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Keynesian policy with resource constraints can be studied in various contries during the second world war. Employment goes up, GDP goes up, inflation goes up. New goods per capita goes down, recycling goes up.

So we know that it can be done, and we know what happens. If it is impossible it is because of political constraints and it is far from obvious that those political constraints depends on resources. After all, full employment policies was also impossible before world war two due to political constraints.

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by A swedish kind of death on Wed Nov 5th, 2014 at 07:40:40 AM EST
With a well regulated banking sector and progressive taxation the economy can and did boom. With cheap or free state financing countries can create abundant, relatively cheap sources of renewable energy. But an unregulated financial sector is the most efficient means with which to extract wealth from a society by the elites. After about 1960 elite conservatives went for the jugular and got it with Ronald Reagan's election. Taxes and regulations were reduced and soon the money from finance overwhelmed the electoral system. It seems we are down a very deep well - head first.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Nov 5th, 2014 at 11:06:43 AM EST
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You can't have an exponential debt system without occasional jubilees. It's like designing a hot water system without a safety pressure valve!
Or a tenement building with no fire escape.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Thu Nov 6th, 2014 at 09:55:52 PM EST
[ Parent ]
Well, obviously we can and have. But then we can't prevent debt crises.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Nov 7th, 2014 at 12:56:20 AM EST
[ Parent ]
We could regulate too-risky loans, and thus convince investors to choose more salubrious channels for making profits than say the USA car loan bubble (which apparently is one of the next ones to pop).

The whole moral hazard thing is way out of whack, even an amateur economist can see that unless he's well paid not to.

In which case he wouldn't be an amateur any longer, but a Serious Person.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Nov 10th, 2014 at 03:40:40 PM EST
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