djsunshine

The Downfall of Keynesian Economics and the U.S. (Part 3 of 3)

I think you are making too much of Keynesian theory. It is like comparing Model T with a Toyota hybrid. Even though auto industry started in big time with Model T comparing it in today's market is absurd. All it was an advancement to horse cart. Period.

You can not even talk about crash of 30's and Keynesian theory in today's context. It is like living in past. It is about creating values and greater utilities toward the perceived human advancement. I stress 'perceived'. No amount of improvement in Iraq will be a meaningful advancement if all Iraqis and the world think 'It is a wasted result of Bush aggression'. That is why my friends 'perception becomes (and is) a reality. That is why we say 'Beauty lies in the eyes of the be-holder’. This way we have an 'International human value perception' It is difficult to define and quantify but it is there. Ignoring it is a suicidal mission. So what ever we come up with like a 'Green movement' and 'improved infrastructures' we have to have a consensus 'value' and 'true utility' that brings about a true improvement in human experience. Why are we happy about electing Borak Obama? Because it truly demonstrate our tolerances to diversity and an appreciation to the qualitative value system and an election process it represents. We won cold war by default. We have to win world opinion by a demonstration of making a right choice in an authentic democratic transfer of power. Now we have demonstrated that ours is a better system. We f'ud it up when we elected Bush for the second time (thanks to Carl Row winning at any cost and a 'Hanging Chad' episode with Al Gore). We did not demonstrate that we have a better system of government.
Coming back to Keynes...
You are not considering population growth, productivity growth and internet based e-commerce and globalization in to an equation.
This episode is nothing but de-leveraging. All the risk and profit prices were rigged by lop sided Chinese currency manipulations and 30-100 times overleveraging by hedge funds. Now risk pricing, values and productivity have to be added to justify current level of GNP. Expansion by any which way will not work. All commodities can not demand to 'an inflation adjusted pricing'. Now the moors law is deeply embedded in to all the goods and services, because high-tech and internet based ' flattening' is commoditized. High tech hardware industries have learned to prosper with it. Oil and health industry can not sustain it with out heavy duty increase in productivity. Same goes to Housing construction and 'Government politics' and defense industry. Borak Obama is a result of that. Republicans’ were inefficient and unproductive in delivering 'public good' they have to be replaced. They were stupid enough to mask the truth and 'get in' (with Bush's 2nd term with manipulations) but paid by heavier back lash. If they had been truthful about 'the fallacy' of Iraq war and other dealing they would have been better off.

The Humpty Dumpty Economy

Home prices all over are so high no one can qualify at the guide line. The system is woring on at 7-10% home appriciation rate.We need to bail them and do a Loan MOD or they all stop playing in the system. Whole episode of 'slowing the economy' by Fed's rate increase is outdated. That cause more problems then solutions. Global economy is too big and so complex our law abiding citizens are being crushed every month. They are borrowing from Paul to pay Peter. In this case to pay Iraq war or Saudi OPEC. Loan MOD will bring some stailisation..too late to worry about moral hazard...This much borrowing was a moral problem to begin with.


On Nov 16 10:53 AM dinochick wrote:

> Excellent article.
>
> It bothered me when they brought the bailout proposal on three sheets
> of paper, then it expanded to over 50.
>
> The prosperity that we were living in was false, created by credit.
> The inflation of housing prices is what caused many to use their
> "easy credit", and of course the "disposable goods". When a toaster
> broke, you tried to fix it. Now you throw away and spend another
> $20 on one.
> However, this "tude" has gone on for a long time. While allot of
> goods are cheaper than they used to be, some don't work as well.
> And, of course by the time you buy a laptop, it is outdated.
>
> The old underwriting formula was 29/33 ratios. (yep I am an underwriter)
> and we didn't even include women's income of child bearing age (yes
> there was that "prejudice" in the seventies). So obviously, there
> is a serious "gap" that needs to be closed. Increase salaries or
> lower housing prices..
>
> When companies lower salaries (as many are doing now due to the extensive
> unemployed who are desperate for anything) they contribute to the
> problem. Until standardized salaries for specific work, and limitations
> on housing inflations are regulated, you will continue to have this
> mess. I know this affects free enterprise, but obviously we didn't
> handle it very well.
>