Saturday, December 21, 2019

I am not reading it

But this is Brad's summary, it will do:

Stripped down, the conclusions of The General Theory might be expressed as four bullet points:
  1. Economies can and often do suffer from an overall lack of demand, which leads to involuntary unemployment
  2. The economy’s automatic tendency to correct shortfalls in demand, if it exists at all, operates slowly and painfully
  3. Government policies to increase demand, by contrast, can reduce unemployment quickly
  4. Sometimes increasing the money supply won’t be enough to persuade the private sector to spend more, and government spending must step into the breach
Point one means economies suffer partial shutdowns on occasion.  point two means capital flows in an economy. Point three is moot since government policies are in phase with shutdowns on a repeatable basis. Government is part of the economy. Point four, even pretending that fouling the money supply helps is an error.

Government mostly fouled the pricing system in the USA in the last forty years. A better Keynesian stimulus estimates government typical losses to the economy then announces the predicted losses well before they occur. Making up fantasies about pushing string does not help, just adds a layer of confusion for the shadow bankers to sort.

No comments: