tag:blogger.com,1999:blog-4900303239154048192.post8828622363124230746..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Explaining the Prejudice that Keynesian Economics Is Obsessed with the Short RunUnknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-4900303239154048192.post-75043656858686159792013-05-26T08:42:38.898-04:002013-05-26T08:42:38.898-04:00Hayek is off the rails. Recessions occur when the...Hayek is off the rails. Recessions occur when the transmission mechanism for purchase of goods and services fails or in a Fed induced recession, when the flow of money to goods and services is decreased. There is plenty of need for goods and services and investments that will generate returns in the future. The mistake is looking at BigG spending as a "loss" in a zero sum economy rather than an investment in more rapidly expanding an economy. The economy is NOT zero sum. Debt is always easier to pay from an expanded revenue stream. BigG gets expanded revenue by expanding GDP, individuals get expand revenue from ROI. It is not zero sum. <br /><br />Wage-Demand is a spiral, not a constant. Wage-Demand can spiral up and create inflation or Wage-Demand can spiral down and create deflation or unemployment. It is the Fed job to keep Wage-Demand in a reasonable range through the use of monetary policy AND REGULATORY policy. Our current crisis is the result of regulatory fail.<br /><br />Persistent demand shortfalls may not exist in a "properly specified general equilibrium model". However, persistent demand shortfalls can exist in real economies. Logic would demand that "properly specified general equilibrium" is NOT a useful model in a period of persistent demand shortfall. DUH<br /><br />-jonny bakebakhohttps://www.blogger.com/profile/16472764185459425186noreply@blogger.com