Maynard's Revenge: Keynesianism and the Crisis

Google Tech Talk
February 16, 2010

ABSTRACT

Presented by Lance Taylor, Arnhold Professor of International Cooperation and Development at the New School for Social Research.

Historically, financial crises have been commonplace. Over the past two decades the sector has staged the 1987 stock market crash, the Mexican crisis, the Asian crisis, Enron, the LTCM collapse, the end of the internet bubble, and 2007-09. Why did the latest episode almost derail the world economy? The macroeconomics developed by John Maynard Keynes and his close followers provides the only plausible set of answers, including rising income inequality which spilled over into debt accumulation at the same time as household consumption rose, low real interest rates, massive expansion of financial assets and liabilities as investors borrowed heavily (increased leverage) to buy assets with rising prices, and an ample supply of imports and capital inflows from the rest of the world. In an accommodating political economic environment these factors linked the real and financial sides of the economy to create the crisis.

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[FartyFace]

"No one predicted the decline in the real estate market"

AHAHAHAHHAHAHAHAHHAHAHAHA

What an idiot. What he really means is that no KEYNESIAN predicted it. Thousands of Austrians did. They werent surprised at all.

[selfrealizedexile]

"New School for Social Research"

aka Socialist

[honjo294]

and there for no longer have monopoly power in the market. I don't think unemployed us citizens can move to china to work very easily.

[honjo294]

@FartyFace If I constantly say bad stuff will one day happen to you, Given along enough time span guess what one day it will. Its the same with the Austrian schools predictive power, they always say things are going to go bad. However they never come up with solutions on how to stop it from going bad. If the USA went back to a less interventionist economy it would be in a situation similar to the 1930's, probably even worse as they are no longer the only intacted industrialized nation,

[honjo294]

@FartyFace typical sign of a losing debate, can't argue the point so tries to change topic, then when that fails make personal attacks. I'm not a Keynesian I follow mainstream academic economics which is know as the neo-classical synthesis. Please stay on topic, comparing Keynesian economics to creationism not relevant . No one can predict with certainty what new innovations in the financial service sector will do. Such as the use of derivatives and mortgage-backed securities.

[FartyFace]

@honjo294 I love how Keynsian retards get OWNED over and over again in online debates. Their failed policies have been mainstream for decades now. Failure after failure after failure over and over again. You guys are worse than creationists. have fun with your toilet paper degree. How does it feel to always be wrong? You idiots never saw the .com bubble coming. You TOTALLY FAILED to predict the housing bubble. What credibility does you people think you have anymore?

[FartyFace]

@honjo294 LOL!! You still think the .com bubble was totally healthy for the economy? Companies with no product, no customers, and no capitol are worth tens of millions of dollars? You think thats healthy? Those companies need to be purged from the system. You think its a healthy market where housing prices go up 15% per year? You really think that 2 bedroom shack in California should be worth 1.5 mil? Those are all symptoms of government intervention in the market.

[honjo294]

@FartyFace that money is going into commodities as investment banks use their access to the fed to divert money. I hate how Austrians think that they are economists because they are not! I have an MSc in Econ and there is I think it was Stigliz that said "they are like the zombies of the economics world, the walking end, keep coming back with little to offer"

[honjo294]

@FartyFace Picking an isolated cases of where business have gone bankrupt does not discredit my former statement. Your anecdotal evidence has very little to do with current economics. The reason Glass-Steagall would have prevented the collapse is there would not have been the problem of "to big to fail" as investment banks would still be separate from retail banks. The problem now is all the new money that is should be going into the retail banks to increase consumption by the public is instead

[FartyFace]

@honjo294 The fed absorbs the loss. They only absorb it by printing money and causing inflation. Aka a REGRESSIVE TAX on the poor. Inflation is the most immoral form of taxation. You should be ashamed of yourself for advocating regressive taxation. The last thing poor people in this country, suffering from government intervention inspired economic crisis, need is to pay more for food and energy. Think of the 99% for once in your life.

[FartyFace]

@honjo294 Dude, you just said that glass-steagal would have prevented the housing market crisis. This automatically make me win and you lose because there is NOTHING in that act that would have prevented our current economic situation in any way shape or form. You have never read glass-steagal. You heard someone else mention that act and you remembered its name so you could regurgitate it on debates. Please educate yourself a tiny bit before participating in these types of debates.

[FartyFace]

@honjo294 Really? You think the internet stock bubble was perfectly healthy? You actually think its ok for toys.com to be work 3 times what ToysRus is worth despite NEVER making a profit? Thats "healthy" to you? toys.com was a terrible idea and deserved to go bankrupt. Same with hundreds of other dumb internet businesses. LOL that you mentioned Glass-Steagall. Tell us what glass steagall would have done to prevent the economic crisis. YOU NEVER READ IT LOL LOL LOL