This is one of the best shorts on a very concise understanding of Keynesian principles and how the US has employed them to help our economy. Adding two points I think are worth mentioning. WWII introduced massive government spending - ergo a very Keynesian idea that often is co-opted as a conservative fiscal concept by detractors of Keynesian economics. The other point and often missed concept is that we go thru periods o conservative idealism force massive tax decreases at inappropriate times during the business cycle. This ultimately poisons the Keynesian progress. One of the more recent tax cuts, for example, occurred a few years ago when in my personal view the US was in a boom cycle. We should have kept taxes where they were in 2015 to moderate the boom and pay off some debt. Side note, I also think thr Fed reserve also plays a part and during the pandemic in 2020 should have raised interest rates to slow the economy in a more manageable way than then did in 2022-23. Home prices rising so steeply for example, were as a result of low low interest rates and a society flush with cash.
That's what I was thinking. They're supposed to gain the money back during booms but how when where? Is it really happening or are politicians being politicians wanting votes instead of the good of the country and economy?
The problem is government benefits from inflation. It borrows $100 long-term knowing it will only have to pay back half that value because the money will be worth half ( $50 real value adjusting for inflation) long term.
Yes, but that is not the fault of Keynes. That is the government's fault because Keynesian economics instructs governments to cut taxes, lower interest rates, and spend more during recessions to raise taxes and interest rates and decrease spending during booms.
The question is not so much whether "the government" should spend, which is academic, it is whether the people in that government are competent to know how much to spend, on what and to what end.
Exactly. It seems insane to me that in 2020 we pumped trillions of the dollars into the economy to increase spending as explained in this video. But, we didn't create any jobs, we were actively losing jobs. I think unemployed almost reached 7%. It seems to fly in the face of Keynesian theory. There was no clear recovery, almost like we were teetering on the ledge for a year and now it's obvious we are in a recession.
@@placebo5466 All it does is perpetually redistribute spending power from workers and producers, while reducing the interest rates leading to asset price inflation that increases the time those workers businesses need to reinvest to expand, increasing the duration for people to climb ladders and buy homes.
I'm majoring in Business and really found this video useful, I watched 5 videos to understand Keynesian theory and this video was the best. thank you so much
Study Austrian economics. That’s real economics. Keynes was a gift to the body politic. Keynes basically told the politicians that now that they can go out in promise money and exchange for votes.
Bardzo mi się podobają twoje filmy. Są coraz bardziej profesjonalne. Podoba mi się zawsze koniec wykładu kiedy zostawiasz problem do dyskusji dla słuchacza. Nie forsujesz swoich opinii zostawiając sluchajacym miejsce na swoje własne opinie i przemyślenia. To uczy myślenia korzystając z wiedzy którą im przekazujesz. Good Job.👍
One more thing… Read or Audible The Black Swan, by Nassim Taleb! A super powerful and entertaining read on how the real world of human beings works…. A ton of well-supported examples of dangerous and stupid assumptions made by blindly following some theory as it stands, without considering the unknowns and unknowables.
At 3:20, Korczyk says, "So, [government] spending money and going into a little debt ..." Wow, that's quite an understatement, because going into *a lot of debt* is actually required ... and must be paid-back, whether the spending was beneficial to society (such as creating improvements that pay for themselves in some manner) or not. And that's a big problem that Keynes foresaw, and tried to under-play the "lack of benefits" by saying that it'd be beneficial even if all the government did was literally bury money in tin-cans and allow civilians to dig it up. Keynes later decided that taxpayers couldn't be relied-on to spend the buried money, because the raging-deflation was making money more valuable, or at least seem so, and people usually hoard money in such circumstances. The problem with Keynes' *General Theory of Employment Interest and Money* is that (1.) there's never a large number of beneficial projects just waiting-in-the-wings to be funded in order to save society, and, (2.) Keynes' Theory wasn't actually a "General" theory ... It was just a "Special" theory which specifically addressed the symptoms of the Great Depression, and, of course, (3.) it was also wrong, mainly because Keynes didn't believe that a significant decline in the US Money Supply could have created the world-wide Great Depression ... but it did. And part of the reason the Great Depression went world-wide so quickly is because the UK had been following an inadvisable plan to raise the value of the Pound-Sterling (the UK's official money), thus lowering the market-price of gold back to its previous price before WW1. (I recall the UK's effort was called "Gold Parity" or similar.) Deflating the UK Money Supply (i.e., "deflation") is recognized today as dangerous, because it can lead to depression. These were things that, back then, no one really knew, except perhaps for the Chairman of the Federal Reserve, Benjamin Strong. But Strong died suddenly in 1928, and that's why he is sometimes blamed for the Great Depression, as no one else, in a position of power and influence, properly understood the role of the Federal Reserve in this type of crisis.
Hi, i'm a uni student and I have a question. So before Keynesianism, government didn't spend or invest to create more jobs, correct? So what did Government do with all the money it made from taxes and etc? And does this have any relation to the Great depression ?
They did, but they didn’t engage in active stabilization policy. They did traditional investments, but not counter cyclical fiscal and/or monetary policy. The video is kinda misleading in that there’s nothing inherently anti-free market about Keynes’s core idea (stabilize total spending), in fact free market economists such as Milton Friedman accepted this. Hope that helps!
@@programking655 There is actually something inherently anti free market about his ideas, that is the theory of fructification, in that when interest rates are zero land prices and asset prices can reach infinity. This is not infinity in absolute terms but relative to the value of the output of the asset, meaning you are unable to expand a business effectively by reinvesting output when interest rates are very low. This leads to supply shortages and Keynesian economics can only work so long as there is excess supply, or sufficient capital accumulated, because the way it lowers interest rates causes capital consumption after it pushes interest rates below a certain level that prevents supply being able to expand by reinvesting.
@@bengardener8928 What you just said is a mix of silly attacks and absolute nonsense. First off, I’ve read a lot of economics and never once in my life heard of the theory of fructification. The most likely explanation for why this is is that it is completely and totally irrelevant. But even if I accept it’s relevant, Keynes has nothing to do with it. It was created by Turgot like 130 years before Keynes ever existed. The only ones who ever said anything about it were Bawerk and Schumpeter. To bring it up is extremely random and makes no sense. As for the second part of your comment, everything you said is complete nonsense. “Keynesian economics can only work when there is excess supply” what does this even mean? Keynesian economics, and that term is essentially meaningless at this point, is a theory of how changes in aggregate expenditure causes output fluctuations away from potential in the short run. I seriously doubt you know anything about contemporary economic thought.
@@programking655 So, Because you've never heard of something it is not true or relevant? Perhaps you should read more on economics because Turgot was the first economist, in 1700's to recognize capital is necessary for economic growth and the importance of capital accumulation, explained how interest rates work in regards to capital accumulation and the economic stagnation that the west has been in for a good 10 years is due to suppression of the interest rates caused by credit expansion. It's not random at all and does make sense because that is the key reason why Keynesian economics does not work and if it did work, living standards would be going up for the majority, not down. The second part of my comment means that credit expansion and suppression of interest rates can only continue so long as there is surplus capital accumulated - meaning there is enough real productivity to purchase with that money to maintain living standards, as soon as capital consumption happens to the extent that is no longer the case, rates have to rise and Keynesian economics no longer works. It's really not complicated to understand, the Keynesian multiplier does not work because the reduction in interest rates results in slower expansion by reinvesting due to asset price inflation caused by low rates, that results in supply shortages at at that point Keynesian economics ceases to be viable.
If we create inefficiency we can create a baseline for aggregate demand and have done so for decades. Our entire economy is built on inefficiency to ensure the stability of aggregate demand
Politicians love it because it lets them call all their payoff/bribes "stimulus". The basic theory makes some sense. The execution is often questionable.
Technically not true. When Keynes explained his stimulus theory he specifically states it has heavy emphasis on fiscal insentives. I.e government contracts to get people to work. Because Keynes predicted rightly that in economic depressions occur that his wage stickiness theory persists and we see wage inflation start to take a toll on employers. Therefore the government basically acts as a hug net and scoops up all these unemployed people then puts them back to work. The theory was massively used to great success during the reconstruction period post ww2.
it's interesting that when stop following Keynesian economics plans in the 1980s the booms and busts of economic cycles have gotten worse. it is also interesting that most of the problems are created by deregulation.
Nope. The Great Moderation ran from 1981 to 2007. The 2008 Financial Crisis was created by stupid politicians, like Barney Frank, who required Fanny & Freddy to make loans to people who couldn't afford the loans. Politicians believed the number of said loans were too small to matter much, and the housing market would never crash due to its huge size. That was short-sighted. What resulted was the Great Recession 2008-2014 and we were still slogging our way back to normalcy when the Wuhan Virus (aka Covid-19) hit the world economy in 2020.
Regarding 4:30 When he said that they believed free markets would correct themselves... This is actually wrong. The truth is that the great depression was produced by government failure. Let me explain why: At October 1929 the market crashed and unemployment rose to 9% in 2 months. However after December 1929 the unemployment started to drop all the way to 6% at June 1930. At around this time Hoover's government got involved by implementing the Smoot-Halley tariffs. As predicted and signed by more than 1000 economists at the time the rest of the world responded with trade barriers which killed many jobs in the US as businesses shut down making the unemployment rise significantly. Later, because everyone was afraid, they were holding cash and gold so the total money circulation contracted by 30%. As the famous economist Milton Friedman pointed out, the Fed also exacerbated the situation by raising interest rates and by not printing enough money. Moreover the government implemented floor pricing in many commodities like grain, in order to prevent hyperdeflation and help the farmers, there were huge surplaces in grain which were wasted while Americans were starving. Had the government not step in in June 1930 many economists believe that there would have been far less economic turmoil and that things would get back to normal more quickly.
This was a great explanation! I was hoping maybe you could expand on the modern use of Keynesian theory, I understand it might be good to spend money in a recession, but it doesn’t seem that the government now is following Keynes fundamental caveat, that they pay it back or save? Does Keynes theory work if the government deficit spends without paying off the debt?
You're gonna wanna look into the NRA a bit more. That was the most tacit description of it I've heard, and not what people at the time thought of it. Also, WWII didn't 'bring us out of the depression.' GDP was up 85% due to wartime spending, but private net wealth dropped 15%+, not recovering until the early 1960s
You should be able to just reference the channel name. You should definitely check with your teacher/instructor/professor to see if UA-cam videos are acceptable sources though!
Check out some more of my Global Politics videos here! ua-cam.com/play/PL-MZyeaK_bhvgZfBQ_AfjizWO27-YzXeB.html The big question around Keynesian Economics today is whether the government should spend money when very little is coming in, and how much debt can be acceptable to help alleviate the effects of a recessions. Also, inflation can be a problem with fiscal policies that can put money in people's hands. To the effect, Keynes believed that inflation should be curbed as much as possible during boom times to bring about more balance.
so sir, i have an article about great depression, maybe perhaps you can help me to find the reason why is keynesian not dead? if you are willing to help..
Government spending has become so politically targeted it is essentially an effort to buy votes and not actually build infrastructure. The end result is more dependency and entitlement.
The New Deal had 6 years to prove itself but it was sheit. Unemployment was still persistently high. Government programs are shortlived and can only be propped by the private sector who actually make the product and service that consumers want. Government rarely provide product or service that consumer want or willingly to pay for. When you depressed the motivation of the foundation of unlimited want, people stop buying and commit suicide which result in life expectancy declining. The case with US today.
So…Keynesian (government intervention) policies are needed to balance out the boom/bust business cycle that itself is caused by bureaucratic (government) action. Nothing to see here.
The way he’s describing it, barely. Keynes’s core idea is very simple: stabilize total spending. Basically every living macroeconomist accepts this. The difference between “monetarists” and “keynesians” (sort of meaningless terms at this point) is that Keynesians generally prefer fiscal policy as a tool of stabilization while monetarists prefer monetary policy. In mainstream models, both are effective, but monetary policy generally gets the primary role for stabilization because it’s independent of politics and is much faster to implement. Plus it doesn’t involve generating large amounts of debt, which can cause problems.
Deficit spending works best when your nation is not already running a massive deficit..so spending more when you are already broke just perpetuates the problem. Stimulus checks were not the answer, and now we're seeing a crazy spike in the the FEDs reverse repo program because the market is flooded with cash. However, the FED is now adding an interest rate onto the bonds they do 1 for 1 exchanges with the counterparties that they approve. Yes, I know the FED is a private entity separate from the the government but they are both only thinking in short term solutions, which aren't actually solutions and will hurt us further down the road. The economy is going to take another turn for the worst in the next year or so..hope everyone is doing their research on crypto!
isn't it basically inflation --> growth, so despite inflation the economy grows to compensate? but the problem is that it demands perpetual growth? and if debt accumulates, the keynesian effect dwindles, until you reach debt-to-GDP levels where the keynesian effect is null or negative and the model breaks down? ...
Small government with low or no interference in the free market is wise but in times of disaster, pandemic then government has a to play. I know Friedman and Hayek believed that government shouldn't spend irrespective.
“When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession - as distinguished from the love of money as a means to the enjoyments and realities of life - will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.” ― John Maynard Keynes, Economic Possibilities for Our Grandchildren
It's certainly not dead. We still see Keynesian economic principles used during recessions. The US government's stimulus spending during the last few months is a pretty recent example of the government spending money to help the economy.
@@stellakenifer3107 I’ll answer your question: dear god no, especially the way he’s describing it. The way he’s describing, which is basically just that stabilization policy is important, is widely accepted by virtually every living macroeconomist.
What do you call deficit spending during recession (or otherwise) when the government has no intention on repaying the debt? Nobody is diplaying the integrity to persue interests beyond being reelected.
One should not blindly throw money at the rich and corporations who then supposedly create jobs. Instead those who create jobs get a return of tax later or if it's clear that the jobs are already there, then they should immediately pay less. One can give more money in the hands of people but only to buy the slightly more expensive local goods, not import which benefits another country. To be fair, I think no system can solve anything for the moment. The great powers should sit together and admit they have to cooperate instead of compete till the bottom.
I don’t agree that the market is going up. When you consider the devaluation of the dollar and lower purchasing power, we really aren’t better off. It takes more currency to buy the same things. I also don‘t agree with raising taxes. The people suffered through a low business cycle and now they’re trying to make up for government folly. Plus it’s a taxing method that not based on sound money, which is unlawful in the first place. Then add in seigniorage and that the government has the power to devalue currency at will to encourage sales from other countries. The government made money with their sale but back home, we end up with higher prices for goods and services. In the end, the government has all the advantages and we are stuck with the liabilities.
You should look up all of the market intervention by government legislation before the recession and depression that arguably led up to and prolonged them. See my reply below...
Those who think that the depression was the result of "laissez faire capitalism run amok" while Hoover stood by without intervening are mistaking. This is not my opinion, you can easily check the following data yourself: Not even mentioning that the roaring twenties was arguably a synthetic economic high from government and fed trying to stop a small recession in the teens. 1 - Hoover intervened in response to economic decline before Roosevelt did and increased govt spending by roughly 50%. 2 - He set a meeting with Industry leaders headed by Henry Ford (Ford Motors), Alfred Sloan (GM) and Pier Dupont (Dupont Chemicals). The directive was to keep wages at the current levels in spite of the declining economy and to minimize layoffs through job sharing. 3 - He signed the Smoot Hawley Tariff Act of 1930, which raised tariffs on imports to the highest levels in 100 years and led the US's trading partners to retaliate by placing tariffs on American products. 4 - Following the Tariff Act above, US exports were roughly cut in half, and the price of those exports dropped significantly. 5 - As the depression moved on, Industries reached out to Hoover requesting permission to lower wages, but Hoover rejected. ("If we cut wages, there will be hell to pay with unions" -- Hoover). They ultimately had to cut wages and increase layoffs anyway, starting in 1931. 6 - Hoover increased government spending tremendously with his 9 Point Plan. 7 - The plan included major government work projects like the Hoover Dam and the Los Angelos Aqueduct. 8 - Obviously to pay for that, he raised taxes (on the top income bracket from 25% to 63%). 9 - Even Roosevelt accused Hoover of spending too much public money, and campaigned promising to be more responsible than Hoover in that regard (contrary to the modern accusation that Hoover was too "laissez faire"). And that's not all folks. "...practically the whole New Deal was extrapolated from programs that Hoover started." -- Rexford Guy Tugwell of Roosevelt's first "Brain Trust".
Need to address the tariffs that were put into place and the length of the great depression in America versus other nations probably caused by keynesian policies.
The great depression lasted as long as it did because of the government intervention. If the canes kept their hands out of the economy during that time. The depression would’ve lasted 3 to 4 years.
Why do videos like these that show how govt spending clearly helps economies always promote clown economists like Paul Krugman saying “yeah it’s nice but ...” These days govt doesn’t borrow to fund spending.- borrowing is just to drain reserves from the banking system for interest rate management.
... /./ . We need a new paradigm. Here is the correct Truth : The politicians today get elected because the voters are ignorant about the following basic truths: 1) The market is a battlefield. Profit is King. There is no such thing as a battle that never ends and a battle that never has a clear dominant force to take over all others. 2) The markets concentrate Wealth to extreme levels. Therefore it is essential to have a mechanism for re-distribution of wealth. 3) Looking at Capitalism, all employees can be aggregated into one Employee and all owners can be aggregated into one Owner. The aggregated Employee invents and makes the products then sells the products to itself and then pays a fee called Profit to an 'Owner' for the permission to own the same products the aggregated Employee itself made and sold to itself. The Owner is a parasite. Ownership is a claim, not effort. The Owner makes the claim, then the Employee enters to protect and grow what has been claimed as owned by the Owner. All efforts are done by the aggregated Employee, the aggregated Owner just owns, nothing else, no effort whatsoever. 4) Therefore, either the free market will make you poor or the Owner will.....unless the owned Wealth is being perpetually redistributed as I describe here. 5) A poor person is forced to think about how to make "bread" using a patch of land and some tools, a Wealthy person is free to think about which farm and bread factory to purchase. (But the 'really poor' have no other choice except to think about rebellion or theft or how to lend themselves to others in exchange for "bread".) Perpetual re-distribution of sufficient Wealth will eliminate the 'really poor' by giving them a choice to say 'NO' to unfair demands on their time and efforts. It would also elevate the poor to think about 'prosperity' instead of 'survival'. 6) Also, we must have laws to enforce strict border control for wealth leaving an economic area (town, city, state, country) and people entering an economic area. THE ONLY SOLUTION: Tax ownership of wealth Exponentially and then distribute it evenly among all citizens , again and again, in perpetuity. (The government should not be excluded from taxation of owned or controlled Wealth thus making it irrelevant what is private and what is public. ) !!! !! ! . Jordan Peterson would say to you that "hierarchies dispossess" and then your mind will be trapped, trying to find a reasonable solution, because you listen to Peterson, Wolff, Marx, Lenin and the likes. I am saying, If "Hierarchies Dispossess" then 'Redistribute' to make them less prominent. Such solution is Obvious ... but not for Marx, Bakunin, Wolff, Peterson, Lenin and their ideological supporters. This is a new paradigm, people. Get on board or stay ignorant and trapped in looser ideologies. (I hope you, nincompoops, understand what I mean by saying "to make hierarchies less prominent by redistributing whatever they concentrate, particularly, Wealth or Power".)
Is the collective wisdom of government officials greater than that of the entire US population? That is the primary question that should be raised when considering government intervention. Can those in government invest and spend your money (tax revenue) better and wiser than you can? By sheer numbers, the obvious answer should be a resounding NO. Page 77 of the book "Out of Work" by Richard Vedder and Lowell Gallaway proves this fact quite eloquently. Unemployment peaked around 9% two months after the crash and started to trend downward for the remaining six months, reaching about 6.5%. It was not until the government did something in the way of the Smoot-Howley Tariffs by Hoover (certainly not laissez-faire economics) that unemployment reached double digits at about 15-16%. It stayed high and rose even higher with FDR's New Deal where we saw unemployment reach 20% and 23%. Finally, War does not pull an economy out of a recession/depression. One only needs to read Henry Hazlitt's Economics in One Lesson to know that redirecting money toward repairs or products that have no use in everyday life, such as armaments and other wartime products, inhibits meaningful growth. When scarce resources, such as metal, are used to build tanks and ammunition they are not being used to build cars and refrigerators. Therefore, the economy is not growing in a way that has value to everyday life.
One problem with Keynesian economics theory is that when the economy rebounds the politicians never pay back the money that they borrowed during the downturn. They just keep on spending and passing the debt on to the next politician and generation. So they only apply the first half of the Keynesian theory, borrow and spend.
Why is it a problem? It's designed in such a way that a larger percent of the taxes overtime will not be going to the government... Hardly a problem if it's intended.
saying hoover didn't follow keynesian economics and fdr did is gravely misleading, since keynesianism didnt exist until keynes ublished his magnum opus in 1936 (after the second new deal). hoover did basically what everybody did before him, since this was the only kind of economic response he knew. as for fdr, his approach couldn't have been keynesian, because again, it didnt exist yet. he drew his inspiration primarily from the institutionalist school, which was the only big government school, besides marxism, considered to be not fringe
You're right that calling it interventionism over Keynesianism in the Hoover section would have been more accurate. When I get around to it I'll re upload the video with some clarification. In the meantime I'll update the description.
In the first minute there is a false assumption. People don't just possess money to spend. They have to have the opportunity to earn money first. Economies are driven first through production. Spending can dictate demand in productive capacities outside necessities. But there is constant demand for food and housing. Which is directly tied to birth and mortality rates.
That's true until the credit economy came along. Now people can spend money they haven't yet earned which is both good and bad but otherwise good in a low unemployment economy.
This video is misinformation. The easiest way to explain keynesian economics is to describe the opposite, Austrian economics. Austrian economics is a honest money system that uses value based money like gold and silver. Keynseian economics is based on a debt based system, which is basically slavery disguised as a economic theory.
He’s misrepresenting the opposition to government stimulus - it’s not about whether the government has the money. Government interference in the market is what perpetuates the boom-bust cycle and inflation.
How so? Continuing to print fiat is definitely problematic but the question I have with cryptos is that anyone can create another one so long as some people somewhere deem it of value, there is no end just like countries printing their own currency. Bitcoin has a limited number of coins that can every be earned by miners verifying the blockchain. Currently there are a relatively small number of key holders with any significant value and a very very few with extreme value in their holdings. As I understand the vast majority of people with any bitcoin at all have only a few fractions of a satochi, like a few dollars worth. The concept seems sound except when reality is brought in.
Keynesian Economics Concept about spending in deficit is all about stealing. You might think this is hard word but no. Spending money you dont have ak printing a money causes a inflation. Inflation is degrading value of money. Overally it means part of existing value will be taken from those who have money buffers for bad days or for better future and given for thouse who dont have any. Inflation punishes people who dont wish to consume but wish to secure future. And its straightforward stealing. yes it will help the economy start again, but overally it serves only the industrialist. Industrialists will collect money by consumption from many people who still work for it and spend it. But the value of that money is lower than before. Same happens now. Midclass money will be taken and given thouse who dont have any to spend and they use it to buy stuff from Amazon and Walmart and other big economic players. Who will spend that money on a property that will not be infected from inflation. This rises property prices and its harder for hardworking people to buy property for themself. In this scheme there is too main winners bigCORP and thouse who dont work and get free money what holds the vale of hardworking people.
So do you consider creditors and mortgagees to be third as they've purchased with money that haven't yet earned? We live in an arrears credit society. Property inflation is based on complexity arising from supply demand, caused by cheap, unregulated credit, unregulated immigration beyond capacity to supply. Investors into property for rent or holiday letting using negative gearing is a real contribution to surging property prices.
Wrong, Wrong, Wrong, State spending money means bread for today hungry for tomorrow, when there´s depretion goverment need to adjust to elimited tax, idealy to his minimun expression that is security and justice. Let the private iniciative take care of services, the more competition the better. More offer means lower prices, If USA would have let the market take over in the 30s, would´n have to wait until 1945 to grow. In Greece the richest city was Athens, because trade and free market, they trade with all mediterranean meanwhile the rest of citys dedicated to sow, and off course Sparta dedicated to war and exploit their neighbors.
This is one of the best shorts on a very concise understanding of Keynesian principles and how the US has employed them to help our economy. Adding two points I think are worth mentioning. WWII introduced massive government spending - ergo a very Keynesian idea that often is co-opted as a conservative fiscal concept by detractors of Keynesian economics. The other point and often missed concept is that we go thru periods o conservative idealism force massive tax decreases at inappropriate times during the business cycle. This ultimately poisons the Keynesian progress. One of the more recent tax cuts, for example, occurred a few years ago when in my personal view the US was in a boom cycle. We should have kept taxes where they were in 2015 to moderate the boom and pay off some debt. Side note, I also think thr Fed reserve also plays a part and during the pandemic in 2020 should have raised interest rates to slow the economy in a more manageable way than then did in 2022-23. Home prices rising so steeply for example, were as a result of low low interest rates and a society flush with cash.
Guess what ? We're in a new gilded age. With a small fraction making a kazillion dollars and the rest of us barely getting by.
Yep. Gilded Age 2 Electric Boogaloo.
At least during the gilded age purchasing power increased
Why do you think taxes are punitive? Shouldn’t everyone get the same value for a dollar paid?
But public works really do not make any of the money.
The problem is that during boom times, governments don't raise taxes, so when there is a recession, the only thing governments can do, is borrow.
And then after they borrow the government never pays back the money and that just increases the debt.
That's what I was thinking. They're supposed to gain the money back during booms but how when where? Is it really happening or are politicians being politicians wanting votes instead of the good of the country and economy?
The problem is government benefits from inflation. It borrows $100 long-term knowing it will only have to pay back half that value because the money will be worth half ( $50 real value adjusting for inflation) long term.
Yes, but that is not the fault of Keynes. That is the government's fault because Keynesian economics instructs governments to cut taxes, lower interest rates, and spend more during recessions to raise taxes and interest rates and decrease spending during booms.
Lower tax rates actually result in higher tax revenues believe it or not
Decided to go back and get my high school diploma before I finished uni. Thanks to your videos I feel prepared for my diplomas today!
Thanks again! - and all the best on your diplomas!!!
That's unusual. Usually in my country you need to finish highschool to go to university.
@@glennoc8585what country are you from?
The question is not so much whether "the government" should spend, which is academic, it is whether the people in that government are competent to know how much to spend, on what and to what end.
Exactly. It seems insane to me that in 2020 we pumped trillions of the dollars into the economy to increase spending as explained in this video. But, we didn't create any jobs, we were actively losing jobs. I think unemployed almost reached 7%. It seems to fly in the face of Keynesian theory. There was no clear recovery, almost like we were teetering on the ledge for a year and now it's obvious we are in a recession.
@@placebo5466 All it does is perpetually redistribute spending power from workers and producers, while reducing the interest rates leading to asset price inflation that increases the time those workers businesses need to reinvest to expand, increasing the duration for people to climb ladders and buy homes.
I'm majoring in Business and really found this video useful, I watched 5 videos to understand Keynesian theory and this video was the best. thank you so much
I'm glad you found the videos helpful. Best of luck with your studies!
My diploma is tmr and I need a quick recap. You’re so good at explaining! Great pace and word pronunciation. Thank you
You're so welcome! I hope your exams went ok!
After watching 10 videos on youtube on this topic, this video helped!
I'm so glad you found it helpful! :)
Study Austrian economics. That’s real economics. Keynes was a gift to the body politic. Keynes basically told the politicians that now that they can go out in promise money and exchange for votes.
There it is, the voice of reason.
How so?
Thank you so much!! This makes so much more sense then my text book!
I'm glad you found it helpful!
Bardzo mi się podobają twoje filmy. Są coraz bardziej profesjonalne. Podoba mi się zawsze koniec wykładu kiedy zostawiasz problem do dyskusji dla słuchacza. Nie forsujesz swoich opinii zostawiając sluchajacym miejsce na swoje własne opinie i przemyślenia. To uczy myślenia korzystając z wiedzy którą im przekazujesz. Good Job.👍
Dzięki!
This makes so much sense. I understand Keywhatever Economics alot more now
Glad it helped!
so few likes and subscribers....underrated channel. make it explode guys.
Thank you so much for the comment! I hope you found the video helpful. 😊
I think all politicians should take Econ classes. They can start by watching this video
Very handy. I'm tackling the *General Theory* itself and background is useful
One more thing… Read or Audible The Black Swan, by Nassim Taleb! A super powerful and entertaining read on how the real world of human beings works…. A ton of well-supported examples of dangerous and stupid assumptions made by blindly following some theory as it stands, without considering the unknowns and unknowables.
This was a great summary, thank you!
I'm glad you found it helpful!
Thanks for this. It's always nice to have a reminder why I invest so heavily in Bitcoin and why I despise the war mongering central bank so much.
still thinking the same way?
@@benjaminmondragon7243 Absolutely
At 3:20, Korczyk says, "So, [government] spending money and going into a little debt ..." Wow, that's quite an understatement, because going into *a lot of debt* is actually required ... and must be paid-back, whether the spending was beneficial to society (such as creating improvements that pay for themselves in some manner) or not. And that's a big problem that Keynes foresaw, and tried to under-play the "lack of benefits" by saying that it'd be beneficial even if all the government did was literally bury money in tin-cans and allow civilians to dig it up. Keynes later decided that taxpayers couldn't be relied-on to spend the buried money, because the raging-deflation was making money more valuable, or at least seem so, and people usually hoard money in such circumstances.
The problem with Keynes' *General Theory of Employment Interest and Money* is that (1.) there's never a large number of beneficial projects just waiting-in-the-wings to be funded in order to save society, and, (2.) Keynes' Theory wasn't actually a "General" theory ... It was just a "Special" theory which specifically addressed the symptoms of the Great Depression, and, of course, (3.) it was also wrong, mainly because Keynes didn't believe that a significant decline in the US Money Supply could have created the world-wide Great Depression ... but it did.
And part of the reason the Great Depression went world-wide so quickly is because the UK had been following an inadvisable plan to raise the value of the Pound-Sterling (the UK's official money), thus lowering the market-price of gold back to its previous price before WW1. (I recall the UK's effort was called "Gold Parity" or similar.)
Deflating the UK Money Supply (i.e., "deflation") is recognized today as dangerous, because it can lead to depression. These were things that, back then, no one really knew, except perhaps for the Chairman of the Federal Reserve, Benjamin Strong. But Strong died suddenly in 1928, and that's why he is sometimes blamed for the Great Depression, as no one else, in a position of power and influence, properly understood the role of the Federal Reserve in this type of crisis.
Excellent explanation. Concise and easy. I enjoyed watching this video from Korea :) Thanks!
Glad it was helpful! Thank you for the comment! :)
I LOVE THE WAY YOU EXPLAIN THANK YOU
So nice of you! Thank you for watching! 🙂
awesome video! Thank you!
Hi, i'm a uni student and I have a question. So before Keynesianism, government didn't spend or invest to create more jobs, correct? So what did Government do with all the money it made from taxes and etc? And does this have any relation to the Great depression ?
Same question here. Have you found the answer yet?
They did, but they didn’t engage in active stabilization policy. They did traditional investments, but not counter cyclical fiscal and/or monetary policy. The video is kinda misleading in that there’s nothing inherently anti-free market about Keynes’s core idea (stabilize total spending), in fact free market economists such as Milton Friedman accepted this. Hope that helps!
@@programking655 There is actually something inherently anti free market about his ideas, that is the theory of fructification, in that when interest rates are zero land prices and asset prices can reach infinity. This is not infinity in absolute terms but relative to the value of the output of the asset, meaning you are unable to expand a business effectively by reinvesting output when interest rates are very low. This leads to supply shortages and Keynesian economics can only work so long as there is excess supply, or sufficient capital accumulated, because the way it lowers interest rates causes capital consumption after it pushes interest rates below a certain level that prevents supply being able to expand by reinvesting.
@@bengardener8928 What you just said is a mix of silly attacks and absolute nonsense. First off, I’ve read a lot of economics and never once in my life heard of the theory of fructification. The most likely explanation for why this is is that it is completely and totally irrelevant. But even if I accept it’s relevant, Keynes has nothing to do with it. It was created by Turgot like 130 years before Keynes ever existed. The only ones who ever said anything about it were Bawerk and Schumpeter. To bring it up is extremely random and makes no sense.
As for the second part of your comment, everything you said is complete nonsense. “Keynesian economics can only work when there is excess supply” what does this even mean? Keynesian economics, and that term is essentially meaningless at this point, is a theory of how changes in aggregate expenditure causes output fluctuations away from potential in the short run. I seriously doubt you know anything about contemporary economic thought.
@@programking655 So, Because you've never heard of something it is not true or relevant? Perhaps you should read more on economics because Turgot was the first economist, in 1700's to recognize capital is necessary for economic growth and the importance of capital accumulation, explained how interest rates work in regards to capital accumulation and the economic stagnation that the west has been in for a good 10 years is due to suppression of the interest rates caused by credit expansion.
It's not random at all and does make sense because that is the key reason why Keynesian economics does not work and if it did work, living standards would be going up for the majority, not down.
The second part of my comment means that credit expansion and suppression of interest rates can only continue so long as there is surplus capital accumulated - meaning there is enough real productivity to purchase with that money to maintain living standards, as soon as capital consumption happens to the extent that is no longer the case, rates have to rise and Keynesian economics no longer works. It's really not complicated to understand, the Keynesian multiplier does not work because the reduction in interest rates results in slower expansion by reinvesting due to asset price inflation caused by low rates, that results in supply shortages at at that point Keynesian economics ceases to be viable.
Works really well now in Canada - high debt, high inflation, high tax, low saving rate and close to zero GDP growth
I learned more here than in my class
Haha, I'm glad it helped!
The control of “capital” will be the threshold understood throughout time.
Your explaination is much easier to understand than our econ prof (his was a little complicated) hahahaha
Haha, I'm glad you found it helpful - though I'm sure your prof went into some important detail you should know, too! :)
what a nice explanation, as an Italian student, I catched every single thing that you said.
p.s even better than my textbook😂
Glad you found it helpful!
Godbless you for this. I absolutely did not want to read my textbook
Haha, I'm glad you found it helpful! Good luck in your studies!
So im confused, what is the government spending if it has monetary sovereignty?
If we create inefficiency we can create a baseline for aggregate demand and have done so for decades. Our entire economy is built on inefficiency to ensure the stability of aggregate demand
2:21. 10,000,000,000 of high velocity money based on government loans.
Thanks for the video
You're very welcome! Thanks for watching! 😊
Politicians love it because it lets them call all their payoff/bribes "stimulus".
The basic theory makes some sense. The execution is often questionable.
Technically not true. When Keynes explained his stimulus theory he specifically states it has heavy emphasis on fiscal insentives. I.e government contracts to get people to work. Because Keynes predicted rightly that in economic depressions occur that his wage stickiness theory persists and we see wage inflation start to take a toll on employers. Therefore the government basically acts as a hug net and scoops up all these unemployed people then puts them back to work. The theory was massively used to great success during the reconstruction period post ww2.
it's interesting that when stop following Keynesian economics plans in the 1980s the booms and busts of economic cycles have gotten worse. it is also interesting that most of the problems are created by deregulation.
Nope. The Great Moderation ran from 1981 to 2007. The 2008 Financial Crisis was created by stupid politicians, like Barney Frank, who required Fanny & Freddy to make loans to people who couldn't afford the loans. Politicians believed the number of said loans were too small to matter much, and the housing market would never crash due to its huge size. That was short-sighted. What resulted was the Great Recession 2008-2014 and we were still slogging our way back to normalcy when the Wuhan Virus (aka Covid-19) hit the world economy in 2020.
amazing video, thanks
Glad you liked it!
Regarding 4:30
When he said that they believed free markets would correct themselves... This is actually wrong. The truth is that the great depression was produced by government failure. Let me explain why:
At October 1929 the market crashed and unemployment rose to 9% in 2 months. However after December 1929 the unemployment started to drop all the way to 6% at June 1930. At around this time Hoover's government got involved by implementing the Smoot-Halley tariffs. As predicted and signed by more than 1000 economists at the time the rest of the world responded with trade barriers which killed many jobs in the US as businesses shut down making the unemployment rise significantly. Later, because everyone was afraid, they were holding cash and gold so the total money circulation contracted by 30%. As the famous economist Milton Friedman pointed out, the Fed also exacerbated the situation by raising interest rates and by not printing enough money. Moreover the government implemented floor pricing in many commodities like grain, in order to prevent hyperdeflation and help the farmers, there were huge surplaces in grain which were wasted while Americans were starving. Had the government not step in in June 1930 many economists believe that there would have been far less economic turmoil and that things would get back to normal more quickly.
This was a great explanation! I was hoping maybe you could expand on the modern use of Keynesian theory, I understand it might be good to spend money in a recession, but it doesn’t seem that the government now is following Keynes fundamental caveat, that they pay it back or save? Does Keynes theory work if the government deficit spends without paying off the debt?
Well-educating video, thank you!
Glad it was helpful!
I got A cause of your lecture on social contract theory big thanks
That's awesome, congrats! I'm glad it helped!
Excellent!
Many thanks!
You're gonna wanna look into the NRA a bit more. That was the most tacit description of it I've heard, and not what people at the time thought of it. Also, WWII didn't 'bring us out of the depression.' GDP was up 85% due to wartime spending, but private net wealth dropped 15%+, not recovering until the early 1960s
7:21. The boom and bust cycle was supposed to be fixed with central banking!
What is the full name of the author of this video? I would like to make him as my reference. Thank you
You should be able to just reference the channel name. You should definitely check with your teacher/instructor/professor to see if UA-cam videos are acceptable sources though!
Check out some more of my Global Politics videos here!
ua-cam.com/play/PL-MZyeaK_bhvgZfBQ_AfjizWO27-YzXeB.html
The big question around Keynesian Economics today is whether the government should spend money when very little is coming in, and how much debt can be acceptable to help alleviate the effects of a recessions. Also, inflation can be a problem with fiscal policies that can put money in people's hands. To the effect, Keynes believed that inflation should be curbed as much as possible during boom times to bring about more balance.
so sir, i have an article about great depression, maybe perhaps you can help me to find the reason why is keynesian not dead? if you are willing to help..
Government spending has become so politically targeted it is essentially an effort to buy votes and not actually build infrastructure. The end result is more dependency and entitlement.
thank you so much
I hope it helped!
The New Deal had 6 years to prove itself but it was sheit. Unemployment was still persistently high. Government programs are shortlived and can only be propped by the private sector who actually make the product and service that consumers want. Government rarely provide product or service that consumer want or willingly to pay for. When you depressed the motivation of the foundation of unlimited want, people stop buying and commit suicide which result in life expectancy declining. The case with US today.
So…Keynesian (government intervention) policies are needed to balance out the boom/bust business cycle that itself is caused by bureaucratic (government) action. Nothing to see here.
How does Keynesian differ from Monetarist?
The way he’s describing it, barely. Keynes’s core idea is very simple: stabilize total spending. Basically every living macroeconomist accepts this. The difference between “monetarists” and “keynesians” (sort of meaningless terms at this point) is that Keynesians generally prefer fiscal policy as a tool of stabilization while monetarists prefer monetary policy. In mainstream models, both are effective, but monetary policy generally gets the primary role for stabilization because it’s independent of politics and is much faster to implement. Plus it doesn’t involve generating large amounts of debt, which can cause problems.
Deficit spending works best when your nation is not already running a massive deficit..so spending more when you are already broke just perpetuates the problem. Stimulus checks were not the answer, and now we're seeing a crazy spike in the the FEDs reverse repo program because the market is flooded with cash. However, the FED is now adding an interest rate onto the bonds they do 1 for 1 exchanges with the counterparties that they approve. Yes, I know the FED is a private entity separate from the the government but they are both only thinking in short term solutions, which aren't actually solutions and will hurt us further down the road. The economy is going to take another turn for the worst in the next year or so..hope everyone is doing their research on crypto!
isn't it basically inflation --> growth, so despite inflation the economy grows to compensate? but the problem is that it demands perpetual growth? and if debt accumulates, the keynesian effect dwindles, until you reach debt-to-GDP levels where the keynesian effect is null or negative and the model breaks down? ...
I have no idea what on earth you’re talking about
Thank you!
You're welcome! I hope you found it helpful! 😊
8:28. Cash For Clunkers. George JR try at is as well. Still doesn’t make sense.
10:13. I enjoyed the take on reality. The problem is that you are distorting it for others.
Interstates weren't built until 1950s under Eisenhower
Small government with low or no interference in the free market is wise but in times of disaster, pandemic then government has a to play. I know Friedman and Hayek believed that government shouldn't spend irrespective.
“When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession - as distinguished from the love of money as a means to the enjoyments and realities of life - will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.”
― John Maynard Keynes, Economic Possibilities for Our Grandchildren
Can you please do a video on Austrian school of ecomonics?
I think if he tried it would be more of a hit piece - he sounds fully bought-in to Keynesianism (even used Krugman as a reference!). I could be wrong.
can someone pls help me answer a question about keynesian econ?
What's your question?
@@KorczyksClass is keynesian economics dead as today sir?
It's certainly not dead. We still see Keynesian economic principles used during recessions. The US government's stimulus spending during the last few months is a pretty recent example of the government spending money to help the economy.
@@stellakenifer3107 I’ll answer your question: dear god no, especially the way he’s describing it. The way he’s describing, which is basically just that stabilization policy is important, is widely accepted by virtually every living macroeconomist.
helped a lot thanks
I'm glad you found the video helpful!! Thanks for the comment! 😊
Korczyk's Class very helpful for trying to understand something at 2am that u need to know for the next day ahah
Usually help corporations, not individuals.
Thank you
What do you call deficit spending during recession (or otherwise) when the government has no intention on repaying the debt? Nobody is diplaying the integrity to persue interests beyond being reelected.
One should not blindly throw money at the rich and corporations who then supposedly create jobs. Instead those who create jobs get a return of tax later or if it's clear that the jobs are already there, then they should immediately pay less.
One can give more money in the hands of people but only to buy the slightly more expensive local goods, not import which benefits another country.
To be fair, I think no system can solve anything for the moment. The great powers should sit together and admit they have to cooperate instead of compete till the bottom.
I’m pretty sure the federal reserve was to blame and misuse of the gold standard. Herbert hovers tariffs were bad but I might be wrong
I don’t agree that the market is going up. When you consider the devaluation of the dollar and lower purchasing power, we really aren’t better off. It takes more currency to buy the same things. I also don‘t agree with raising taxes. The people suffered through a low business cycle and now they’re trying to make up for government folly. Plus it’s a taxing method that not based on sound money, which is unlawful in the first place. Then add in seigniorage and that the government has the power to devalue currency at will to encourage sales from other countries. The government made money with their sale but back home, we end up with higher prices for goods and services. In the end, the government has all the advantages and we are stuck with the liabilities.
Our problem is nowadays our government deficit spends in good times and bad.
Hoover was actually very hands on, and the New Deal extended the depression.
You should look up all of the market intervention by government legislation before the recession and depression that arguably led up to and prolonged them. See my reply below...
Those who think that the depression was the result of "laissez faire capitalism run amok" while Hoover stood by without intervening are mistaking. This is not my opinion, you can easily check the following data yourself:
Not even mentioning that the roaring twenties was arguably a synthetic economic high from government and fed trying to stop a small recession in the teens.
1 - Hoover intervened in response to economic decline before Roosevelt did and increased govt spending by roughly 50%.
2 - He set a meeting with Industry leaders headed by Henry Ford (Ford Motors), Alfred Sloan (GM) and Pier Dupont (Dupont Chemicals). The directive was to keep wages at the current levels in spite of the declining economy and to minimize layoffs through job sharing.
3 - He signed the Smoot Hawley Tariff Act of 1930, which raised tariffs on imports to the highest levels in 100 years and led the US's trading partners to retaliate by placing tariffs on American products.
4 - Following the Tariff Act above, US exports were roughly cut in half, and the price of those exports dropped significantly.
5 - As the depression moved on, Industries reached out to Hoover requesting permission to lower wages, but Hoover rejected. ("If we cut wages, there will be hell to pay with unions" -- Hoover). They ultimately had to cut wages and increase layoffs anyway, starting in 1931.
6 - Hoover increased government spending tremendously with his 9 Point Plan.
7 - The plan included major government work projects like the Hoover Dam and the Los Angelos Aqueduct.
8 - Obviously to pay for that, he raised taxes (on the top income bracket from 25% to 63%).
9 - Even Roosevelt accused Hoover of spending too much public money, and campaigned promising to be more responsible than Hoover in that regard (contrary to the modern accusation that Hoover was too "laissez faire").
And that's not all folks.
"...practically the whole New Deal was extrapolated from programs that Hoover started." -- Rexford Guy Tugwell of Roosevelt's first "Brain Trust".
Austrian economics has never actually been tried. Keynesian got us here. 🤨
8:20
The theory : govt spend more during bad times, save more during good times.
In reality : govt spend more and more during bad and good times 😂
Need to address the tariffs that were put into place and the length of the great depression in America versus other nations probably caused by keynesian policies.
The great depression was caused by state intervention. Keynesian economics caused the great depression
Higher taxes on the top 10%, and recovery for the middle class…plus more social programs for those on the bottom.
The great depression lasted as long as it did because of the government intervention. If the canes kept their hands out of the economy during that time. The depression would’ve lasted 3 to 4 years.
Because 70 percent of GDP is consumption. Seems like a lot economists for that.
We are now in late stage socialist Keynesianism, time to go back to gold backed free market Capitalism
But spending without making much bankrupt.
They just can't print up like they use to.
$35,000,000,000,000
I was interested in this topic , but I seriously fell asleep
Why do videos like these that show how govt spending clearly helps economies always promote clown economists like Paul Krugman saying “yeah it’s nice but ...”
These days govt doesn’t borrow to fund spending.- borrowing is just to drain reserves from the banking system for interest rate management.
... /./ . We need a new paradigm.
Here is the correct Truth : The politicians today get elected because the voters are ignorant about the following basic truths:
1) The market is a battlefield. Profit is King. There is no such thing as a battle that never ends and a battle that never has a clear dominant force to take over all others.
2) The markets concentrate Wealth to extreme levels. Therefore it is essential to have a mechanism for re-distribution of wealth.
3) Looking at Capitalism, all employees can be aggregated into one Employee and all owners can be aggregated into one Owner.
The aggregated Employee invents and makes the products then sells the products to itself and then pays a fee called Profit to an 'Owner' for the permission to own the same products the aggregated Employee itself made and sold to itself. The Owner is a parasite.
Ownership is a claim, not effort. The Owner makes the claim, then the Employee enters to protect and grow what has been claimed as owned by the Owner. All efforts are done by the aggregated Employee, the aggregated Owner just owns, nothing else, no effort whatsoever.
4) Therefore, either the free market will make you poor or the Owner will.....unless the owned Wealth is being perpetually redistributed as I describe here.
5) A poor person is forced to think about how to make "bread" using a patch of land and some tools, a Wealthy person is free to think about which farm and bread factory to purchase.
(But the 'really poor' have no other choice except to think about rebellion or theft or how to lend themselves to others in exchange for "bread".)
Perpetual re-distribution of sufficient Wealth will eliminate the 'really poor' by giving them a choice to say 'NO' to unfair demands on their time and efforts. It would also elevate the poor to think about 'prosperity' instead of 'survival'.
6) Also, we must have laws to enforce strict border control for wealth leaving an economic area (town, city, state, country) and people entering an economic area.
THE ONLY SOLUTION: Tax ownership of wealth Exponentially and then distribute it evenly among all citizens , again and again, in perpetuity. (The government should not be excluded from taxation of owned or controlled Wealth thus making it irrelevant what is private and what is public. )
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Jordan Peterson would say to you that "hierarchies dispossess" and then your mind will be trapped, trying to find a reasonable solution, because you listen to Peterson, Wolff, Marx, Lenin and the likes.
I am saying, If "Hierarchies Dispossess" then 'Redistribute' to make them less prominent. Such solution is Obvious ... but not for Marx, Bakunin, Wolff, Peterson, Lenin and their ideological supporters.
This is a new paradigm, people. Get on board or stay ignorant and trapped in looser ideologies.
(I hope you, nincompoops, understand what I mean by saying "to make hierarchies less prominent by redistributing whatever they concentrate, particularly, Wealth or Power".)
Is the collective wisdom of government officials greater than that of the entire US population? That is the primary question that should be raised when considering government intervention. Can those in government invest and spend your money (tax revenue) better and wiser than you can? By sheer numbers, the obvious answer should be a resounding NO.
Page 77 of the book "Out of Work" by Richard Vedder and Lowell Gallaway proves this fact quite eloquently. Unemployment peaked around 9% two months after the crash and started to trend downward for the remaining six months, reaching about 6.5%. It was not until the government did something in the way of the Smoot-Howley Tariffs by Hoover (certainly not laissez-faire economics) that unemployment reached double digits at about 15-16%. It stayed high and rose even higher with FDR's New Deal where we saw unemployment reach 20% and 23%.
Finally, War does not pull an economy out of a recession/depression. One only needs to read Henry Hazlitt's Economics in One Lesson to know that redirecting money toward repairs or products that have no use in everyday life, such as armaments and other wartime products, inhibits meaningful growth. When scarce resources, such as metal, are used to build tanks and ammunition they are not being used to build cars and refrigerators. Therefore, the economy is not growing in a way that has value to everyday life.
One problem with Keynesian economics theory is that when the economy rebounds the politicians never pay back the money that they borrowed during the downturn. They just keep on spending and passing the debt on to the next politician and generation. So they only apply the first half of the Keynesian theory, borrow and spend.
Depends on what govt is in power and their capacity to pay.
Which is why most economists prefer to give monetary policy the primary role in stabilization
Why is it a problem? It's designed in such a way that a larger percent of the taxes overtime will not be going to the government... Hardly a problem if it's intended.
saying hoover didn't follow keynesian economics and fdr did is gravely misleading, since keynesianism didnt exist until keynes ublished his magnum opus in 1936 (after the second new deal). hoover did basically what everybody did before him, since this was the only kind of economic response he knew. as for fdr, his approach couldn't have been keynesian, because again, it didnt exist yet. he drew his inspiration primarily from the institutionalist school, which was the only big government school, besides marxism, considered to be not fringe
You're right that calling it interventionism over Keynesianism in the Hoover section would have been more accurate. When I get around to it I'll re upload the video with some clarification. In the meantime I'll update the description.
@@KorczyksClass Appreciate the fact that you can learn from mistakes (even such petty ones as these). Keep pumping out good content!
I think you focused too much in history rathen that the theory itself. Thanks for sharing though.
arrrrrrrrra 😅
Poor delivery - looks like you were struggling to read from a cue card. Once you finally got it out, the information itself was clear.
In the first minute there is a false assumption. People don't just possess money to spend. They have to have the opportunity to earn money first. Economies are driven first through production. Spending can dictate demand in productive capacities outside necessities. But there is constant demand for food and housing. Which is directly tied to birth and mortality rates.
That's true until the credit economy came along. Now people can spend money they haven't yet earned which is both good and bad but otherwise good in a low unemployment economy.
This video is misinformation. The easiest way to explain keynesian economics is to describe the opposite, Austrian economics. Austrian economics is a honest money system that uses value based money like gold and silver. Keynseian economics is based on a debt based system, which is basically slavery disguised as a economic theory.
He’s misrepresenting the opposition to government stimulus - it’s not about whether the government has the money. Government interference in the market is what perpetuates the boom-bust cycle and inflation.
Are all bs
Bitcoin is the solution to money printing.
How so? Continuing to print fiat is definitely problematic but the question I have with cryptos is that anyone can create another one so long as some people somewhere deem it of value, there is no end just like countries printing their own currency. Bitcoin has a limited number of coins that can every be earned by miners verifying the blockchain. Currently there are a relatively small number of key holders with any significant value and a very very few with extreme value in their holdings. As I understand the vast majority of people with any bitcoin at all have only a few fractions of a satochi, like a few dollars worth. The concept seems sound except when reality is brought in.
Yes because governments will give up their money printer AKA their power in favor of decentralized finance
Fast forward 5 months and crypto has collapsed.
@@glennoc8585 You and I knew Glenn. You must be a historian. Or just someone with common sense.
@@glennoc8585 lol you don't know crypto, give it time. Nothing does up in a straight line. See you in 4 years when btc is 100k+
You just quoted Paul Krugman. Zero credibility.
Keynesian Economics Concept about spending in deficit is all about stealing. You might think this is hard word but no. Spending money you dont have ak printing a money causes a inflation. Inflation is degrading value of money. Overally it means part of existing value will be taken from those who have money buffers for bad days or for better future and given for thouse who dont have any. Inflation punishes people who dont wish to consume but wish to secure future. And its straightforward stealing. yes it will help the economy start again, but overally it serves only the industrialist. Industrialists will collect money by consumption from many people who still work for it and spend it. But the value of that money is lower than before. Same happens now. Midclass money will be taken and given thouse who dont have any to spend and they use it to buy stuff from Amazon and Walmart and other big economic players. Who will spend that money on a property that will not be infected from inflation. This rises property prices and its harder for hardworking people to buy property for themself. In this scheme there is too main winners bigCORP and thouse who dont work and get free money what holds the vale of hardworking people.
So do you consider creditors and mortgagees to be third as they've purchased with money that haven't yet earned?
We live in an arrears credit society. Property inflation is based on complexity arising from supply demand, caused by cheap, unregulated credit, unregulated immigration beyond capacity to supply. Investors into property for rent or holiday letting using negative gearing is a real contribution to surging property prices.
Wrong, Wrong, Wrong, State spending money means bread for today hungry for tomorrow, when there´s depretion goverment need to adjust to elimited tax, idealy to his minimun expression that is security and justice. Let the private iniciative take care of services, the more competition the better. More offer means lower prices, If USA would have let the market take over in the 30s, would´n have to wait until 1945 to grow. In Greece the richest city was Athens, because trade and free market, they trade with all mediterranean meanwhile the rest of citys dedicated to sow, and off course Sparta dedicated to war and exploit their neighbors.
@D Heyman Keynes was a mathematician not an economist, the man himselve said that his ideas had to be implemented by force
Horrible philosophy. Gov needs to stop interfering with free markets.
F*cking Neoliberalist! 🤨😡😡