Post-Keynesian economics

[Politruk]

This appears now to be the prevailing school of thought among academic economists.

General beliefs[edit]​

Although the Post-Keynesians are a diverse group, many share similar beliefs, some of which may include:

• A focus on effective demand and the rejection of Say's Law. Demand creates supply, and a lack of demand will lead to underemployment and unemployment of labor and resources.[6]
• A focus on how inflation is created by distributional conflict between classes.[6]
• Free trade can harm poorer countries by not allowing them to have competitive manufacturing sectors.[6]
• Financial transactions always create an offsetting liability. There are always three parties, not two, involved in a transaction: buyer, seller, and bank. This is because all money is credit. Cash ("high-powered money") is a liability of the Federal Reserve, credit (like credit cards) is a liability of your bank, and that credit is created by loaning out against the bank's reserve of high-powered money. Some post-Keynesians add the government as the insurer and protector of transactions and property rights being a fourth party.[7]
• Rejection of "crowding out". Government spending does not crowd out monetary resources because spending "creates" more money.[7]
• Rejection of the money multiplier. Banks can loan reserves to each other or get money from the Fed's discount window, making the money multiplier a formality without much real meaning.[7]
• Rejection of equilibrium. Post-Keynesians believe the market is dynamic and rarely if ever in equilibrium; markets might be above or below equilibrium level at any given time.[7]
• Rejection of a natural level of unemployment and the natural accelerating inflation rate of unemployment.[8]
• Rejection of both the Phillips Curve and the Expectations Augmented Phillips Curve.[7][8]
• Rejection of homo economicus.[7]
• Belief that the economy should be viewed in historical time and with uncertainty of future expectations.[7]
• Importance of the credit cycle as part of the business cycle. Mostly modeled off of Hyman Minsky's "Financial Instability Hypothesis" which states that excessive credit given out "endogenously" over long periods of stability will necessarily lead to riskier investments, and therefore instability. This continues until speculators realize an asset's price is artificially inflated, causing them to sell it all at once, causing the asset price to fall to the ground. That results in what is called a "Minsky moment", and thus financial crisis.[7]
• The money supply is endogenous and is not controlled by the central bank.[9]
• Government Deficit = Private Sector Surplus. Every time the U.S. government has tried to balance the budget, there has been a subsequent recession. This is because when a government stops deficit spending, they are pulling money out of the economy that the private sector thrives on.[10][6]

Whaddaya think?

 

[Politruk]

Too intellectually challenging for this crowd?

 

[Britva415]

Too intellectually challenging for this crowd?

Your link doesn’t go anywhere.

Source?

 

[Politruk]

Your link doesn’t go anywhere.

Source?

How about this one?

 

[UltraChad]

Sounds like the leftoids are coping with their failure.....

 

[Politruk]

Sounds like the leftoids are coping with their failure.....

Keynesian economics is "leftoid" now?

 

[Cardinal]

Too intellectually challenging for this crowd?

Oh yeah you’re so smart to come to an erotic website and cut and paste someone else’s work

 

[UltraChad]

Keynesian economics is "leftoid" now?

Yup. No right wing people buy into that shit.

 

[cdstefi]

Yup. No right wing people buy into that shit.

Until their libertarian enterprises, like failing banks or subprimes fall over and they need a big govt bailout to stop people throwing bankers or brokers out of windows because their money's worth shit or their mortgage forecloses.

Shit gets real when capitalism fails.

 

[UltraChad]

Until their libertarian enterprises, like failing banks or subprimes fall over and they need a big govt bailout to stop people throwing bankers or brokers out of windows because their money's worth shit or their mortgage forecloses.

You think our bank crashes and the 08' crash and bailout was done by a bunch of libertarians??

Are you serious or literally retarded?

Shit gets real when capitalism fails.

Capitalism doesn't fail, it just is.

Capitalist don't view capitalism as the utopian cure all the way socialist romanticize their god and savior the totalitarian state.

 

[Politruk]

You think our bank crashes and the 08' crash and bailout was done by a bunch of libertarians??

It weren't done by socialists.

 

[cdstefi]

You think our bank crashes and the 08' crash and bailout was done by a bunch of libertarians??

Are you serious or literally retarded?

So what do you call a system where unrestrained money-pushers create all kinds of fragile products that DO fall over when a particular bubble bursts, then governments have to install oversight frameworks to try and prevent it happening again?

To anybody with a brain that looks like libertarianism unchained, irresponsible fuckwits chasing the money and demanding no gummint interfering with their dodgy practices.

Like it or not, the state will always have to intervene and bail shit out in these cases, or else you'd have a country full of Luigi Mangiones shooting every suit in sight.

 

[UltraChad]

It weren't done by socialists.

Far closer to that end of the spectrum.

 

[Philthy_Phil]

Too intellectually challenging for this crowd?

Yes, you should start posting in another forum.

 

[UltraChad]

So what do you call a system where unrestrained money-pushers create all kinds of fragile products that DO fall over when a particular bubble bursts, then governments have to install oversight frameworks to try and prevent it happening again?

Unrestrained? That's insane, do you know how many regulations there are on the banking industry? It's the only thing more regulated than drugs.

You mean the bubble created by government policy that supported all those fragile products the banks would have NEVER sold had they been on the hook for it instead of the taxpayer???

Yea that's NOT capitalism bud.

To anybody with a brain that looks like libertarianism unchained, irresponsible fuckwits chasing the money and demanding no gummint interfering with their dodgy practices.

They literally demand government support.....LOL that's what "too big to fail" was and all those do-gooder feel good housing for all programs that the Democrats set up.

That's not libertarian in any way.

Like it or not, the state will always have to intervene and bail shit out in these cases, or else you'd have a country full of Luigi Mangiones shooting every suit in sight.

No, it doesn't......that's the totally not libertarian or capitalist lie that you socialist types tell to get the government to support all this corruption and failure you guys love so much.

 

[Politruk]

Far closer to that end of the spectrum.

Obama ain't.

 

[Politruk]

You mean the bubble created by government policy that supported all those fragile products the banks would have NEVER sold had they been on the hook for it instead of the taxpayer???

Of course they were on the hook for it, that's why Lehman Brothers no longer exists.

 

[UltraChad]

Obama ain't.

Not relevant but he was too.

Of course they were on the hook for it

So then what was all that too big to fail money for?? Why did the taxpayer dish out a cool trillion so all those bankers could have fat 8 figure Christmas bonuses for crashing their corporations??

 

[Politruk]

Not relevant but he was too.

No more than Bill Clinton was. Just one more centrist DLC DINO. Not even as far left as Bernie Sanders -- who is really not very far left at all.

So then what was all that too big to fail money for?? Why did the taxpayer dish out a cool trillion so all those bankers could have fat 8 figure Christmas bonuses for crashing their corporations??

Remedial action taken after the fact, to keep the whole financial system from collapsing. At the time they made the loans, the banks alone were on the hook for them.

Now, if you say some executives should have done time for their roles in all that, I'm inclined to agree -- but the bailouts still would have been necessary.

 

[UltraChad]

No more than Bill Clinton was. Just one more centrist DLC DINO. Not even as far left as Bernie Sanders -- who is really not very far left at all.

Still irrelevant deflection.

Remedial action taken after the fact, to keep the whole financial system from collapsing. At the time they made the loans, the banks alone were on the hook for them.

That's what the government told you and you were dumb enough to accept it as they handed the bankers their money.

You stupid fuck.

Now, if you say some executives should have done time for their roles in all that, I'm inclined to agree -- but the bailouts still would have been necessary.

Why should executives do time for politicians bad moves??

It wasn't necessary.......that's just what you tell yourself so you don't feel so dumb about supporting the people who fucked you over.

 

[Politruk]

Why should executives do time for politicians bad moves??

It was the executives' bad moves. Like in the 1990s savings-and-loan crisis -- the pols created the conditions that made it all possible, but the bankers made the business decisions, nobody else did.

 

[UltraChad]

It was the executives' bad moves.

So then they should suffer their consiquences.

the pols created the conditions that made it all possible,

Oh you mean they are the ones making it all happen...without them the CEO's would be fucked, as they should be.

but the bankers made the business decisions, nobody else did.

Only because they knew big gubbmint was covering their ass.

They KNEW they could walk into Congress demand a trillion bucks and walk out with a fuckin' check.

It was an extortion scam.

 

[Politruk]

More of Post-Keynesian Economics:

MMT Specific Beliefs[edit]​

People who believe in MMT have a few differences from other non-MMT Post-Keynesians:

• The government as a sovereign issuer of money. This is a commonly known fact, but important especially to neo-chartalists as they draw many implications from it. They believe that most people, the government included, act as if the nation still ran on the gold standard.[11]
• The government doesn't collect taxes in order to subsequently spend them. Taxes "destroy" currency and spending "creates" currency because fiat currency is only backed by the government's faith. So taxing money out of the economy is the same as destroying that money.[11]
• Government spending is limited by high levels of inflation, not tax revenue.[12]
• Since taxes destroy currency, the government must first create it. After all it is impossible for money that was never created to be destroyed. Governments can create currency either via minting coins, printing paper money, or increasing numbers in bank accounts.[11]

Monetary Sovereignty[edit]​

Countries that have monetary sovereignty have the following characteristics:

• The government issues currency and requires taxes to be paid in that currency.
• The government's currency is neither pegged to a resource nor another currency. The currency operates via a floating exchange rate (The value of the currency is determined via supply and demand relative to other currencies)
• The government owns minimal debt in foreign currency.[13]

Countries that have monetary sovereignty will only experience dangerous levels of inflation when the government attempts to increase deficit spending when the full capacity of resources within a monetarily sovereign country are used. This does mean that developing countries may be constrained by inflation, as they often won't have enough resources and will need to import them at the cost of borrowing from a foreign currency. However, countries like the U.S, Japan, U.K., China, and Australia are capable of maintaining high deficits that by themselves, won't cause inflation. Additionally, it is possible for all of these countries to pay back any debt they owe.

Countries That Don't Have Monetary Sovereignty Are Financially Constrained[edit]​

• Countries that don't issue their own currency are incapable of paying off their own debt. A good example of this are the countries within the European Union. When the Great Recession happened, E.U. countries were unable to pay back their own debts without outside assistance. This lead to the European Debt Crisishttps://upload.wikimedia.org/wikipedia/commons/thumb/5/5a/Wikipedia%27s_W.svg/12px-Wikipedia%27s_W.svg.png.
• Countries that peg their currency are vulnerable to price shocks. A great example of this is Venezuela. Venezuela pegged their currency to the U.S. Dollar and they were highly dependent on oil exports. Unfortunately, when oil prices dropped, the value of Venezuela's currency also dropped as oil exports were no longer as valuable to sell in the U.S. dollar.[14]
• Countries that own foreign debt in other currencies cannot repay that debt instantly without their currency losing value. For example, after World War I, the Weimar Republic gained a lot of foreign debt. They tried to instantly repay that debt, but were unable to and eventually defaulted. Eventually production slowed, devaluing the currency, and forced to still pay the debt, the Weimar Republic started printing money. This increase in the money supply didn't really lead to an increase in productivity, and so it devalued the currency even more.[15]

What Caused Stagflation?[edit]​

MMTers believe that stagflation was caused because the government attempted to solve a supply side inflation problem (cost-push inflation) by treating it as a demand side inflation problem (demand-pull inflation). When the OPEC countries created a price shock for oil, inflation occurred (creating a supply side problem). The government, which still used the Phillips Curve, believed that inflation could be reduced by increasing unemployment (decreasing demand). This didn't fix the inflation issue, and just lead to more people being unemployed. What really solved the inflation problem was when governments like the U.S. and Australia found alternative sources of oil.[16]

Doesn't Printing Money Cause Inflation?[edit]​

Countries that are printing money usually own debt in foreign currencies, and end up devaluing their own currency.[15] An increase in the money supply does not necessarily mean hyperinflation occur. A great example of this is when the U.S. did quantitative easing during the Great Recession and COVID-19 Pandemic.[17][18] Many inflation hawks feared that these increases in the money supply were going to lead to hyperinflation within the U.S. However, we know today that these efforts to increase the money supply in fact did not cause hyperinflation.