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2008-2009 Keynesian resurgence - Wikipedia, the free encyclopedia

Many policymakers around the world currently see Keynesian solutions as the best option for shielding their populations from the current crisis. Nevertheless this revival of Keynesian ideas has attracted considerable criticism. Commentators on the left question whether policy has become sufficiently Keynesian - in their view Obama's economic team is disappointingly centrist, with its inclusion of liberal-leaning economists like Jason Furman and Larry Summers.[40] [41] In February 2009 Shiller and George Akerlof published Animal Spirits , a book where they argue the current US stimulus package is too small as it doesn't take into account the loss of confidence, or do enough to restore the availability of credit. Also there is Germany, whose administration, according to some, stands out in their reluctance to wholeheartedly embrace Keynesian policy.[42]

From the right, some commentators assert the late 2000s crisis was caused not by excessively free markets but by the remnants of Keynesian policy. Libertarian think tanks such as the Cato Institute have argued that markets in the United States suffered from harmful distortions caused by government stretching back to the Sherman Anti Trust Act of 1890. [43] Historian and Austrian School Economist Thomas Woods published a book in 2009 which again firmly places the blame for the crises on Government intervention.[44] Most critics focus on arguing that Keynesian policy will be counter-productive - as it will be inflationary, create more income disparity, cause consumers to rein in their spending even more as they anticipate future tax rises, as well as various other technical reasons.[45] [46] [47]

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 07:16:19 AM EST
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