Raoul_Luke
"Wait, it's all Marxism?" "Always has been."
Primarily because they fail to grasp the basic fundamentals of market dynamics. They are "supply siders" when it comes to "stimulus" - believing that money creation, and even money dissemination, creates "demand" for money (or goods). Of course it does not, and the evidence so is clear. Nobody explains this stuff better than Jeff Snider:
http://www.realclearmarkets.com/art..._liquidity_preferences_still_rule_102683.html
Money, absent the market based desire to employ it in productive endeavors (demand for money, as measured in https://en.wikipedia.org/wiki/Velocity_of_money ), just sits there on bank balance sheets. You cannot create demand for money via increasing the supply of money (which is why the velocity of money has collapsed).
Even fiscal "stimulus," which puts money into people's hands, will only pull demand forward, not create organic growth in long term aggregate demand. Of course, that shows their backward thinking with respect to the supply/demand dynamic for goods and services in a market based system. For the definitive explanation on that we need only go back to the observations of Jean-Baptist Say, who created the definitive rule of market based supply and demand - https://en.wikipedia.org/wiki/Say's_law - wherein supply must first increase in order to expand (rather than merely pull forward future) demand.
I think in both cases, the fatal flaw in (leftist) Keynesian thinking is a fundamental failure to understand an exceptionally simple concept - a society, or economy, is not a "collective" so much as a collection of individuals. Making macro economic decisions at the government level is, always and everywhere, doomed to failure to the extent they refuse to accommodate the needs and desires of individuals, making their own decisions about whether to produce or consume, and instead presume that bureaucrats pulling imaginary (fiscal and monetary) levers in the "halls of power" are the ultimate determinants of where the economy is going. Of course, for the unassailable proof of that, we need look no further than the current events in Venezuela:
https://fee.org/articles/you-cant-deny-that-venezuela-is-a-socialist-calamity/
http://www.realclearmarkets.com/art..._liquidity_preferences_still_rule_102683.html
Money, absent the market based desire to employ it in productive endeavors (demand for money, as measured in https://en.wikipedia.org/wiki/Velocity_of_money ), just sits there on bank balance sheets. You cannot create demand for money via increasing the supply of money (which is why the velocity of money has collapsed).
Even fiscal "stimulus," which puts money into people's hands, will only pull demand forward, not create organic growth in long term aggregate demand. Of course, that shows their backward thinking with respect to the supply/demand dynamic for goods and services in a market based system. For the definitive explanation on that we need only go back to the observations of Jean-Baptist Say, who created the definitive rule of market based supply and demand - https://en.wikipedia.org/wiki/Say's_law - wherein supply must first increase in order to expand (rather than merely pull forward future) demand.
I think in both cases, the fatal flaw in (leftist) Keynesian thinking is a fundamental failure to understand an exceptionally simple concept - a society, or economy, is not a "collective" so much as a collection of individuals. Making macro economic decisions at the government level is, always and everywhere, doomed to failure to the extent they refuse to accommodate the needs and desires of individuals, making their own decisions about whether to produce or consume, and instead presume that bureaucrats pulling imaginary (fiscal and monetary) levers in the "halls of power" are the ultimate determinants of where the economy is going. Of course, for the unassailable proof of that, we need look no further than the current events in Venezuela:
https://fee.org/articles/you-cant-deny-that-venezuela-is-a-socialist-calamity/
