Krazy Keynesians: to spend now and begin again to trust our economy and its institutions

(KarenDeCosterBlog) Krazy Keynesian Wants Shopping Subsidies

The key is realising that recessions are usually consumer cycles, not business cycles. They're driven by weakening demand first for homes, then for consumer durables, and finally for non-durables and services. As consumers stop spending, businesses stop investing, and the economy "recedes".

It was a surreal moment listening to Laurence Kotlikoff, a Professor of Economics at Boston University, on Bloomberg radio last week as he discussed his plan for curbing savings and triggering spending. This is a recent column of his (along with a co-writer) from the Financial Times that discusses his plans for a Keynesian salvation for America.

He invokes Keynes' Paradox of Thrift and says that evil consumers are hoarding every dollar as if it's their last. He says that these "collective and obsessive attempts to save" (the "panicked-saving trap") are undermining the economy.,(,,,)

Finally, he says his plan will give us "economic medicine where it's most needed - on consumer spending, giving everyone an incentive to spend now and begin again to trust our economy and its institutions.".

Nota: De facto, confiança na economia e as suas instituições é o que mais abunda neste momento. Pergunto-me se este professor terá já contribuído para "a economia" gastando a sua poupança... sei lá, em rebuçados.