19 Jul 2010

DeLong on Deficits

Economics, Federal Reserve, Shameless Self-Promotion 1 Comment

By popular demand, today at Mises.org I critique a Brad DeLong blog post which had said, “We need bigger deficits now!” An excerpt:

This is part of the problem with Keynesian economics. It’s true, in certain circumstances it can spit out an answer that is reasonable — such as this case, where DeLong agrees that a government deficit would not be justified. But if the analysis itself is crude, then we shouldn’t be surprised that often the Keynesian framework spits out the wrong answer — which we’ll see in the next section.

One Response to “DeLong on Deficits”

  1. Bob Roddis says:

    The central problem with the Keynesians (and the Marxists) is their VISION of reality. The Keynesians see “the economy” as a machine, one stuck in neutral without the pulling of various government stimulus levers (by them, of course). Hayek called it “the fatal conceit”. I call it “The Nurse Ratched Syndrome” which explains why the Keynesians will never give up their vision and facts or logic will not matter.