Comments on: Stimulus to what?

By: Silicon Prairie

Silicon Prairie — Fri, 23 Jan 2009 16:42:08 +0000

Various government interventions may be intended to increase spending, but it sounds like a lot of people have caught on and won’t go for it (it helps that people are losing jobs everywhere and things are a lot more uncertain now).

Give it a few years and all will be forgotten though – with the savings that have built up over that time we can start another bubble.

I would definitely support any policies that reward saving and small businesses instead of spending since that would give me the biggest benefit. But even without any such encouragement I’m not planning to sell my own future that cheaply.

By: admin

admin — Fri, 23 Jan 2009 14:35:41 +0000

I believe you hit the nail on the head with economist. They assume that people are perfectly rational beings and we are celarly not!

Thanks for the comments.

By: Finance Matters

Finance Matters — Fri, 23 Jan 2009 13:45:59 +0000

I read Schiffs book as well and agree the American economy is broken. It need a radical paradigm shift from consumer driven economy to an manufacturing/exporting economy. This is how America was built and became a world leader. They seem to have lost their way and it’s not easy to steer a ship the size of the US. Good luck to Obama, but until a shift in thinking occurs and the focus becomes education, innovation and hard work, things will get much worse. Just my 2 cents.

By: the weakonomist

the weakonomist — Fri, 23 Jan 2009 12:33:56 +0000

He, not hey.

By: the weakonomist

the weakonomist — Fri, 23 Jan 2009 12:33:30 +0000

Hey would be a Keynesian economist. Modern Keynesian economics suggests that consumption is perhaps the most important metric into the health of an economy. A rising savings rate would conceivably hurt the economy further. His point is entirely valid.

However we can argue that overconsumption lead to the current crises. Further evidence of this theory is that for the last few years of good times, we were buying everything on credit. This of course is now hurting the economy.

Students of Keynes, and all economists for that matter, live in a world of holding everything else equal, ceteris paribus. In essence, if we all only bought useful items and invested all savings, the economist would be right. Sadly in the real world you can’t hold all factors equal, so when a Keynesian economist starts talking about a rising savings rate, he looks like an ass.

I’m not a student of Keynes myself. There are two many of them. Like there should be 1 theoretical physicist for every 10 physicists, there seems to be 10 Keynesian economist for every 1 of another type.