Keynesian Economics Concepts Explained with No Math! 

There it is, the voice of reason.

And then after they borrow the government never pays back the money and that just increases the debt.

That's what I was thinking. They're supposed to gain the money back during booms but how when where? Is it really happening or are politicians being politicians wanting votes instead of the good of the country and economy?

The problem is government benefits from inflation. It borrows $100 long-term knowing it will only have to pay back half that value because the money will be worth half ( $50 real value adjusting for inflation) long term.

Yes, but that is not the fault of Keynes. That is the government's fault because Keynesian economics instructs governments to cut taxes, lower interest rates, and spend more during recessions to raise taxes and interest rates and decrease spending during booms.

Lower tax rates actually result in higher tax revenues believe it or not

Yep. Gilded Age 2 Electric Boogaloo.

At least during the gilded age purchasing power increased

Why do you think taxes are punitive? Shouldn’t everyone get the same value for a dollar paid?

But public works really do not make any of the money.

Thanks again! - and all the best on your diplomas!!!

That's unusual. Usually in my country you need to finish highschool to go to university.

You're so welcome! I hope your exams went ok!

Dzięki!

I'm so glad you found it helpful! :)

I'm glad you found the videos helpful. Best of luck with your studies!

I'm glad you found it helpful!

Exactly. It seems insane to me that in 2020 we pumped trillions of the dollars into the economy to increase spending as explained in this video. But, we didn't create any jobs, we were actively losing jobs. I think unemployed almost reached 7%. It seems to fly in the face of Keynesian theory. There was no clear recovery, almost like we were teetering on the ledge for a year and now it's obvious we are in a recession.

@@placebo5466 All it does is perpetually redistribute spending power from workers and producers, while reducing the interest rates leading to asset price inflation that increases the time those workers businesses need to reinvest to expand, increasing the duration for people to climb ladders and buy homes.

So nice of you! Thank you for watching! 🙂

I'm glad you found it helpful!

Glad it was helpful! Thank you for the comment! :)

You're very welcome! Thanks for watching! 😊

Glad it was helpful!

Glad it helped!

Glad you liked it!

Thank you so much for the comment! I hope you found the video helpful. 😊

Many thanks!

You're welcome! I hope you found it helpful! 😊

I hope it helped!

I'm glad you found the video helpful!! Thanks for the comment! 😊

Korczyk's Class very helpful for trying to understand something at 2am that u need to know for the next day ahah

That's awesome, congrats! I'm glad it helped!

Glad you found it helpful!

Haha, I'm glad you found it helpful - though I'm sure your prof went into some important detail you should know, too! :)

Haha, I'm glad it helped!

Haha, I'm glad you found it helpful! Good luck in your studies!

Technically not true. When Keynes explained his stimulus theory he specifically states it has heavy emphasis on fiscal insentives. I.e government contracts to get people to work. Because Keynes predicted rightly that in economic depressions occur that his wage stickiness theory persists and we see wage inflation start to take a toll on employers. Therefore the government basically acts as a hug net and scoops up all these unemployed people then puts them back to work. The theory was massively used to great success during the reconstruction period post ww2.

still thinking the same way?

@@benjaminmondragon7243 Absolutely

I think if he tried it would be more of a hit piece - he sounds fully bought-in to Keynesianism (even used Krugman as a reference!). I could be wrong.

Nope. The Great Moderation ran from 1981 to 2007. The 2008 Financial Crisis was created by stupid politicians, like Barney Frank, who required Fanny & Freddy to make loans to people who couldn't afford the loans. Politicians believed the number of said loans were too small to matter much, and the housing market would never crash due to its huge size. That was short-sighted. What resulted was the Great Recession 2008-2014 and we were still slogging our way back to normalcy when the Wuhan Virus (aka Covid-19) hit the world economy in 2020.

Same question here. Have you found the answer yet?

They did, but they didn’t engage in active stabilization policy. They did traditional investments, but not counter cyclical fiscal and/or monetary policy. The video is kinda misleading in that there’s nothing inherently anti-free market about Keynes’s core idea (stabilize total spending), in fact free market economists such as Milton Friedman accepted this. Hope that helps!

@@programking655 There is actually something inherently anti free market about his ideas, that is the theory of fructification, in that when interest rates are zero land prices and asset prices can reach infinity. This is not infinity in absolute terms but relative to the value of the output of the asset, meaning you are unable to expand a business effectively by reinvesting output when interest rates are very low. This leads to supply shortages and Keynesian economics can only work so long as there is excess supply, or sufficient capital accumulated, because the way it lowers interest rates causes capital consumption after it pushes interest rates below a certain level that prevents supply being able to expand by reinvesting.

@@bengardener8928 What you just said is a mix of silly attacks and absolute nonsense. First off, I’ve read a lot of economics and never once in my life heard of the theory of fructification. The most likely explanation for why this is is that it is completely and totally irrelevant. But even if I accept it’s relevant, Keynes has nothing to do with it. It was created by Turgot like 130 years before Keynes ever existed. The only ones who ever said anything about it were Bawerk and Schumpeter. To bring it up is extremely random and makes no sense. As for the second part of your comment, everything you said is complete nonsense. “Keynesian economics can only work when there is excess supply” what does this even mean? Keynesian economics, and that term is essentially meaningless at this point, is a theory of how changes in aggregate expenditure causes output fluctuations away from potential in the short run. I seriously doubt you know anything about contemporary economic thought.

@@programking655 So, Because you've never heard of something it is not true or relevant? Perhaps you should read more on economics because Turgot was the first economist, in 1700's to recognize capital is necessary for economic growth and the importance of capital accumulation, explained how interest rates work in regards to capital accumulation and the economic stagnation that the west has been in for a good 10 years is due to suppression of the interest rates caused by credit expansion. It's not random at all and does make sense because that is the key reason why Keynesian economics does not work and if it did work, living standards would be going up for the majority, not down. The second part of my comment means that credit expansion and suppression of interest rates can only continue so long as there is surplus capital accumulated - meaning there is enough real productivity to purchase with that money to maintain living standards, as soon as capital consumption happens to the extent that is no longer the case, rates have to rise and Keynesian economics no longer works. It's really not complicated to understand, the Keynesian multiplier does not work because the reduction in interest rates results in slower expansion by reinvesting due to asset price inflation caused by low rates, that results in supply shortages at at that point Keynesian economics ceases to be viable.

You should be able to just reference the channel name. You should definitely check with your teacher/instructor/professor to see if RU-vid videos are acceptable sources though!

I have no idea what on earth you’re talking about

What's your question?

@@KorczyksClass is keynesian economics dead as today sir?

It's certainly not dead. We still see Keynesian economic principles used during recessions. The US government's stimulus spending during the last few months is a pretty recent example of the government spending money to help the economy.

@@stellakenifer3107 I’ll answer your question: dear god no, especially the way he’s describing it. The way he’s describing, which is basically just that stabilization policy is important, is widely accepted by virtually every living macroeconomist.

The way he’s describing it, barely. Keynes’s core idea is very simple: stabilize total spending. Basically every living macroeconomist accepts this. The difference between “monetarists” and “keynesians” (sort of meaningless terms at this point) is that Keynesians generally prefer fiscal policy as a tool of stabilization while monetarists prefer monetary policy. In mainstream models, both are effective, but monetary policy generally gets the primary role for stabilization because it’s independent of politics and is much faster to implement. Plus it doesn’t involve generating large amounts of debt, which can cause problems.

Those who think that the depression was the result of "laissez faire capitalism run amok" while Hoover stood by without intervening are mistaking. This is not my opinion, you can easily check the following data yourself: Not even mentioning that the roaring twenties was arguably a synthetic economic high from government and fed trying to stop a small recession in the teens. 1 - Hoover intervened in response to economic decline before Roosevelt did and increased govt spending by roughly 50%. 2 - He set a meeting with Industry leaders headed by Henry Ford (Ford Motors), Alfred Sloan (GM) and Pier Dupont (Dupont Chemicals). The directive was to keep wages at the current levels in spite of the declining economy and to minimize layoffs through job sharing. 3 - He signed the Smoot Hawley Tariff Act of 1930, which raised tariffs on imports to the highest levels in 100 years and led the US's trading partners to retaliate by placing tariffs on American products. 4 - Following the Tariff Act above, US exports were roughly cut in half, and the price of those exports dropped significantly. 5 - As the depression moved on, Industries reached out to Hoover requesting permission to lower wages, but Hoover rejected. ("If we cut wages, there will be hell to pay with unions" -- Hoover). They ultimately had to cut wages and increase layoffs anyway, starting in 1931. 6 - Hoover increased government spending tremendously with his 9 Point Plan. 7 - The plan included major government work projects like the Hoover Dam and the Los Angelos Aqueduct. 8 - Obviously to pay for that, he raised taxes (on the top income bracket from 25% to 63%). 9 - Even Roosevelt accused Hoover of spending too much public money, and campaigned promising to be more responsible than Hoover in that regard (contrary to the modern accusation that Hoover was too "laissez faire"). And that's not all folks. "...practically the whole New Deal was extrapolated from programs that Hoover started." -- Rexford Guy Tugwell of Roosevelt's first "Brain Trust".

You're right that calling it interventionism over Keynesianism in the Hoover section would have been more accurate. When I get around to it I'll re upload the video with some clarification. In the meantime I'll update the description.

​@@KorczyksClass Appreciate the fact that you can learn from mistakes (even such petty ones as these). Keep pumping out good content!

so sir, i have an article about great depression, maybe perhaps you can help me to find the reason why is keynesian not dead? if you are willing to help..

Depends on what govt is in power and their capacity to pay.

Which is why most economists prefer to give monetary policy the primary role in stabilization

Why is it a problem? It's designed in such a way that a larger percent of the taxes overtime will not be going to the government... Hardly a problem if it's intended.

... /./ . We need a new paradigm. Here is the correct Truth : The politicians today get elected because the voters are ignorant about the following basic truths: 1) The market is a battlefield. Profit is King. There is no such thing as a battle that never ends and a battle that never has a clear dominant force to take over all others. 2) The markets concentrate Wealth to extreme levels. Therefore it is essential to have a mechanism for re-distribution of wealth. 3) Looking at Capitalism, all employees can be aggregated into one Employee and all owners can be aggregated into one Owner. The aggregated Employee invents and makes the products then sells the products to itself and then pays a fee called Profit to an 'Owner' for the permission to own the same products the aggregated Employee itself made and sold to itself. The Owner is a parasite. Ownership is a claim, not effort. The Owner makes the claim, then the Employee enters to protect and grow what has been claimed as owned by the Owner. All efforts are done by the aggregated Employee, the aggregated Owner just owns, nothing else, no effort whatsoever. 4) Therefore, either the free market will make you poor or the Owner will.....unless the owned Wealth is being perpetually redistributed as I describe here. 5) A poor person is forced to think about how to make "bread" using a patch of land and some tools, a Wealthy person is free to think about which farm and bread factory to purchase. (But the 'really poor' have no other choice except to think about rebellion or theft or how to lend themselves to others in exchange for "bread".) Perpetual re-distribution of sufficient Wealth will eliminate the 'really poor' by giving them a choice to say 'NO' to unfair demands on their time and efforts. It would also elevate the poor to think about 'prosperity' instead of 'survival'. 6) Also, we must have laws to enforce strict border control for wealth leaving an economic area (town, city, state, country) and people entering an economic area. THE ONLY SOLUTION: Tax ownership of wealth Exponentially and then distribute it evenly among all citizens , again and again, in perpetuity. (The government should not be excluded from taxation of owned or controlled Wealth thus making it irrelevant what is private and what is public. ) !!! !! ! . Jordan Peterson would say to you that "hierarchies dispossess" and then your mind will be trapped, trying to find a reasonable solution, because you listen to Peterson, Wolff, Marx, Lenin and the likes. I am saying, If "Hierarchies Dispossess" then 'Redistribute' to make them less prominent. Such solution is Obvious ... but not for Marx, Bakunin, Wolff, Peterson, Lenin and their ideological supporters. This is a new paradigm, people. Get on board or stay ignorant and trapped in looser ideologies. (I hope you, nincompoops, understand what I mean by saying "to make hierarchies less prominent by redistributing whatever they concentrate, particularly, Wealth or Power".)

That's true until the credit economy came along. Now people can spend money they haven't yet earned which is both good and bad but otherwise good in a low unemployment economy.

So do you consider creditors and mortgagees to be third as they've purchased with money that haven't yet earned? We live in an arrears credit society. Property inflation is based on complexity arising from supply demand, caused by cheap, unregulated credit, unregulated immigration beyond capacity to supply. Investors into property for rent or holiday letting using negative gearing is a real contribution to surging property prices.

How so? Continuing to print fiat is definitely problematic but the question I have with cryptos is that anyone can create another one so long as some people somewhere deem it of value, there is no end just like countries printing their own currency. Bitcoin has a limited number of coins that can every be earned by miners verifying the blockchain. Currently there are a relatively small number of key holders with any significant value and a very very few with extreme value in their holdings. As I understand the vast majority of people with any bitcoin at all have only a few fractions of a satochi, like a few dollars worth. The concept seems sound except when reality is brought in.

Yes because governments will give up their money printer AKA their power in favor of decentralized finance

Fast forward 5 months and crypto has collapsed.

@@glennoc8585 You and I knew Glenn. You must be a historian. Or just someone with common sense.

@@glennoc8585 lol you don't know crypto, give it time. Nothing does up in a straight line. See you in 4 years when btc is 100k+

@D Heyman Keynes was a mathematician not an economist, the man himselve said that his ideas had to be implemented by force

F*cking Neoliberalist! 🤨😡😡