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No, the facts don't actually indicate that higher growth results from Keynesian intervention compared to non-intervention if you're talking about the long term.

Actually, Richard Koo presented a good, well supported argument that such intervention is less costly than not intervening at the inaugural meeting of George Soros' Institute for New Economic Thinking in April, 2010. He drew from The Bank of Japan's experience during Japan's "Long Recession" after the real estate bubble of the '80s collapsed. BOJ raised interest rates too soon and produced a "double dip" out of poorly founded concerns about the effects of deficits. The double dip resulted in lost production. BOJ found that repairing the additional damage was more expensive than continuing the stimulus would have been.

A link to the video presentation is here.

Koo's slide presentation is here.

And Yves Smith's coverage with lots of links and intelligent commentary is here

(Sorry for the late response. I was traveling Friday and this morning and will be again Sunday and Monday morning.)

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 13th, 2010 at 04:43:57 PM EST
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