perceptions_now wrote on Aug 25^th, 2010 at 12:33pm:


Just a branch? Didn't you hear? We are all Keynesians now.

perceptions_now wrote on Aug 25^th, 2010 at 12:33pm:


What are the correct inputs?

freediver wrote on Aug 25^th, 2010 at 7:39pm:


Ah, now there is the $64 Trillion question!

Let me say 2 things very clearly, the right inputs should have started about 50-60 years ago, but that did not happen and there are now no Hollywood endings!

That said, perhaps human nature being what it is, the game was always going to play out in this manner?

So, leaving the past alone, as it only leads to recriminations, we are now essentially faced with 2 choices -
1) Live for today & screw the future consequences.
2) Take the pain now & leave future generations with a fighting chance, for their survival & that of the human race.

I vote for the later! But what will that mean?

It will mean 20-30 years of higher taxes & lower benefits.

It will mean heading to ZPG, over the next 20-30 years, then a gradual reduction in the Global Population, to around 2 Billion , by natural regression, over time.

It will mean an urgent "Manhattan Style Project" to locate any possible replacement/s for Oil, Coal & Gas, as quickly as humanly possible. A large part of that project will be to enable the transition away from Fossil Fuels, to their replacements, in the shortest time possible, to assist in restricting the flow of GHG's into the environment.

It will mean changing the Political & Economic status quo, into something new, which will allow us the time needed to extricate ourselves from the CRAP that we ALL created! And, do do that, it will mean dragging every nation into a common agreement, on the actions needed, by any & all means.

Now, I don't know IF we will be allowed to make our own decisions, which may result in better outcomes, as I suspect that some contingency plans are already under way.

Whether we like it or not & whether they work or not, are entirely different questions!

So, FD, I doubt I answered your direct question, but as Malcolm Fraser & George Bernard Shaw said, "life wasn't meant to be easy" and I suspect we are in the process of confirming that to be a fact?

freediver wrote on Aug 27^th, 2010 at 10:22pm:


In looking at the current situation, we need to understand that Australia can not swim against the Global Economic tide, that the Keynesian Economics uses various Economic levers to provide a temporary transition in Economic Activity (up or down) to smooth the usual business cycle and the following Global macro  factors are either already in play &/or will come to be in play.

Given the above & the following, regrettably I think the Keynesian time has passed.

Global Macro Factors :-
1) Baby Boomer Retirement  

2) Peak Energy

3) Declining Global Population

4) Interest Rates already at or near Zero, in many major Economies.

5) Debt & Deficits already thru the roof, in many major economies.

6) Climate Change looking to curtail the Usual Economic expansion.

7) Real Estate markets are De-valuing, Financial markets are De-leveraging & Currencies (particularly in the USA) may be De-valued & Sovereign Debt (including the USA) may De-fault.

I'm sure I have missed a few others, but these issues & others, are well beyond the usual cyclical ups & downs that the Keynesians &/or Austrians would normally be involved in and be able to "fix" with the usual "Hollywood upbeat ending".

These are long term issues, some unique in history, which will affect Supply & Demand on a Global scale, for a very long time.

The time for short term fixes/adjustments is in the past.

If alterations had been made, such as -
1) Adjusting the great Global Baby Bulge birth rate, as it was happening 50-60 years ago, then the current Boomer Bust may have been preventable.
2) Restricting the splurge in Energy use and looking to sustain such sources as Oil over a much longer time frame, than merely a few short decades.
3) If the Baby Boom & Bust (rise & fall of birth rate) had been smoothed and restricted at the time, then we would not be looking at the coming great Population decline, because it would not have escalated to the current point, where a continued expansion would threathen the very existence of humanity. An Economic Recovery, after Extinction is not likely.

The Aging & decline of the Global Population, alone, will severely restrict Demand and far outweigh, any possible Kenesian or Austrians solutions.

However, the addition impact of Peak Energy, the decline in Supply of Oil & other Essential Resources will make the continuation of the Status quo economy an impossible task, along with the restrictions imposed by Climate Change.

That said, I would prefer to be wrong!  

freediver wrote on Aug 28^th, 2010 at 1:24pm:


And yet economic stimulus and quantitative easing have done nothing to solve America's or Europe's problems.

What's going on Freediver? Why isn't it working?

freediver wrote on Aug 28^th, 2010 at 1:24pm:


Yes, I am aware of that and that is why Keynesian Economics can not fix the current situation, because the current situation is all about long term problems in both Supply & Demand.

And, in any event, the usual economic levers are almost exhausted and the Global Economy is still going backward.

That can be clearly demonstrated by looking at the anaemic US GDP figures in recent times, despite the impact of the massive US stimulus packages & bailouts. In fact, without these, the US GDP would be massively negative, over recent times!

Of course, even if they could be useful, which clearly they aren't against the long term factors referred to in my earlier post, there are limits to the capacity of the USA & others to continue to provide economic stimulus packages, particularly given the existing extent of Deficits & Debt.

As I have said previously, we now need to look at both our Economy & Society sustaining each other, changes need to take place & quickly!

To clarify, I am not saying that Keynesian &/or Austrian Economics don't have their place & would work, given certain circumstances, but clearly under the current circumstances neither will fix our current problems.

Most of the stimulus spending was ill-targeted towards the top end of the upside-down pyramid...

The real problem, is that such measures simply reinforced or exacerbated the exponential polarisation of income, wealth and debt of the past few decades...

We will continue on our downward spiral, unless and until we appreciate the need for a paradigm shift in the distribution of income, wealth and opportunity - and debt!

Sappho wrote on Aug 28^th, 2010 at 2:59pm:


I know it is alarming!

I doubt that what I am saying, has much ol' fashioned content!

That said, what is not factual?  

Sappho wrote on Aug 28^th, 2010 at 4:02pm:


Because, if you answer my question about what is not factual, much of the answer to your question will start to become apparent, even if you don't necessarily like it!