Title: Rob Johnson and Tom Ferguson on the Real Meaning of the S&P Downgrade and the Market Reaction Source:
Naked Capitalism URL Source:http://www.nakedcapitalism.com/2011 ... e-and-the-market-reaction.html Published:Aug 14, 2011 Author:Yves Smith Post Date:2011-08-14 11:32:43 by lucysmom Keywords:None Views:5115 Comments:8
#1. To: Badeye, A K A Stone, hondo68, Fred Mertz, Godwinson, go65, war, no gnu taxes, Skip Intro, ferret mike, jwpegler, brian s, mcgowanjm, Capitalist Eric, Mininggold (#0)
"Classic Keynesianism" is how we got into this mess.
Nope. Keynesianism is how we got to the point where we had a surplus in 2000. What got us into this mess was the counter-Keynesian approach by Bush and the GOP who cut taxes and drastically increased spending during an economic expansion. Keynesian theory says to cut spending and deficits during expansion.
Had Bush & the GOP maintained or even expanded the surplus, we would have been in a very strong position to deal with the 2008 crisis.