Long ago and far away I taught economic principles and money and banking in night school. Since those three-hour classes came after long hours in my day job, I must admit—against interest as the lawyers say—that I tended to emphasize things that were easier to teach. Nothing was easier than simple Keynesian relationships because of [...]
I’m scheduled to make a talk at Missouri State University on Wednesday, April 14. This is a teaser piece I wrote for the local newspaper in Springfield, Missouri, the News Leader.com. Goal for Public Affairs Speech Seems Lofty as Deadline Approaches April 12, 2010 On Wednesday, I’m supposed to talk to economics students and [...]
Some of my supply side friends are probably perturbed with me for my view that, while their model may be appropriate for normal times, Keynes is relevant during a period of inadequate demand. In fact, I view his General Theory as a guide for getting out of a recession or liquidity trap. The focus now [...]
I’ve been reading Amity Shlaes’ wonderful book, The Forgotten Man, A New History of the Great Depression, with an eye out for parallels and lessons for our current crisis. You will find some of those and much, much more. Amity showed great restraint in writing her book. A scholar with her expertise could have driven [...]
“You can’t spend your way out of recession” is a sound bite heard almost every day on financial TV. Recently a guest commentator combined that sound bite with this one: “You can’t borrow your way out of debt.” Perhaps the second one was intended to divert our attention from the first one. Clever. Perhaps too [...]
In my opinion, the average watcher of financial cable TV and reader of the financial press can be forgiven some confusion. Experts are found at opposite extremes of many issues. For example, *We need more spending, but budget deficits are bad. *Debt is bad, but we are adding debt at a record pace. *Consumers and [...]
When recession becomes an issue, as it now is, the remedy involves increasing total spending, or aggregate demand, to match the capacity of the economy to produce goods and services at full employment. One way to view aggregate demand is by its spending components such as consumption, investment, and government spending. This "Keynesian approach facilitates [...]
The economy is facing quite a dilemma-or paradox. Actually, John Maynard Keynes called it the Paradox of Thrift, but most economists I know don't talk about it much for fear of being labeled a Keynesian. The paradox is this: most of us need to save more, i.e., consume less of our disposable income. Yet, if [...]