Sunday, August 16, 2009

Can government be counter cyclical?

Government, as in Government stimulus, depends upon Congress. For Congress to be stimulative in its market deliberations, Congress needs to be surprisingly different than it has been in the past. That is the essential characteristic of a Stimulus.

Congress is unique as a market model, but Congress is still positively sloped in supply and demand. The economy in its effort to minimize transactions has placed Congress and Congressional activities in a equilibrium position where its inefficiencies and oligarchies are "covered" by a properly sloped supply and demand regarding taxes and services.

How can Congress be surprisingly stimulative at the margins? I would look to Hayek and his theories on Knowledge for the answers, not Keynes.

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