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Keynesian economics are fine during times of stability, but the extreme Keynesian policies since the GFC are dooming an entire generation to a life of debt. It's all guesswork based upon very flawed and simplistic assumptions. The dynamics and unpredictability of the economy are never factored in.


http://science.slashdot.org/story/13/02 ... ing-a-coin

First time accepted submitter ras writes "The Reserve Bank of Australia did some investigation into the accuracy of their economic predictions — the ones they use to run the country — with less than flattering results. '70 per cent of the RBA's forecasts for underlying inflation for the year ahead were close to the mark, but its predictions of economic growth were less accurate, and its unemployment rate estimates no better than [chance] ... The Reserve Bank employs numbers of people on very high pay and what they're admitting now is that their — all of this so-called science — has produced nothing more than what a roll of the dice could produce.'"

They have failed spectacularly in the USA too... kicking the can down the road at a cost of trillions of dollars with no reprieve in sight. The stockmarket is just a glorified casino now.

In 15-20 years:

How to explain to your kids why 10% of their taxes go towards just paying off the interest of the debt, why the principal will never ever be repaid, and how many schools and hospitals could have been built with that dead money? The media told us and we believed the experts, the same ones who failed to see the housing bubble or the GFC until the week it actually happened? The same ones who were still employed in the highest, most influential positions despite their utter incompetence and coin-toss track record?

Will "we believed the media" really be a valid excuse? Barney Frank seemed like a smart guy and we voted him in again and again even though he started the housing bubble and GFC?

Trillions per year down the drain in interest payments.. well done, economic "experts". Well done, sycophantic idiots who think an out of control debt spiral doesn't matter.. your kids are gonna love you for it.

I like the above post because it's an accurate assessment.

SmokingGun wrote:Keynesian economics are fine during times of stability, but the extreme Keynesian policies since the GFC are dooming an entire generation to a life of debt.

No offense but you are an imbecile. Cuts in public investment and consumption slowed growth in 2011 and 2012. There has been an absence of Keynesian stimulus, not excess stimulus. Spending cuts slowed growth by .67% in 2011 and .34% in 2012.

SmokingGun wrote: It's all guesswork based upon very flawed and simplistic assumptions. The dynamics and unpredictability of the economy are never factored in.

No, it's not all guess work. Keynesian models accurately predicted that inflation would remain very low even with the Fed Funds rate cut to .25% because the economy was in a liquidity trap. The economy suffers from lack of aggregate demand and cut to govt spending made the situation worse.

CPI all items including food and energy:
2008: 215.303
2012: 229.594 = annual rate of inflation of 1.61%/year for 4 years.

SmokingGun wrote: First time accepted submitter ras writes "The Reserve Bank of Australia did some investigation into the accuracy of their economic predictions — the ones they use to run the country — with less than flattering results.

What relevance does this have? There is no indication they were using models based on Keynesian economics. Apparently you think economic forecasting is Keynesian economics.

SmokingGun wrote: They have failed spectacularly in the USA too...

Really? Apparently you don't know that Reaganomics was a Keynesian stimulus. Govt spending boosted growth every year with 1/3 of the growth in 85 and 86 coming from the public sector. Reagan also devalued the dollar in 1985 to boost exports and bring relief to the newly formed rust belt.

SmokingGun wrote: kicking the can down the road at a cost of trillions of dollars with no reprieve in sight.

Actually the stimulus ended in 2010 since that's the last year govt spending contributed to growth, and then the contribution was very minor, .04%.

SmokingGun wrote:The stockmarket is just a glorified casino now.

The stock market has nothing to do with Keynesian stimulus. Apparently you think that an interest rate cut is always Keynesian. Cutting interest rates to boost investment/speculation was well established in central banking centuries before Keynes was born.

It's clear that you are using Keynesian economics to describe any decision by the federal govt/central bank to reduce unemployment. So you are criticizing something you have not taken the time to understand.

Keynes achievement was explaining the limitations on monetary policy and proving that when monetary policy becomes ineffective (liquidity trap) that fiscal policy can generate demand and reduce unemployment.

SmokingGun wrote: In 15-20 years:

How to explain to your kids why 10% of their taxes go towards just paying off the interest of the debt,

Buy them bonds and then the interest will be paid to them.

SmokingGun wrote: why the principal will never ever be repaid,

It gets repaid, you dope. If govt did not repay the principal then nobody would lend to the federal govt. The principal gets continually refinanced. Sovereign debt is only reduced relative to nominal GDP. It is not "paid off" like a credit card. It's reduced by nominal GDP growth (productivity growth, population growth and inflation). So if the national debt increased 5% and nominal GDP grows 6%, then the national debt is reduced relative to GDP. That's why the federal govt can run deficits every year. Learn a little about public finance and get back to us. You're completely ignorant on this topic.

Nominal GDP
2012: 15,676.0
2011: 15,075.7 = nominal GDP grew 3.98% in 2012.

National Debt
12/30/2011 15,222,940,045,451.09

National Debt x Nominal GDP growth
15,222,940,045,451.09 x .038 = 606 billion

So the federal govt could have added 600 billion to the national debt in 2012 and reduced the national debt relative to GDP. In other words, even with a 600 billion dollar deficit, the national debt would get reduced.

SmokingGun wrote: Will "we believed the media" really be a valid excuse? Barney Frank seemed like a smart guy and we voted him in again and again even though he started the housing bubble and GFC?

LMFAO, a Congressman whose party was out of power started the housing bubble? Don't recall Bush mentioning Barney Frank when Bush stood in front of the nation at the 2004 GOP convention and took full credit for the housing boom.

Here are his exact words:

"Thanks to our policies, home ownership in America is at an all- time high.

Tonight we set a new goal: 7 million more affordable homes in the next 10 years, so more American families will be able to open the door and say, "Welcome to my home."

Hear for yourself in this clip:

http://www.youtube.com/watch?v=w1ag29b_-lg

Bush told the regulators to bank off the banks in 2003 because economic growth was very slow in 2001 and 2002. He wanted to get re-elected and he used the housing sector to boost his chances. Wall Street knew how to make easy money off mortgages that were not likely to get paid back. They bundled up junk mortgages, got them rated AAA and sold them to suckers. That's how the housing bubble was inflated. It was driven by unregulated greed, not Barney Frank.

SmokingGun wrote: Trillions per year down the drain in interest payments.. well done, economic "experts". Well done, sycophantic idiots who think an out of control debt spiral doesn't matter.. your kids are gonna love you for it.

The federal govt is borrowing money at negative real rates for 5,7 and 10 years. That means once you factor in inflation, investors are paying the federal govt to hold their money. There is no interest on this debt. This has been going on for close to 2 years. The 5 year bond hit a negative real yield on Feb 24, 2011 and the rest followed shortly there after.

Not borrowing at negative real rates is stupid. You are stupid.

Daily Treasury Real Yield Curve Rates 2011
http://www.treasury.gov/resource-center ... &year=2011