it's cause by huge external forces.