I would summarize the Keynesian view in terms of four points:1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn't enough spending. Such episodes can happen for a variety of reasons; the question is how to respond. 2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain. 3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by "printing money”, using the central bank's power of currency creation to push interest rates down. 4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses.
Paul KrugmanRelated topics
boost case central close currency deficit effectiveness employ enough fiscal four full human interest large less money pain possible power printing produce push question should spending using view work zero means Keynesian pointsRelated quotes
I will not be proposing a course which has been under some public discussion recently - deficit financing. It is wholly inappropriate to our economic situation. In its least extreme form it is based on the theory that additional money generated by a Government deficit (and given currency, as necessary, by use of the printing press) will stimulate consumption and thereby production, in time to match the excess money with goods before real inflationary harm is done. Unfortunately we don't, and can't, produce more than a small fraction of what we consume, and increased consumption would merely mean increased imports without matching exports; and a severe balance of payment crisis, which would destroy Hong Kong's credit and confidence in the Hong Kong dollar; and which we could not cure without coming close to ruining ourselves. Keynes was not writing with our situation in mind. In this hard world we have to earn before we spend.
John James Cowperthwaite
For, strange as the statement will appear at first sight, modern metaphysics, and to a large extent modern physical science, have been groping for centuries blindly after knowledge which occult philosophy has enjoyed in full measure all the while. Owing to a train of fortunate circumstances, I have come to know that this is the case; I have come into some contact with persons who are heirs of a greater knowledge concerning the mysteries of Nature and humanity than modern culture has yet evolved; and my present wish is to sketch the outlines of this knowledge, to record with exactitude the experimental proofs I have obtained that occult science invest its adepts with a control of natural forces superior to that enjoyed by physicists of the ordinary type, and the grounds there are for bestowing the most respectful consideration on the theories entertained by occult science concerning the constitution and destinies of the human soul.
Alfred Percy Sinnett
In Professor Pigou's study the argument that free enterprise lead to excessive investments in industry having relatively upward-sloping cost curves is developed with the aid of concrete example, the case of two roads; Suppose that between two points there are two highways, one of which is broad enough to accommodate without crowding all the traffic which may care to use it, but is poorly graded and surfaced; while the other is a much better road, but narrow and quite limited in capacity. If a large number of trucks operate between the two termini and are free to choose either of the two routes, they will tend to distribute themselves between the roads in such proportions that the cost per unit of transportation, or effective returns per unit of investment, will be the same for every truck on both routes. As more trucks use the narrower and better road, congestion develops, until at a certain point it becomes equally profitable to use the broader but poorer highway.
Frank Knight
We often hear it said in this country, and the words have a familiar smack about them, that what is wanted is a period of either firm or strong government [for India]. It is very difficult to define what is meant by that, but, assuming for a moment that we are in agreement as to what it means, I would say this. That is perfectly possible, but you can only hope to succeed on that policy alone on two assumptions; I am coming to the history in a moment. Those two assumptions are, first, unanimity among the political parties at home, and, secondly, continuity of policy. It was because both these preliminary necessities were absent in the case of Ireland that the Irish question went on, as it did, for a generation, and culminated, as it did, between the alternatives of complete surrender or war. Opinions differ as to the solution that was chosen. I, as a member of the Government at the time, supported the solution of surrender. I did not like it at the time, but I did it from conviction.
Stanley Baldwin
Rachel was looking into the mirror at an angle of 45°, and so had a view of the face turned toward the room and the face on the other side, reflected in the mirror; here were time and reverse-time, co-existing, cancelling one another exactly out. Were there many such reference points, scattered throughout the world, perhaps only at nodes like this room which housed a transient population of the imperfect, the dissatisfied; did real time plus virtual or mirror-time equal zero and thus serve some half-understood moral purpose? Or was it only the mirror world that counted; only a promise of a kind that the inward bow of a nose-bridge or a promontory of extra cartilage at the chin meant a reversal of ill fortune such that the world of the altered would thenceforth run on mirror-time; work and love by mirror-light and be only, till death stopped the heart's ticking (metronome's music) quietly as light ceases to vibrate, an imp's dance under the century's own chandeliers....
Thomas Pynchon