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[mrstickball]

Badassbab said:

mrstickball said:

Arguably, Keynesian economics did help create the American crisis.

Our housing markets failed due in part to the government creating incentives for people to purchase houses (a classic Keynesian idea - incentivize consumption). Furthermore, the Community Reinvestment Act was/is a partial culprit in the crisis which (again) has roots in Keynesian economics of the 1970s which continued to grow and maturate in such a way to give significant power to incentivizing housing sales for those that could ill afford it.

Arguably yes but Keynesian economics never intended it to be used in conjunction with monetarism. With the deregulation of the Financial institution starting in the 1970's remnants of Keynesians economics did stay with us (and to the benefit of the banks and lenders). It was a lethal mix.

I agree it was a lethal mix. You can't incentivize bad behavior (promoting government-backed loans to minorities to improve home ownership) while negating risk. It allows for systemic exploitation of the free market, which causes it to collapse. That is why my view is that we must remove all Keynesian policies from the government and let the free market determine the amount of risk needed in the system - which is likely to be far more fiscally conservative than was ever allowed during the sub prime crisis.