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Robert J. Samuelson: Deflation in Europe? Good news isn't good enough

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  • Howard Beal Provo, UT
    May 30, 2014 3:49 p.m.

    I know deflation isn't exactly a good thing for an economy and a sign of things awry, but I would say at this point in America, with stagnant (and low) wages for most of us, that deflation would be welcomed.

  • SEY Sandy, UT
    May 29, 2014 6:29 p.m.

    Res Novae: this “blather” about Keynesianism has to do with the real economy. The theory espoused by Keynes recommends that politicians reduce spending and save for a rainy day during good times. The only years (after 1950) when federal outlays actually dropped from one year to the next were 1954, 1956, 1969, 1987, 1993, 2010 and 2013 (adjusted for inflation). Those reductions were mere blips, almost accidents, but not significant drops. In other words, you're going to be waiting a long time (forever?) for politicians to reduce spending in a meaningful way even in the best of times.

    Yes, the problem is Keynesianism and its many permutations. Even if implemented “correctly,” it would cause economic bedlam. But that's another discussion.

  • Res Novae Ashburn, VA
    May 29, 2014 4:15 p.m.

    What's this blather about Keynesians? People dump on Keynes for advocating spending as stimulus, but completely ignore the other side of the Keynesian coin: in economic booms, cut spending and save surpluses for a rainy day. The debt problem isn't Keynesian economics, it's politicians who can't be bothered to curtail spending when it isn't necessary.

  • happy2bhere clearfield, UT
    May 29, 2014 2:50 p.m.

    SEY

    And I still worry about the national debt. Unless basic principles of economy don't apply at those levels, I just can't believe that one day as we continue to borrow more money to fund our government, there won't be a collapse. The credit will either be shut off or the interest rates will go so high that it will ruin what economy we have. And with all that paper debt waiting in the wings out there to the tune of 17 trillion, it just begs for inflation to set in. Maybe this is what the Keynesians really want. A collapse of the capitalistic economic system that will usher in New Deal 2.0.

  • SEY Sandy, UT
    May 29, 2014 12:11 p.m.

    The economic paradigm in the Euro nations (and just about everywhere else) is Keynesian. As long as the argument is framed in terms of GDP growth and stimulus, it is Keynesian. These two concepts are its holy grail. If the economy is weak or failing in terms of GDP, the solution is to artificially stimulate borrowing through manipulation of interest rates or to increase government spending, or both. The ultimate goal is to increase spending because it is assumed by Keynesians that GDP can only be raised by increased spending. If the economy is weak or failing in terms of GDP, the solution is to increase spending. GDP is the health of the economy.

    Paul Krugman, for example, has written that the US should prepare for a huge alien invasion by making massive expenditures for war materials. Keynes himself suggested we could accomplish the same thing by building pyramids. The theory says that with enough spending, the pump will be primed and the economy will achieve "escape velocity."

    Make no mistake, we are in uncharted waters. The Keynesians-in-charge are grasping at straws as they bring down economies throughout the world.

  • T. Party Pleasant Grove, UT
    May 29, 2014 8:22 a.m.

    @marxist

    When it's already debt everywhere you look, Keynesian tactics are no longer an option. Short-sighted stupidity is what that was.

  • marxist Salt Lake City, UT
    May 28, 2014 11:49 p.m.

    Here's the problem in Europe and in the United States. Neoclassical economics has triumphed over Keynesianism. This means governments are left with only monetary tools, stimulus spending is out. So its Dullsville everywhere. Moreover, capitalism as portrayed by Piketty is not going to provide the American (or European) dream of a picket-fenced house, a couple of cars, etc. Labor is increasingly strapped. There are some things going on Europe which may show a third way - Worker Self Directed Enterprises (WSDE's), but such is probably too exotic for Samuelson. BTW, Cuba has decided to de-emphasize state-socialism in favor of WSDE's.