Steve Keen is a leading Post Keynesian economist. He has done work developing Minsky’s financial instability hypothesis. In these videos, he points out that America has made the same mistake Japan made: failure to
(1) close down and clean out zombie banks, and
(2) deal with excessive debt saturating the private sector.
This is why Keynesian stimulus alone will not work properly until the financial sector is fixed and private sector balance sheets are healthy again.
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Interesting videos, as usual, LK.
ReplyDeleteIf I may make a note, it seems that the videos are embedded a bit too large for the width of your content, thus obscuring some of the usual controls.
You may amend this by using the custom size funtion within the youtube embed button.
This is explained here.
argosyjones,
ReplyDeleteI didn't realise you could use this custom size function. I have changed the sizes.
Many thanks for this!
Regards
Hi Lord Keynes,
ReplyDeleteI was wondering if you read this paper by David Beckworth on the deflations of the 19th century
"The postbellum deflation and its lessons for today
David Beckworth
∗
Department of Accounting, Economics, and Finance, Andrews University,
Berrien Springs, MI 49104, United States
Received 13 September 2006; received in revised form 3 November 2006; accepted 18 December 2006
Available online 13 January 2007"
In it David tries to disentangle "good" deflation, arising from strong productivity growth, from "bad deflation" arising from a negative AD shock. I'm not, nor is David claiming, that all deflation back then was good, but he DOES make the point that the NBER's methodology relies far to heavily on nominal measures.
Your thoughts?
Hi Lord Keynes,
ReplyDeleteI was wondering if you'd like to comment on this paper by David Beckworth,
The postbellum deflation and its lessons for today
David Beckworth
∗
Department of Accounting, Economics, and Finance, Andrews University,
Berrien Springs, MI 49104, United States
Received 13 September 2006; received in revised form 3 November 2006; accepted 18 December 2006
Available online 13 January 2007
Your Thoughts?
The mathematical values of the Keynesian models was the exact policy of the Obama administration. This means that the models are simply not correct. This is why everything economic is discussed in obscurantist metaphors, as to avoid the naked, absolute mathematical failure.
ReplyDeleteHmmm...so if your general belief is that stimulus packages don't work without financial reform, what is your opinion on the general tardiness of the Obama administration on the financial reform bill (which was still pretty radical itself)?
ReplyDeleteI ask, because it was strange that the US government suddenly shifted away from financial reform and moved towards medical care reform, right after the recession.
Do you feel that aggravated the recession?
"so if your general belief is that stimulus packages don't work without financial reform"
ReplyDeleteThey won't work properly until the financial sector is cleaned up and something is done about the excessive private debt.
However, the alternative: no stimulus is insane. That would just lead to depression.
The Obama administration is incompetent, and even the financial reform bill they proposed was toothless.
The tragedy is that it might take another financial crisis and recession before the political will is mustered to shake off the power of the financial sector and implement reform.
The Greek troubles and the EU on the verge of another financial crisis might mean it comes sooner than we think.