[Son House]

Yes, they aren’t even applying their Keynes stimulus theory correctly, Government spending “may” start an economy in a depression;

A REVIEW OF KEYNESIAN THEORY
http://www.huppi.com/kangaroo/Keynesianism.htm

Keynes explanations of slumps ran something like this: in a normal economy, there is a high level of employment, and everyone is spending their earnings as usual. This means there is a circular flow of money in the economy, as my spending becomes part of your earnings, and your spending becomes part of my earnings. But suppose something happens to shake consumer confidence in the economy. (There are many possible reasons for this, which we’ll cover in a moment.) Worried consumers may then try to weather the coming economic hardship by saving their money. But because my spending is part of your earnings, my decision to hoard money makes things worse for you. And you, responding to your own difficult times, will start hoarding money too, making things even worse for me. So there’s a vicious circle at work here: people hoard money in difficult times, but times become more difficult when people hoard money.

The cure for this, Keynes said, was for the central bank to expand the money supply. By putting more bills in people’s hands, consumer confidence would return, people would spend, and the circular flow of money would be reestablished. Just that simple! Too simple, in fact, for the policy-makers of that time.

If this is the proposed definition and cure for recessions, then what about depressions? Keynes believed that depressions were recessions that had fallen into a “liquidity trap.” A liquidity trap is when people hoard money and refuse to spend no matter how much the government tries to expand the money supply. In these dire circumstances, Keynes believed that the government should do what individuals were not, namely, spend. In his memorable phrase, Keynes called this “priming the pump” of the economy, a final government effort to reestablish the circular flow of money.

[darrellmaurina]

Thank you for reminding us of the “up is down,” “war is peace,” “freedom is bondage” Orwellian gobbledygook being advocated by the Keynesians.

Essentially these people are saying “thrift is bondage!” or “debt is freedom!” when they says the solution to government deficits is to spend more money.

Without this background, trying to read the New York Times columnists attacking Republican budget-cutting (Krugman, for example) makes no sense.

[Vanders9]

I'm not an economist, but it seems to me that within the narrow confines you describe keynes' theory is logical and will work, but - and its a big but - you can't build an entire economy on doing that, because the economy is not a completely closed system. Money moves round and round, but there has to be a some basic production that actually generates wealth, rather than just move it around.

The impression that I get is that these stimulus packages are an economic kick start that might get things back on an even keel (i.e. get us out of debt), but you cannot use it as an alternative to a sound, thrifty economy. And what happens if the kick start doesnt work? What do we do then? Interest rates cant get any lower. What else is there but "quantitative easing" - a euphemism for the horror of currency devaluation?