patrick.net

tatupu70 says

Well then why the hell would you call it Keynesian if you know it's not? Call it politicians spending too much on defense because that's what it is.

Because Keynesianism provides the intellectual cover for the politicians doing the looting in western democracies, just like Marxism provided the intellectual cover for the politicians doing the looting in the former eastern bloc countries in the 20th century. Before that, before even the western enlightened societies emerged, it was the Divine Right of King theory that provided the intellectual cover for the looting.

See, while wealth and power is never equally distributed in any society just like people are born with different degrees of beauty and talent . . . the systemic use of force to loot the vast cross section of the society by a tiny minority of elite always requires an intellectual fog cover (lest there be immediate revolt). Keynsianism provides that cover and mind fog to keep the masses down.

Reality says

See, while wealth and power is never equally distributed in any society just like people are born with different degrees of beauty and talent . . . the systemic use of force to loot the vast cross section of the society by a tiny minority of elite always requires an intellectual fog cover (lest there be immediate revolt). Keynsianism provides that cover and mind fog to keep the masses down.

Yep. Well said.

mell says

Reality says

See, while wealth and power is never equally distributed in any society just like people are born with different degrees of beauty and talent . . . the systemic use of force to loot the vast cross section of the society by a tiny minority of elite always requires an intellectual fog cover (lest there be immediate revolt). Keynsianism provides that cover and mind fog to keep the masses down.

Yep. Well said.

Ditto the Yep

Reality says

Because Keynesianism provides the intellectual cover for the politicians doing
the looting in western democracies,

What in the world are you talking about? Keynes definitely didn't advocate spending 50% of the budget on defense. And which politicians are actually claiming that Keynes is guiding their decisions anyway?

Reality says

See, while wealth and power is never equally distributed in any society just
like people are born with different degrees of beauty and talent . . . the
systemic use of force to loot the vast cross section of the society by a tiny
minority of elite always requires an intellectual fog cover (lest there be
immediate revolt). Keynsianism provides that cover and mind fog to keep the
masses down.

Of course wealth isn't equally distributed, but you must understand that the tendency is for it to become more unequal over time unless there is intervention to redistribute the wealth. That's what government's role should be.

But I still don't know what you are talking about regarding the cover or mind fog--that's just a BS talking point.

tatupu70 says

What in the world are you talking about? Keynes definitely didn't advocate spending 50% of the budget on defense.

Keynes advocated the theory that government spending on anything and everything has equal stimulative effect on the economy. When such a policy perspective is adopted, the natural result is out-sized military spending: simply because government waste on military spending is not as obvious as government waste on everyday goods and services that the consumers/voters are familiar with.

And which politicians are actually claiming that Keynes is guiding their decisions anyway?

Every single politician who has advocated government spending as a "stimulus" to the economy. That's the essence of Keynesian prescription.

tatupu70 says

Of course wealth isn't equally distributed, but you must understand that the tendency is for it to become more unequal over time unless there is intervention to redistribute the wealth. That's what government's role should be.

You have it exactly backwards! A free market place where individuals make economic decisions for him/herself tend to enable rapid capital obsolescence and replacement by new forms of capital favored by the individual consumers. Government intervention tend to entrench existing big players. Personal computers would not have emerged if the government had been in control of the computer industry . . . and indeed both Japan and Soviet Union spent almost all their computer engineering talent on mainframes. Bureaucrats tend to think along the lines "nobody gets fired for buying IBM." Government is a monopoly entrenching force. That's why the big family names of the late 19th and early 20th century turned to politics and central banking, in order to preserve their status.

tatupu70 says

But I still don't know what you are talking about regarding the cover or mind fog--that's just a BS talking point.

Keynesianism is pseudo-religious myth that serves to keep down the exploited masses. The primary beneficiaries of Keynesian redistribution schemes (government spending and borrowing) are the well connected cronies who get the money first, at the expense of the masses who get the newly printed money later.

Mell, Reality and Vaticanus oh Hell yes , you guys are a breath of fresh air.

Reality says

A free market place where individuals make economic decisions for him/herself tend to enable rapid capital obsolescence and replacement by new forms of capital favored by the individual consumers.

That sounds brilliant and all. It sounded brilliant in 1776 when Adam Smith first said it.

Now please give an example. Or some mathematical theory behind it.

Its a funny thing when Carnegie's legacy still sit in boardrooms across the nation, and still hold seats in Congress. Considering steel and the railroad were both nearly obsolete by his death in 1919, and Keynes "General Theory" wasn't published until 17 years later.

I see a great deal of garbage written on this thread, but this one - takes the cake:

Reality says

Because Keynesianism provides the intellectual cover for the politicians doing the looting in western democracies, just like Marxism provided the intellectual cover for the politicians doing the looting in the former eastern bloc countries in the 20th century. Before that, before even the western enlightened societies emerged, it was the Divine Right of King theory that provided the intellectual cover for the looting.

C'mon - attributing all of the ills of the US economy to Keynes is doing precisely what you accuse "politicians" of doing under the cover of Keynesianism. You know as well as I that US policy hardly follows Keynes - I see an alignment of the Federal Reserve and Keynes, as if the Federal Reserve was established because of Keynes suggestion - meanwhile the Federal Reserve was created 20 years before Keynes' "General Theory."

It is widely accepted that US policy strayed greatly from Keynes in the 1970s and we are all aware of the supply-side revolution in the 1980s. The only government actions since the mid-1980s that could be attributed to "Keynesianism" are within the past 5 years since the meltdown of Lehman and Bear.

Don't lay the meltdown at the feet of Keynes. We had the lowest taxes and lowest government spending (as a % of GDP) since the 1920s in the 25 years prior to the meltdown. The Federal Reserve was consistently contracting the money supply through the mid-2000s.

So lets talk specifics. I am unafraid of math so lets get into the numbers. I know whose side the numbers are on, however. And so do you - so then we will get into the 1.) The government is lying and all government numbers are lies 2.) All members of government are secretly conspiring with rich capitalists - the "crony" argument. and most importantly 3.) Everyone involved is keeping their mouth shut about it.

david1 says

1.) The government is lying and all government numbers are lies 2.) All members of government are secretly conspiring with rich capitalists - the "crony" argument. and most importantly 3.) Everyone involved is keeping their mouth shut about it.

1) They are not flat out lies, but doctored.
2) Why yes, if your career and your family's future depends on it - not everybody was born to rage against the machine,
3) No, why? They are doing it openly, no need to deny involvement as there are no consequences. They might not shout from the rooftops, but I'd say it's pretty open.

mell says

3) No, why? They are doing it openly, no need to deny involvement as there are no consequences. They might not shout from the rooftops, but I'd say it's pretty open.

Should be pretty easy enough to make your case then. Please proceed.

david1 says

mell says

3) No, why? They are doing it openly, no need to deny involvement as there are no consequences. They might not shout from the rooftops, but I'd say it's pretty open.

Should be pretty easy enough to make your case then. Please proceed.

http://market-ticker.org/akcs-www?post=220451

david1 says

Reality says

A free market place where individuals make economic decisions for him/herself tend to enable rapid capital obsolescence and replacement by new forms of capital favored by the individual consumers.

That sounds brilliant and all. It sounded brilliant in 1776 when Adam Smith first said it.

Now please give an example. Or some mathematical theory behind it.

Its a funny thing when Carnegie's legacy still sit in boardrooms across the nation, and still hold seats in Congress. Considering steel and the railroad were both nearly obsolete by his death in 1919, and Keynes "General Theory" wasn't published until 17 years late

The investor looking out for his interests decides what investment to make. Investment capital goes where it is treated the best. As does the borrower. david1 says

Its a funny thing when Carnegie's legacy still sit in boardrooms across the nation, and still hold seats in Congress. Considering steel and the railroad were both nearly obsolete by his death in 1919, and Keynes "General Theory" wasn't published until 17 years later.

Railroads are obsolete? No they are not and neither is steel. You are waxing esoteric regarding the board rooms so I don't know what you are talking about.

david1 says

It is widely accepted that US policy strayed greatly from Keynes in the 1970s and we are all aware of the supply-side revolution in the 1980s.

You mean as with the dollar going off of the gold standard? Yup
Which is the beginning of the hockey stick graph for debt.

david1 says

The Federal Reserve was consistently contracting the money supply through the mid-2000s.

Say what?

It is called co-opting and it is done tacitly, for sure it is a lie.

The main deal is about the gold standard. I don't care what cockamamie bullshit anyone comes up with as long as we don't have to pay for it.

Look at this graph again the trouble started in 2 places 1933 and 1971 and the graph indicates it.

Because at this point the buying power of Americans went down.
That is the main point which the Keynesians have gone silent on.

I'm not sure why "crony capitalism" is considered an unnatural outcome.

Seems to me the endgame of capitalism, is what you'd call "crony capitalism". Every corporation for itself, and the devil take the hindmost. Whether the hirelings who help enforce their dominance are Pinkertons or government agencies hardly matters.

The US was strong economically when we had a diversity of Manufacturing and R&D. Now the US has cut R&D while Asia and Europe has increased R&D and the results are as one would expect.

Really Lobbying has been the moral loss mechanism. Whether Clinton and the CRA, Unions and their chosen candidate, or Gramm an the repeal of Glass Stegall, lobbying buys representatives.

Lobby has short circuited the role of checks and balances, and this was an excellent idea that should be reinstated.

Vicente says

I'm not sure why "crony capitalism" is considered an unnatural outcome.

Seems to me the endgame of capitalism, is what you'd call "crony capitalism". Every corporation for itself, and the devil take the hindmost. Whether the hirelings who help enforce their dominance are Pinkertons or government agencies hardly matters.

The unnatural occurrence is when capitalists form an incestuous relationship with government

Reality says

Because Keynesianism provides the intellectual cover for the politicians doing the looting in western democracies, just like Marxism provided the intellectual cover for the politicians doing the looting in the former eastern bloc countries in the 20th century.

So wrong it isn't even right. If politicians were doing the looting why aren't they ultra-rich? With the exception of Dick Cheney 99.99999999999% of government employees don't have enough wealth to be admitted to a really good country club.

Where's the loot? Oh right, we don't want to talk about that. You'd have to accept the idea of the thieves being brilliant, but neglectfully leaving the bag of money in the cab or something. Otherwise you might have to admit your fingers point in the wrong direction.

Entitlemented says

The US was strong economically when we had a diversity of Manufacturing and R&D. Now the US has cut R&D while Asia and Europe has increased R&D and the results are as one would expect.

Really Lobbying has been the moral loss mechanism. Whether Clinton and the CRA, Unions and their chosen candidate, or Gramm an the repeal of Glass Stegall, lobbying buys representatives.

Lobby has short circuited the role of checks and balances, and this was an excellent idea that should be reinstated.

The problem is the cost of the government.

I think if enough people were educated on the value of the gold standard that would fix almost all of it.

indigenous says

indigenous says

The unnatural occurrence is when capitalists form an incestuous relationship with government

Like was the norm in the 19th century until Teddy Roosevelt. The gold standard made it extremely easy for capitalists to control the money supply.

If anything accomplishes this it is the Keynesian s. Read the article that start this thread.

indigenous says

The unnatural occurrence is when capitalists form an incestuous relationship with government

You leave unclear what is unnatural about that. Capitalists would say it's good business to own politicians. They have no compunction about sending out Senator Disney to do their bidding. I believe you are confused about who is the boss and who is the hired gun. Wait, not confused, deliberately disingenuous.

Vicente says

indigenous says

The unnatural occurrence is when capitalists form an incestuous relationship with government

You leave unclear what is unnatural about that. Capitalists would say it's good business to own politicians. They have no compunction about sending out Senator Disney to do their bidding. I believe you are confused about who is the boss and who is the hired gun. Wait, not confused, deliberately disingenuous.

What is unnatural is American being enslaved by the U.S. government

indigenous says

What is unnatural is American being enslaved by the U.S. government

Enslaved?

Wait, this argument style is very familiar.

You've been here before under about a dozen identities haven't you?

Vicente says

indigenous says

What is unnatural is American being enslaved by the U.S. government

Enslaved?

Wait, this argument style is very familiar.

You've been here before under about a dozen identities haven't you?

No doubt some one who knows what he is talking about would sound very similar to me.

But it were not me.

Enslaved, YOU BET

indigenous says

Enslaved, YOU BET

Indigenous hoodwinked by his corporate masters, YOU BET!

You'll never engage in meaningful dialog will you?

Plonk!

Reality says

Keynes advocated the theory that government spending on anything and
everything has equal stimulative effect on the economy. When such a policy
perspective is adopted, the natural result is out-sized military spending:
simply because government waste on military spending is not as obvious as
government waste on everyday goods and services that the consumers/voters are
familiar with.

You are partially correct. He also advocated that such spending should be used during down periods to stimulate the economy. During good times, he advocated reduced spending. The bottom line is the current military spending does not follow Keynesian theories.

Reality says

Every single politician who has advocated government spending as a "stimulus"
to the economy. That's the essence of Keynesian prescription.

Very good. I was looking for some examples. I'm assuming it must happen a lot since politicians are using Keynes for cover... Like David said, other than recently, when else have politicians called for it?

Reality says

You have it exactly backwards! A free market place where individuals make
economic decisions for him/herself tend to enable rapid capital obsolescence and
replacement by new forms of capital favored by the individual consumers.

No, I really don't. History is pretty clear on this front. Just look at the measures of wealth disparity--absent government intervention, wealth will tend to accumulate at the top. Not sure why you are talking about government getting into computers--I'm certainly not arguing for government owned businesses.

Reality says

Keynesianism is pseudo-religious myth that serves to keep down the exploited
masses. The primary beneficiaries of Keynesian redistribution schemes
(government spending and borrowing) are the well connected cronies who get the
money first, at the expense of the masses who get the newly printed money
later.

Pseudo-religious myth?? WTF are you talking about. Like others have said--you are confusing Keynes with monetarists.

mell says

http://market-ticker.org/akcs-www?post=220451

So the author of this article is claiming purchasing power has been eroded by the increase in the ratio of average non-supervisory earnings to total systemic debt.

That is, average n-s earnings have fallen about 3x relative to total systemic debt. Isn't he forgetting about what the debt is used for? To actually purchase things? How can you add debt to the "denominator" and leave it out of the "numerator?" when talking about earnings power? Debt is used to buy things...

Earnings power has been enhanced by the addition of credit. He says himself the S&P 500 has increased MORE than total systemic debt. This implies a positive feedback loop, does it not? (.inx 1385 vs. ~1600)

If you borrow $1 to buy something, then it increases in value, can you then not sell it and pay back the borrowed dollar to make profit?

indigenous says

Say what?

It is called co-opting and it is done tacitly, for sure it is a lie.

First, let me say you are correct here. I mispoke - only recalled the Fed increasing the Fed Funds rate in that time period and made a poor assumption. I should have verified before speaking.

indigenous says

Railroads are obsolete? No they are not and neither is steel. You are waxing
esoteric regarding the board rooms so I don't know what you are talking
about.

So you are telling me rail transport for both travel and freight are anywhere near the peak in this country? Also, you are saying that US steel production, which was roughly 1/3 to 1/2 of total world production at pre-1940, and is now roughly 5% of world production, is not obsolete in the manner in which Reality used the word? Rail and steel was obviously a significantly higher percentage of US economic output in Carnegie's time than it is today.

tatupu70 says

You are partially correct. He also advocated that such spending should be used during down periods to stimulate the economy. During good times, he advocated reduced spending. The bottom line is the current military spending does not follow Keynesian theories.

So throughout Keynes' life (1883-1946), when did he advocate reduced government spending in real time (as opposed to some theoretical "future" time)? How about . . . Never! What was he doing the 1920's boom? Why, of course advocating government spending and debasing the currency! He was actively participating in the bubble speculations himself. Good time is never good enough for him or for any sitting politician . . . .which means his so-called theory is simply a fig leaf covering for government profligacy NOW! in exchange for a future reduced spending that will NEVER be implemented voluntarily! Anyone placing faith in such a theory is either naive or willfully blind, no different from an enabler of an alcoholic who hits you up for money to buy alcohol everyday promising to quit next week, every week!

The post-WWII peace time military spending was very much justified on Keynesian grounds: the spending was considered economic necessary lest there be job losses . . . the obvious flaw in such logic is of course civilians using the money buying goods that they want would result in more prosperous lives for all than wasting human labor on useless weapons.

tatupu70 says

Very good. I was looking for some examples. I'm assuming it must happen a lot since politicians are using Keynes for cover... Like David said, other than recently, when else have politicians called for it?

Whenever there is an economic slow-down and the politicians think it's their opportunity to meddle. Keynesianism was very much in vogue in the late 60's and early 70's. Remember Nixon's quip "We are all Keynesians now" ?

tatupu70 says

History is pretty clear on this front. Just look at the measures of wealth disparity--absent government intervention, wealth will tend to accumulate at the top. Not sure why you are talking about government getting into computers--I'm certainly not arguing for government owned businesses.

Who do you think control the government where wealth tend to accumulate to the top? I used the computer industry as an example to show the effect of government bureaucratic intervention vs. market choice by millions of individuals acting independently. Just look at government purchase programs, they usually buy from the big dominant players in the industry. Government bureaucrats buy products from the today's Apple when it is the top computer maker; they would not buy from the 1978 Apple when it was an upstart. Government entrenches dominant players. Government bureaucrats pay-off matrix is such that they personally derive no benefit from outsized gains from discovery but would pay dearly for mistakes relating to not choosing the mainstream choice. So bureaucratic decision making tend to be not creative but extremely conservative and incumbent-reinforcing.

tatupu70 says

Pseudo-religious myth?? WTF are you talking about. Like others have said--you are confusing Keynes with monetarists.

Monetarists were students of Keynesian Macroeconomics to begin with, but diverged from Keynesianism after making some real world observations. Keynsianism is a pseudo-religion because it makes a bunch of counter-factual assertions then work from there. The most classic example of this was mulplier effect that Keynes pulled out of his own ass.

Reality says

The most classic example of this was mulplier effect that Keynes pulled out of
his own ass.

I see. So the wages paid to Solyndra employees went safely into their mattress for safekeeping.

david1 says

Reality says

The most classic example of this was mulplier effect that Keynes pulled out of

his own ass.

I see. So the wages paid to the Solyndra employees went safely into their mattress for safekeeping.

That is the broken window theory. Money spent on a war does not add value to a country. It also has inevitable unintended consequences.

indigenous says

Solyndra went BK = poor job creation, poor production, poor profit

So in Solyndras case (you are about to see why I chose it) - the money was wasted. That is, not one dollar the government invested in that company went anywhere else in the economy. No one that worked there paid taxes. No one that worked there bought a Big Mac.

Reality said the multiplier effect was pulled from Keynes' ass. For that to be true, dollars the government invests in companies, like Solyndra, not only need to fail, but also everyone who works there, every vendor Solyndra used, everything, had to have no economic effect whatsoever.

Do you really believe that? Every dollar went into Solyndra had a return to the general economy of only one? No one bought anything? No one paid taxes?

david1 says

Reality says

The most classic example of this was mulplier effect that Keynes pulled out of

his own ass.

I see. So the wages paid to Solyndra employees went safely into their mattress for safekeeping.

The wages paid to the Solyndra employees is no different from the French experiment in the 19th century hiring the unemployed to dig holes in the ground, then hiring more of the unemployed to fill them back up! All that money paid out as wages on such counter-productive work has to be taken from taxpayers now or in the future with interest added.

The multiplier effect in this case is negative! As it destroys productive jobs via taxation now and in the future to pay for the government waste.

This is not meant to be a personal insult, so please excuse me for the second half of this sentence, but the very fact that a well educated person like you David would bring up Solyndra and employee wages in such a counter-productive enterprise, goes to prove my earlier point that Keynesianism is a pseudo-religious brain fog.

The real beneficiaries of Solyndra are the well-connected corporate cronies who could draw much larger paychecks as a result of government subsidy. The average workers would have been better off if they had spent that part of their career in a productive enterprise that had not been taxed and out-bid (on input factors) out of existence thanks to the politicians' intervention in the market place.

indigenous says

This is a natural law that can only be followed or violated.

What is this natural law you speak of?

david1 says

indigenous says

Solyndra went BK = poor job creation, poor production, poor profit

So in Solyndras case (you are about to see why I chose it) - the money was wasted. That is, not one dollar the government invested in that company went anywhere else in the economy. No one that worked there paid taxes. No one that worked there bought a Big Mac.

Reality said the multiplier effect was pulled from Keynes' ass. For that to be true, dollars the government invests in companies, like Solyndra, not only need to fail, but also everyone who works there, every vendor Solyndra used, everything, had to have no economic effect whatsoever.

Do you really believe that? Every dollar went into Solyndra had a return to the general economy of only one? No one bought anything? No one paid taxes?

Have you ever seen the multiplier effect in the wild?

No because it does not exist.

What is the bench mark on this subject?

It is value, which is defined as somebody would rather have your goods or services than the money they have in their pocket. This is the win win part.

Everything that deviates from this is superfluous.E.G. notions of the value of green energy that no one is willing to pay for or inflated salaries of the parasites who started Solyndra.

The problem with free capitalism is lack of restraint and unethical measures to get profits. See Chinese infant formula laced with melamine to increase protein content.
The problem with government controlled markets is twofold: 1) government can never respond swiftly enough to market forces and ends up strangling the economy. 2) Business and corporations can buy influence with government and soon wind up controlling themselves, so you have the first scenario anyway.

There is no elegant solution. A well functioning economy requires constant vigilance and constant adaptation. It's like any natural system, it requires finely tuned BALANCE to survive and thrive. Take your blood chemistry. Your body must control it's PH between 7.51 and 7.56 or it will have trouble functioning. Carefully balancing acid intake and acid production (CO2) with elimination (exhaling), it maintains an exact acidity perfect for life.
Markets are less particular, but a balance is still critical.

david1 says

Reality said the multiplier effect was pulled from Keynes' ass. For that to be true, dollars the government invests in companies, like Solyndra, not only need to fail, but also everyone who works there, every vendor Solyndra used, everything, had to have no economic effect whatsoever.

Do you really believe that? Every dollar went into Solyndra had a return to the general economy of only one? No one bought anything? No one paid taxes?

Every dollar that the government "invests" in companies like Solyndra has to be paid back from current tax revenue or future tax revenue with interest added. When Solyndra went bankrupt, that left a hole in the cash flow that has to be made up by taxation now and in the future with interest added. That's what makes Keynesian "multiplier" ultimately negative, and actually deflationary in the long run. Keynes infamous defense against that is of course "in the long run, we are all dead." So are you dead, yet? What about your children?

Reality says

All that money paid out as wages on such counter-productive work has to be
taken from taxpayers now or in the future with interest added.

The multiplier effect in this case is negative! As it destroys productive
jobs via taxation now and in the future to pay for the government waste.

I disagree. The net effect of "taxes taken" would be forced consumption. That is, some percentage X of the taxes taken to pay Solyndra employees would have been saved anyway, adding no benefit to the demand economy at a time when the economy surely needed demand. Alternatively, some percentage Y of the wages paid would also be saved. However, as long as X>Y (and assuming no borrowing here, while we both acknowledge borrowing is what happened in reality you used the taxes example) the multiplier effect is not negative, not zero, not 1, but greater than 1.

Reality says

The real beneficiaries of Solyndra are the well-connected corporate cronies who
could draw much larger paychecks as a result of government subsidy.

No disagreement with this statement in principle, however you are looking at the wrong culprit. The owners of Solyndra (capital) emerged victorious from the wreckage with nearly $1B losses able to be applied to future gains. Primary debtors are left holding the bag.

This is why I chose Solyndra - to in effect head off where the conversation may go next - to the bailouts of the automakers. The real beneficiaries of a liquidation in Detroit (which we would have had) would have been a few monied interests with access to capital at that time. It would have been a consolidation of wealth and power grab by vultures and opportunists. Those manufacturing jobs would have been in Mexico and other countries willing to help with labor arbritrage faster than you can say Foxconn.

david1 says

The net effect of "taxes taken" would be forced consumption.

Such forced consumption is no different from the 19th century French that hired gangs of workers to dig holes on the side of the road and filling them back up. The ultimate result was economic collapse and the political turmoil of 1848 (and the birth of Communism Manifesto, perhaps that kind of circumstance is what some want for the near future).

That is, some percentage X of the taxes taken to pay Solyndra employees would have been saved anyway, adding no benefit to the demand economy at a time when the economy surely needed demand.

This anti-savings attitude among Keynesians is really quite non-sensical. Savings (consuming less than production) is the very source of capital formation. When a recession hits, the economic slow down is indicative the existing capital structure running into limitations reality (e.g. natural resource limit, etc.), so a new form of capital is urgently needed to utilize available resources more efficiently. Savings (consuming less than production) provides the resources to make such long term capital structure adjustment, so a new and more productive relationship among resource, labor and capital can emerge and give rise to recovery while rendering old capital obsolete.

The Keynesian policy of suppressing savings and artificially pumping up old pre-crisis demand literally gets in the way of such a transition and reformation. It is literally a policy prescription for entrenching the old established capital by evicerating what could emerge to replace them. It is little wonder that after a few decades Keynesian practices, the working class is reduced to semi-slavery existence under the entrenched capital . . . for there is a lack of new alternative capital to offer the workers a better deal!

Alternatively, some percentage Y of the wages paid would also be saved. However, as long as X>Y (and assuming no borrowing here, while we both acknowledge borrowing is what happened in reality you used the taxes example) the multiplier effect is not negative, not zero, not 1, but greater than 1.

Reality says

This anti-savings attitude among Keynesians is really quite non-sensical

Your ignorance on Keynesian attitudes is what is non-sensical. Keynesians are not anti-savings at all. Your inability to understand the difference between an economy with too little capital vs. one with too little demand is hard to believe.

Re: Anti-Savings.

We have strayed quite far from talking about Keynes pulling a multiplier effect from his ass, haven't we?

My argument would be that if the savings taken via taxes come largely from those who would only use those savings for rent-seeking behaviors that are destructive to growth, then take away.

david1 says

Re: Anti-Savings.

We have strayed quite far from talking about Keynes pulling a multiplier effect from his ass, haven't we?

No, we haven't. Saving and investment are two sides of the same coin. Someone has to be saving (consuming less than producing) in order to for himself or for someone else to use the difference to invest in higher order machinery (i.e. capital formation).

My argument would be that if the savings taken via taxes come largely from those who would only use those savings for rent-seeking behaviors that are destructive to growth, then take away.

The very idea of new capital formation is to reduce the market power of existing rent-seekers, and offer both workers and natural resources a a more productive combination. Someone has to save (consuming less than producing) in order to come up with the difference to make the production of such new machinery or new business (i.e. new capital formation) possible!

Your very beloved Keynesianism is a rent-seeker entrenchment tool.