Keynesianism only works (in theory) if an economy pumps the breaks a bit during the good times. Failure to do that isn’t really Keynesian, and the US has done nothing but hit the gas during the past few years of growth.

This. It works with some discipline, but our current politicians (and by reflection ourselves) lack that discipline. We should have been raising rates and even taxes during the last boom, to slow it down so it would last longer, and to build a reserve for the next bust. A bust is a great time to hire and build, a boom is a not so great time to do that, and I’m not just referring to that from a stimulus perspective.

This is my problem with Keynesian economics. It is obviously correct, but it cannot be done in practise.

Two issues:

- How do we identify good times? EU would for sure said we have not had them since the last crisis.

- How do we get humans to save in good times. Not regular people but politicians that wants to get reelected more than anything else

> How do we identify good times

By looking at the employment rate, not the meaningless unemployment rate numbers. https://tradingeconomics.com/united-states/employment-rate

> How do we get humans to save in good times.

By electing people that save responsibility. Post WWII the US paid down huge amounts of debt. Now it seems like Republicans want to loot the place whenever they get power and Democrats are willing to trade spending for more spending.

The EU via the EMF have been doing aggressive QE upon the Euro for years now, just to keep the EUro competitive for exports as well as imports. A high euro value makes imports cheap, but kills exports as they come more expensive export wise. A low currency makes imports expensive, but makes exports cheap.

So they have been interjecting to keep the balance right.

Before QE you had country interest rates, but with many of those low, the new tool on the block is negative interest rates.

Sadly all these have produced two decades of fiscal responsibility that has seen saver mentality die and buy today, pay tomorrow increase. Which i'm sure looks great on some balance sheet and allows politicians and accountants to say hey, look at the growth, ain't we doing well and the market perception just nods and agree.

Any dent in that perception and a whole raft of cards quickly start to fall and with that in mind, interesting times ahead and let us see what happens.

That fiscal stimulus should be counter-cyclical isn't "Keynesian economics". It is just macroeconomics.

Household savings would be lower if governments take on more debt, but they insist on running surpluses. Germany in particular has kept wages for workers depressed as part of their "economic model". Germany should be cutting taxes for workers significantly and investing in infrastructure, defense, and social programs.

In fact a lot of the rich EU members should be doing that, but they all have a misguided notion of "fiscal prudence". As if the government's budget is the same as a household's budget.

Isn't it the opposite? Money goes from government into the economy through spending, and thus through debt. More debt results in more household savings, not less.

Households wouldn't feel like they have to save so much if they felt their economic situation wasn't so precarious. If their incomes were growing faster and they had more safety nets they'd be consuming more.

> What goes around, comes around. if you turn the screws on people and continue to hurt them financially, they'll have less and less money to spend, and it keeps making the economy even worse.

Sorry, that actually made me laugh. Not "off with their heads!" anymore, but more like "I am not shopping anymore!" I am sure they tremble!

If people's retirement money is shrinking, it's not just "I'm not shopping anymore" it's "I have to save as much as I can to try to make up for attrition to just keep my rainy day fund afloat." I can't see how I'd want to invest when I know that the money I'm saving "just in case" is quickly disappearing on me. I need to keep putting money in my bank account to just to stay in the same place on the treadmill. It's basically putting in a constant overdraft fee.