ANSWERS: 6
  • Yes, he is. Keynesian economics, at its most basic level, is the government putting money into an economy during recessions. In the Great Depression, FDR followed this by creating public works projects. Currently, Bush has cut taxes, miminizing money taken out of the economy by government, and he has raised spending, which puts money back into the economy. Both of these actions are Keynesian.
  • As for FDR, interestingly enough, most of his New Deal programs were in place by the time of the publication of Keynes' book in 1936. FDR's REAL inspiration for most of his programs was the apparent success of syndicalism in fascist Italy during the 20's. It is, of course, politically incorrect to point this out. Working as it is from Partial Equilibrium Theory, Keynsian economics assumes a drop in tax revenue to inevitably result from a lowering in tax rates. They rationalize that a short-term lowering of tax rates MAY be helpful if the assumed revenue drop can be offset through bond finance. This was the rationale behind Kennedy's tax reduction in the early 60's (Kennedy was the first president to overtly embace Keynes). Bush's reason for the spending increases aside (spending always increases during wartime), the rationale for the recent tax reduction is much more likely to be rooted pretty firmly in "supply-side" theory. "Pioneered" in the early 70's by Arthur Laffer and others, supply-side economics was largely a return to classical economic theory, and a rejection of Keynes. Based on a General Equilibrium Theory approach, supply-side assumes that increasing the money available to the populace through tax cuts MAY be helpful if rates have been so high as to previously create a "chilling" effect on investment and spending. They maintain that increases in tax revenue FOLLOWING tax cuts, as happened in the 80's (not to mention the early 60's, although not intended), PROVE this theory, while disproving Keynes. I tend to agree, but please to not take the preceding as a blanket endorsement of W's economic policies. All classical economics -- and to this modern interpreters include Marx -- is in some sense "supply side" (at least insofar as he would not have denied that to consume, one must first produce). My source for much of the preceding is "The Way the World Works" by Jude Wanniski. This is one of the best primers on economics I have ever read, and the only book to adequately explain to me The Crash of 1929.
  • The US government adapted Hayekâ??s economic theory over that of Keynesâ?? during the course of the 1970â??s. Whilst both proposed the stabilization of an economy, the difference in their theories lies in how one approaches such stabilization. Keynes proposed the stabilization of an economy as a way to maintain at the point of full employment (the point where an economy is proposing the best it can).When an economy experiences an economic boom, he proposed the increase of interest rates. The effect, theoretically, is a decrease in spending (as saving is more profitable to the consumer), and money flowing out of the economic system. Likewise, in case of an economic recession, he proposed the decrease of interest rates, so a consumer is more likely to spend than save. Hayek favoured little government intervention, believing that an economy stabilizes best under a free market system. His theory has been gaining ground since the 1970â??s, and was adapted both by President Regan and PM Margaret Thatcher. In conclusion, the USA has adapted Hayekian economics; one can not deny that the US economy is the pinnacle of free market capitalism. It still however uses monetary policy (interest rates) to influence its economy. The USA therefore uses both approaches, and yet experiences economic recession. Possibly the recession will be followed by a boom, but one cannot say when.
  • Don't they all try to do that? Except for Greenspan - who put interest rates to rock bottom when there was an expanding economy....idiot.
  • Don't they all try to do that? Except for Greenspan - who put interest rates to rock bottom when there was an expanding economy....idiot.
  • No, he's using a pseudo-Reaganomic approach.

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