Comments on: The takeaway from six years of economic troubles? Keynes was right. http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/ Sat, 03 Jan 2015 16:42:55 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: VitorPC http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2411 Mon, 10 Nov 2014 13:29:10 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2411 Works for developed with inflation and rates close to zero. Doesn’t work for emerging where inflation and rates are significant. As emerging plays an important role in world GDP, one just can’t say Keynes was right or won anything over monetarists…

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By: VitorPC http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2398 Fri, 07 Nov 2014 17:48:39 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2398 So very valid for developed economies. Watch out on emerging markets though, with very high inflation rates and interest rates still those days… On this part of the world working as a good portion of global macroeconomic outlook, central bankers are still of the utmost importance.

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By: MaskOfZero http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2384 Fri, 07 Nov 2014 00:37:40 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2384 This article is ridiculous and only displays the author’s lack of understanding of even basic economics.

My earlier, more detailed response was deleted by the Reuter’s censor.

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By: blackout888 http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2377 Thu, 06 Nov 2014 16:59:22 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2377 Oh just hilarious, pretending that QE is over, and pretending that things go fixed!

Things are far worse than 6 years ago, and all of the problems are still there, albeit covered up with lies and distraction. Not to mention the contiuous ongoing wars.

my my my

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By: TBorNot http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2375 Thu, 06 Nov 2014 14:03:39 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2375 QE is like keeping a ripped hot air balloon in the air by keeping the flame on full blast. Works great! Well, at least until you run out of fuel.

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By: mlnberger http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2374 Wed, 05 Nov 2014 12:00:12 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2374 None is so blind as he who will not see. The Fed has been quite clear: they would do what they could, but a completely successful policy would include a fiscal stimulus. The Fed set conditions for ending their monetary policy when it became clear the economy was not only “recovering”, but actually growing. Indications of this would be not only low unemployment figures, but rising incomes, as well as rising pressure (in the private sector) on interest rates, in part as a response to more inflationary environment. We are very far from such an environment. If you include our global partners, which must be done in this day and age, the deflationary pressures in Europe are already evident, Japan has had trouble creating inflation, and China is having to come to terms with the consequences of low growth and at least a decade of malinvestment. To worry about the Fed “unwinding” in this environment is very misplaced. The Fed has stated it may sell the Treasuries and MBS, or it may not, holding them until maturity. Unwinding is not the main problem. Hyperinflation is not in the cards. Weak worldwide demand is the issue. Slow or no growth is the issue.

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By: XiolingVonNof http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2371 Mon, 03 Nov 2014 22:39:18 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2371 Claptrap

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By: EcoHistorian http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2369 Mon, 03 Nov 2014 14:39:40 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2369 Excellent article. nose2066: The Keynesian argument is that govts should run budget deficits IN A RECESSION when interest rates have fallen to their lower bound. Its not an argument for running budget deficits continuously, or issuing debt in a foreign currency. As a result Argentina is a poor counter-example.

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By: MaskOfZero http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2368 Sun, 02 Nov 2014 17:15:57 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2368 Let’s be clear about this…macro-economic tools such as lower interest rates and QE have had an enormous negative effect on the global economy.

It started under Alan Greenspan in 1989 when a huge fall in the stock market was miraculously averted by juicing the money supply. During the next decade, a variety of monetary shocks were solved using similar methods–with apparent success. (Mexican Peso crisis, Russian Ruble crisis, Asian crisis etc.) This culminated in the ‘irrational exuberance’ of the Dot.com crisis.

For years, the price of gold was used as an impartial proxy for measuring global inflation. Then, for some strange reason, the price of gold shot up, yet, local national measures of inflation seemed stable? What was happening? The cost of food, fuel and many other essential parts of the CPI index increased, yet salaries/wages froze in place in the late 1990’s.

The next warning sign after the jump in the gold price was the interesting lack of economic effect lower interest rates had on the economy. The interest rates kept falling without any noticeable economic effect–when only a few years earlier, such economic stimulus would have fueled the economy to a roaring fast pace.

Since then, despite good economic news, growth has been fitful and tepid at best. Entire generations have been underemployed or unemployed globally, thanks to this pervasive economic malaise.

There was one huge effect which monetary stimulus had. All that extra money injected into the economy needed to find a home–thus a multitude of bubbles were formed, notably, one large bubble in real estate. Money became so cheap–anyone could buy a home. But this easy money created what economists call ‘moral hazard’. Bankers and lenders were encouraged to lend even to bad risks.

I have no time for a dissertation, but essentially, the world has become hooked on the economic heroin of easy stimulus and the use of money printing to forestall immediate economic shocks–deferring the consequences to a later date. When does the borrowing stop if Keynes was the correct answer?

The article above appears to justify further government borrowing as the only answer to temporary economic downturns–but that is what got us into trouble in the first place. The article misses the point entirely–and I find it frightening in its lack of depth and insight as to the root causes of the current long-standing global economic malaise.

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By: leumasmc http://blogs.reuters.com/anatole-kaletsky/2014/10/31/the-takeaway-from-six-years-of-economic-troubles-keynes-was-right/#comment-2367 Sun, 02 Nov 2014 17:11:30 +0000 http://blogs.reuters.com/anatole-kaletsky/?p=1496#comment-2367 It still depends whether or not the central government is using fiscal policy efficiently. The US weathered the recession due to a focus on pouring money into domestic industry and loosening restrictions on investments. Germany and China increased their industrial capacity as well, allowing for an increase in GDP to offset the increases in spending. France, Spain, and Italy however have cut spending on their industrial sectors and even tightened restrictions on investment. Their key spending focus is still on Social Services, which means that as those countries spending increases, their actual production relative to the rest of the world is decreasing.

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