So, I understand why that isn’t a solution, but the conept of it makes sense to me. Where is the falacy in the logic of increasing aggregate demand to stimulate the economy? If say for example, some unemployed were hired and paid $8/hour; wouldn’t that increase demand which would result in more prod…

Where is the money coming from to pay these people 8 bucks an hour? Why not give everyone, man. woman and child, all over the world, a million dollars a day, and that will result in more production and more jobs and we will all be rich to boot?

Also, check out my blog, in particular: http://smilingdavesblog.blogspot.com/2011/08/myth-of-aggregate-demand.html http://smilingdavesblog.blogspot.com/2011/08/myth-of-aggregate-demand-part-two.html

Nice blog, Dave. OP, savings must come first. If there is demand, it does not mean the necessary resources have been saved. When the government “stimulates” the economy with new money, people spend that money (demand has gone up because people have more money), but the amount of goods has not incre…

Smiling Dave, I imagine that it would be a result of debt monetization, public loans, or both. A Keynesian would respond that increasing total spending by such a large figure would shift aggregate demand into the perfectly inelastic portion of the short-run aggregate supply curve, resulting in…

Rcder, Yep. Or taxes. I suppose so. They do say there’s a difference between an economy humming along at full capacity and one that’s got idle resources. In any case, the blog articles are where my argument, the standard Austrian one, I think, is laid out.

I figure I might as well play advocatus diaboli today, so I’m going to put on my new Keynesian hat (get it?) to try and answer your questions like, say, Paul Krugman or Joseph Stiglitz would. As a result of nominal factors in the economy being “sticky” in the short run a fall in demand for a facto…

To my knowledge most Keynesians would shy away from taxation, presumably because it can have the adverse effect of lowering business expectations and increasing consumer anxiety. Right. Unemployment below 4-5% causes “tightness” in the labor market which results in higher levels of inflation as o…

How can you “understand why that isn’t a solution” if you can’t see the fallacy of logic? Not to mention, haven’t we been through this? Twice? Did you not tell me a month ago you understood?.. Why Doesn’t Stimulus Work? The Multiplier Effect

John James, Thanks for the links on EMH and RE, by the way; both of those concepts were familiar to me so I don’t know why I was so off the mark on that other thread! In regards to EmbracingLiberty, I think he may be getting tripped on the fact that Keynesians consider government expenditures “inv…

Just Increase Aggregate Demand!!!

Economics Economics Questions

John_James July 14, 2012, 3:42pm 11

Sure fooled me…“My knowledge of the efficient market hypothesis is sketchy”

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Just Increase Aggregate Demand!!!

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