"Most people are in arrested development and cannot use logic." Jacob.
"Competition and capitalism are hated to-day because of their tendency to destroy poverty and privilege." William Hutt
"America is unique in that our economy is totally dependent on global charity." Peter Schiff

Sunday, September 25, 2011

The Problem according to Keynesians, Scrutinized from All Angles.

As promised, Smiling Dave will now address what the Keynesians think the problem is [that taxing the rich is supposed to solve]. We quote someone from mises.org, who put it very well:

I was browsing through some blog posts from keynesians and they were arguing that there is not enough demand in the economy to get business' to invest and to encourage growth. This is an argument that I encounter a lot.

There is not enough demand, so they say. And why is there no demand? Because people are hoarding their money. Yes, that's the problem.

Luckily, checking his notes, Smiling Dave finds that he has refuted this one many times over right here:


We have also refuted other possible meanings of "lack of demand" in this blog:
http://smilingdavesblog.blogspot.com/2011/08/myth-of-aggregate-demand.html and its follow up:

We took on Marx's version here, that the problem is that the workers are being ripped off, thus creating a lack of aggregate demand:

We even took on Malthus' version, that of general glut, in this one:
and the articles following it.

We also promised to describe what the problem really is, and what the solution really is, and I see that we have already kept our promise in the series of articles that begin here:

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