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<blockquote data-quote="Lue C Fur" data-source="post: 734887" data-attributes="member: 25159">Re: Obamanation here todayA Keynesian ParadoxThe threat of a double-dip recession is real, but it should not be cause for more government “stimulus,” deficit-spending, bailouts, and low-interest monetary easing. The primary reason for the current market downturn is unacceptably high levels of sovereign debt and spending in Europe, the U.S., Japan, and elsewhere.This poses a Keynesian paradox, defying Keynes’ essential proposition that in a recession, governments must engage in deficit-spending in the absence of private investment. Only, when the economic downturn began in 2007, that’s exactly what Western economies did. Now, they’re going broke, creating more dislocation in the markets — which the deficit-spending was supposed to cure.Hence the paradox. The deficit-spending promised to bring the economy around, but instead it put too much pressure on government balance sheets, and now the global economy is suffering badly as a result.</blockquote>

[QUOTE="Lue C Fur, post: 734887, member: 25159"] [B]Re: Obamanation here today[/B] [SIZE=2]A Keynesian Paradox[/SIZE] [COLOR=blue]The threat of a double-dip recession is real, but it should not be cause for more government “stimulus,” deficit-spending, bailouts, and low-interest monetary easing. The primary reason for the current market downturn is unacceptably high levels of sovereign debt and spending in Europe, the U.S., Japan, and elsewhere.[/COLOR] This poses a Keynesian paradox, defying Keynes’ essential proposition that in a recession, governments must engage in deficit-spending in the absence of private investment. Only, when the economic downturn began in 2007, that’s exactly what Western economies did. Now, they’re going broke, creating more dislocation in the markets — which the deficit-spending was supposed to cure. [COLOR=blue]Hence the paradox. The deficit-spending promised to bring the economy around, but instead it put too much pressure on government balance sheets, and now the global economy is suffering badly as a result.[/COLOR] [/QUOTE]

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