Jason Welker
This is a good article about the Keynesian/Classical debate in macroeconomics:
The Obama administration and Congress justify the vast new government borrowing and spending by asserting that it constitutes “fiscal stimulus.” Not only would each dollar the government borrowed and spent produce a dollar of GDP that would never have been created had the dollar been left in private hands (a fiscal “multiplier” of 1.0), but it would stimulate a wave of new private sector spending, investment and employment that would generate 30, 40, 50 cents or more of additional new wealth per dollar (a multiplier above 1.0)...
...there are two brands of remedy. The first are government measures intended to eliminate obstacles to the adaptation of supply to changing demand. This is the now much-maligned classical brand of remedy. The second are fiscal and other government measures designed to force demand to adapt to supply. This is the Keynesian brand of remedy, now beloved in Washington, based on the belief that under-employment is a congenital defect of the economic system.
Each huge dose of this second remedy serves to further obliterate the functioning of the price mechanism, thus necessitating another huge dose of it. In the long run, this almost certainly means crippling debt, inflation or both. But Keynes, of course, advised against thinking too much about the long run.
economics
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