8 votes

Keynesian Uses Flaws in Keynesian Study to Prove Keynesianism

Believers in Keynesian economics the world ’round are rejoicing at the news that the an influential paper by Carmen Reinhart and Ken Rogoff that has gained influencing by ‘proving’ that austerity is beneficial to the economies of nations who undertake it is rife with errors and faulty calculation methods. Chief Keynesian mouthpiece Paul Krugman writes with glee:

the austerians have lost and whatshisname {editor’s note - read: Krugman)has won. And it’s definitely true that in sheer intellectual terms, this is looking like an epic rout. The main economic studies that supposedly justified the austerian position have imploded; inflation has stayed low; the bond vigilantes have failed to make an appearance; the actual economic effects of austerity have tracked almost exactly what Keynesians predicted.

The reason Krugman is so thrilled is that a paper by PhD candidate Thomas Herndon showed that an Excel coding flaw was partly responsible for the results of the study, thus debunking it all together. Now I don’t care to get into the study itself; the fact of the matter is that “austerity” is largely a scheme where government spending is very minimally ‘cut’ – mostly in areas that directly affect the citizens such as welfare programs – while taxes are raised in order to pay off the banksters who own the debt of said countries in the first place.

Disproving or proving the effects of “austerity” programs such as these does nothing to prove or disprove Austrian economists, as no Austrian economist advocates increasing taxes while advocating much more drastic cuts to government spending. Austrians know that every government dollar taken from the economy either via taxation or debt is being removed from the private sector, and therefore removed from it’s most efficient usage.

Continue Reading



Trending on the Web

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Keynesian economics was created to justify mass socialism

and it can only "work", in theory, in a world of counterfeit money printing by central banks. Rising costs are not a concern of these greedy bastards only rising GDP. But this rising GDP is ficticious since it is based on ballooning funny money and not real economic growth. But they control the statistians and the media outlets to spread the word of the wonders of Government spending and that debt is irrelevant. Sadly, it will take a complete monetary crash for the people to see it for what it is.

I agree, you can't disprove

I agree, you can't disprove something that hasn't been tried.
I think they greatly exaggerate the effect of the coding error on the overall study as well. Reinhart-Rogoff and other economists involved in those studies, maintain that the errors found are insignificant to the outcome of their study which involved other entities using other sets of numbers as well. This is R-R response.
http://blogs.wsj.com/economics/2013/04/16/reinhart-rogoff-re...

But economists trying to nail down economic thresholds that fit every country to specific numbers is silly to me anyway.

Krugman

Is my "Khan." KRUUUUGGGMAAAAN!

Who is Captain Kirk in this one?

Ron Paul? Bob Murphy?

http://lionsofliberty.com/
*Advancing the Ideas of Liberty Daily*