To the extent that Keynesian economics can be simplified into the notion that economic cycles are best managed via fiscal policy, isn’t this current European financial crisis about as devastating a critique of that notion that one could imagine? The euro has become a straight-jacket and prevented individual countries from controlling their own monetary policies, causing the entire eurozone to freeze up in a liquidity crisis. Put simply, the monetary interests of the European behemoths (Germany and France) are diametrically opposite those of Spain, Italy, Greece, Portugal, and Ireland, and as the latter countries spiral into deflationary depression and potential default, the euro experiment is beginning to conclude with far more of a bang than a whimper. Good thing the Tories successfully kept the UK out of the euro; I cringe at how ugly this disaster would be if the euro’s implosion was exacerbated by the UK’s shaky financial condition as well.
I simply don’t see how the euro experiment can possibly survive any longer.
To the extent that Keynesian economics can be simplified into the notion that economic cycles are best managed via fiscal policy, isn’t this current European financial crisis about as devastating a critique of that notion that one could imagine?
I think your next sentence:
The euro has become a straight-jacket and prevented individual countries from controlling their own monetary policies, causing the entire eurozone to freeze up in a liquidity crisis.
ie how does the fact that a system with a single monetary policy but individual fiscal policies has inherent flaws have anything to do with the idea that economic cycles are best managed via fiscal policy?
I mean, I guess the words “fiscal policy” are in both, but other than that…
I’m with Jim on this. Heck, even the One Keynesian To Rule Them All, Paul Krugman, thinks that the Euro was a bad idea, and has always thought so. Why? Because if the parts of the monetary union are unable to control their currencies, the way to combat deflation in a country that has maxed out on stimulus is to inflate the currency. And the Eurozone as a whole cannot run the same stimulus levels (and doesn’t need to). Thus, they need to print money at different rates, according to Keynesian theories. And right now, they cannot because the Euro is seperated from the problems of Greece, Spain, et. al.
All this is an argument for is the bad idea the Euro was and is. It has nothing to do with Keynesian economics.
B. Minich and Jim, you both miss the point — badly. What’s truly sad is the key to the exercise was in my first sentence:
To the extent that Keynesian economics can be simplified into the notion that economic cycles are best managed via fiscal policy…
Ergo, in this simplified view of Keynesianism, the restricted options inherent in a euro-zone single monetary policy should easily be overcome by the affected countries’ increased levels of deficit spending and other fiscal hijinks.
What you seem to be proposing is an alternative view of Keynesianism that boils down to: Run deficits to spur economic growth, and when that fails and you’re close to default, print money with wild abandon to devalue your currency and make your debt problem go away. I don’t doubt that also is a simplified but very accurate description of how most left-leaning political economists like Krugman believe. You should all be so proud of yourselves for defending the Argentinian school of economics!
Huh? You either realize you misspoke or simply have no idea what you are talking about, because the level of gibberish you are speaking is simply going through the roof.
Let’s put this simply for you, in terms that perhaps you can understand.
1.) Your simplified view of Keynesian economics, valid or not, shared by Krugman or not, involved only fiscal policy.
2.) The problem with the Euro currently very much has to do with the disconnect between multiple fiscal policies and a single monetary policy.
I don’t understand what’s so hard for you to grasp about the fact that as a result of the two statements above, neither of which you have specifically disagreed with (and you can’t, they are very much generally agreed upon), we can safely say one is not damning of the other.
One false move in Europe could set off global chain reaction
To the extent that Keynesian economics can be simplified into the notion that economic cycles are best managed via fiscal policy, isn’t this current European financial crisis about as devastating a critique of that notion that one could imagine? The euro has become a straight-jacket and prevented individual countries from controlling their own monetary policies, causing the entire eurozone to freeze up in a liquidity crisis. Put simply, the monetary interests of the European behemoths (Germany and France) are diametrically opposite those of Spain, Italy, Greece, Portugal, and Ireland, and as the latter countries spiral into deflationary depression and potential default, the euro experiment is beginning to conclude with far more of a bang than a whimper. Good thing the Tories successfully kept the UK out of the euro; I cringe at how ugly this disaster would be if the euro’s implosion was exacerbated by the UK’s shaky financial condition as well.
I simply don’t see how the euro experiment can possibly survive any longer.
To the extent that Keynesian economics can be simplified into the notion that economic cycles are best managed via fiscal policy, isn’t this current European financial crisis about as devastating a critique of that notion that one could imagine?
I think your next sentence:
The euro has become a straight-jacket and prevented individual countries from controlling their own monetary policies, causing the entire eurozone to freeze up in a liquidity crisis.
explains why it’s not a critique at all.
Huh?
ie how does the fact that a system with a single monetary policy but individual fiscal policies has inherent flaws have anything to do with the idea that economic cycles are best managed via fiscal policy?
I mean, I guess the words “fiscal policy” are in both, but other than that…
I’m with Jim on this. Heck, even the One Keynesian To Rule Them All, Paul Krugman, thinks that the Euro was a bad idea, and has always thought so. Why? Because if the parts of the monetary union are unable to control their currencies, the way to combat deflation in a country that has maxed out on stimulus is to inflate the currency. And the Eurozone as a whole cannot run the same stimulus levels (and doesn’t need to). Thus, they need to print money at different rates, according to Keynesian theories. And right now, they cannot because the Euro is seperated from the problems of Greece, Spain, et. al.
All this is an argument for is the bad idea the Euro was and is. It has nothing to do with Keynesian economics.
B. Minich and Jim, you both miss the point — badly. What’s truly sad is the key to the exercise was in my first sentence:
Ergo, in this simplified view of Keynesianism, the restricted options inherent in a euro-zone single monetary policy should easily be overcome by the affected countries’ increased levels of deficit spending and other fiscal hijinks.
What you seem to be proposing is an alternative view of Keynesianism that boils down to: Run deficits to spur economic growth, and when that fails and you’re close to default, print money with wild abandon to devalue your currency and make your debt problem go away. I don’t doubt that also is a simplified but very accurate description of how most left-leaning political economists like Krugman believe. You should all be so proud of yourselves for defending the Argentinian school of economics!
Huh? You either realize you misspoke or simply have no idea what you are talking about, because the level of gibberish you are speaking is simply going through the roof.
Let’s put this simply for you, in terms that perhaps you can understand.
1.) Your simplified view of Keynesian economics, valid or not, shared by Krugman or not, involved only fiscal policy.
2.) The problem with the Euro currently very much has to do with the disconnect between multiple fiscal policies and a single monetary policy.
I don’t understand what’s so hard for you to grasp about the fact that as a result of the two statements above, neither of which you have specifically disagreed with (and you can’t, they are very much generally agreed upon), we can safely say one is not damning of the other.