Krugman: Hey, Small Spender (contrarian)

[cinyc]

You are as usual missing the point - during deflationary depressions the money is not allocated to any uses, productive or otherwise - it sits inactive in the hands of the elite.  Seizing it from them or 'borrowing' it from them is good policy, and all the effects of same are beneficial.  Another way of putting this is government does in fact always know best - the fact that you prefer to be controlled by set of haphazard aristocrats is pretty pathetic.

And of course this is precisely what got the US out of the depression (WWII).

You speak as if the "elite" are just keeping their money in a mattress somewhere, not in a bank that then can make more loans, in the stock market, which ultimately allows companies to raise more capital, or elsewhere.  And you miss the point that we are not borrowing from the "elite" in the US but from countries that don't much like us and don't share our values, like China.

Government in fact rarely knows best.   In the absence of market mechanisms, they are acting on incomplete information and misappropriating funds to projects of dubious benefit to benefit the politically connected, not the public.

[opebo]

You speak as if the "elite" are just keeping their money in a mattress somewhere, not in a bank that then can make more loans, in the stock market, which ultimately allows companies to raise more capital, or elsewhere.

During a depression loans are not made, and companies do not invest, cinyc.  This is rational behavior for each aristocrat, and there is no way for the economy to be lifted out of the deflationary spiral. 

And you miss the point that we are not borrowing from the "elite" in the US but from countries that don't much like us and don't share our values, like China.

What're you talking about?  They share our values - capitalism: enslaving the masses to get money for the elite.

Government in fact rarely knows best.   In the absence of market mechanisms, they are acting on incomplete information and misappropriating funds to projects of dubious benefit to benefit the politically connected, not the public.

Absolutely not.  The market offers no solutions, merely mass panic.

[ag]

This is rational behavior for each aristocrat,

Your Lordship would know )

[opebo]

It doesn't take into account that there is no such thing as a free lunch

Quite obviously false (read General Theory) when demand is the problem.  Where did the lunch go in the first place?  What is a recession?

Yes, capitalist downturns mean that the ingredients of lunch are sitting on the stove-top, and everybody's hungry, but the women-folk refuse to cook the food.  Keynesianism is when Dad comes home, and either cajoles or beats them into making the lunch.

[Frink]

The problem is that with 1) special interests and 2) Pandering Politicians picking where to spend the money it is almost guarrenteed that a lot of Stimulus money that could go to a bridge somewhere's else that would be used more, or an existing bridge that is used heavily, gets sent to a bridge that happens to be in Jim Oberstar's or Don Young's district but is practically useless.

Sounds like a convincing argument for some kind of limited centralization of the process.

[Frink]

Propping up politically popular businesses because they are supposedly too big to fail creates perverse incentives by ignoring risk and rewarding failure.  

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Neither of these policies are really Keynesian.

I think it's abundantly clear by now that only a few people on this site, and certainly not people like Cinyc, Vepres, or Libertas, as three examples, actually know what Keynesian economics is.

Don't tell me I know nothing about economics because I don't agree with conventional conclusions that Keynesian economics works.

Government spending isn't the only form of stimulus called for depending on the circumstance in  Keynesian economics. In current Keynesian schools of thought (which are closer to Monetarism and the recently resurgent Neo-Classical schools than Keynes really) the understanding of how the recession in question was caused is a great determinant for what action is called for.

Keynesian economics isn't the only school of economics that argues for the importance of the demand side of the equation either.