Obama's Stimulus Keynes Model is Questioned
12/March/2009 11:47 Filed in: Oikos Thoughts | Web News
Into our valley of economic turpitude rode President Obama’s itty-bitty team of economic knights to tell us with the passage of the stimulus plan the City of Eternal Prosperity was just a steep monetary deficit climb away. To reach that city they offered us some Keynesian economic projections of continual prosperity to come. They then supplied us all with rose colored glasses, whereby we could see through the dust of enterprise destruction and gain a vision of this summit Auda-City of Hope.
People generally and Americans specifically are really pretty skeptical of evangelists of any fashion, hence many refused the put-on and decided they would continue to struggle slowly through the haze. As reported in a Wall Street Journal today in Old Europe Is Right on Stimulus a team of four trans-Atlantic economists, two Americans and two Germans questioned Obama’s Old Keynesian projections with New Keynesian projections. Those projections showed not an eternal plateau of stable economic growth, but a real that Auda-City was not near as high as the itty-bitty knights predicted, and furthermore there was another very deep valley on the other side of the hill. A link to that New Keynesian versus Old Keynesian Government Spending Multipliers paper is found under our Resources Tab.
Not having that much formal education in economics it is interesting to see the similarities between two of our Business Ecology Growth Curves below as they relate to the projections of the Old Keynesian Obama knights and the New Keynesian study.
The Old Keynesian Model suggest growth consistent with what natural ecologists would call a energetic Climax Ecosystem. In the natural world such a system normally takes decades if not centuries to be established. The Old Keynesian Model used by Obama’s itty-bitty team makes it happen in months, stabilizing in a climax state for almost eternity.
As we pointed out in The Dow’s Hidden Reality section of yesterday’s weekly column, the New Projections offered by the New Keynesian Model is more consistent with what we outlined as a Bug Curve, in which high levels of growth are present for a short season and which dies out shortly after that growth peak.
People generally and Americans specifically are really pretty skeptical of evangelists of any fashion, hence many refused the put-on and decided they would continue to struggle slowly through the haze. As reported in a Wall Street Journal today in Old Europe Is Right on Stimulus a team of four trans-Atlantic economists, two Americans and two Germans questioned Obama’s Old Keynesian projections with New Keynesian projections. Those projections showed not an eternal plateau of stable economic growth, but a real that Auda-City was not near as high as the itty-bitty knights predicted, and furthermore there was another very deep valley on the other side of the hill. A link to that New Keynesian versus Old Keynesian Government Spending Multipliers paper is found under our Resources Tab.
Not having that much formal education in economics it is interesting to see the similarities between two of our Business Ecology Growth Curves below as they relate to the projections of the Old Keynesian Obama knights and the New Keynesian study.
The Old Keynesian Model suggest growth consistent with what natural ecologists would call a energetic Climax Ecosystem. In the natural world such a system normally takes decades if not centuries to be established. The Old Keynesian Model used by Obama’s itty-bitty team makes it happen in months, stabilizing in a climax state for almost eternity.
As we pointed out in The Dow’s Hidden Reality section of yesterday’s weekly column, the New Projections offered by the New Keynesian Model is more consistent with what we outlined as a Bug Curve, in which high levels of growth are present for a short season and which dies out shortly after that growth peak.