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The takeaway from six years of economic troubles? Keynes was right.
Thus the six years since 2008 have provided strong empirical support for the supposedly outmoded Keynesian view that government borrowing is more powerful than monetary policy in stimulating severely depressed economies and pulling them out of recession. In a sense, it is odd that the power of fiscal policy has come as a surprise - or that it continues to be categorically denied by the German government and the U.S. Tea Party. The underlying reason why fiscal policy is so important in recessions, and has now come to dominate over monetary policy, is a matter of simple arithmetic that should not be open to debate.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 31st, 2014 at 09:14:45 AM EST
The problem is that elites on the right see any rehabilitation of Keynes as a direct threat to the present purchased consensus around 'Mainstream Economics' and political attitudes about the role of governments in societies. And that consensus constitutes a large part of their support for their current capitalization. Expect them to be willing to kill to preserve that consensus.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Oct 31st, 2014 at 09:57:48 AM EST
[ Parent ]
And Kaletsky is only talking about Keynes being right about fiscal stimulus, not even the euthanasia of the rentier (about which Keynes was right, too).

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Oct 31st, 2014 at 11:51:06 AM EST
[ Parent ]

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