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Two things tend to get conflated, as I see it: Money and physical resources.

It is a crime when money is scarce, there should be an adequate provision of such to allow the economy to function at full capacity.

That being said, a completely different reasoning should be applied to natural resources: here scarcity can be real. The "Keynesian" inflation of the first oil shocks had nothing to do with keynesian policy, it was because there was real scarcity of a resource and, naturally, inflation ensued.

In my view (someone with little knowledge of economic history) the oil shocks set the stage for the attack on Keynes. Both sides, I believe were wrong: It was not a problem caused by Keynesianism. BUT, there is nothing that Keynes seem to have to offer to solve this problem. Indeed there might be no real solution to this problem: if a resource is scarce, access to it will be problematic. No economist can solve that (only mitigate it).

Even in a sound economy, resource scarcity can happen. And because of this conflation between money and resources it seems that keynesian economists tend to not discuss resource scarcity very much (one cannot print oil).

by cagatacos on Thu Jun 5th, 2014 at 10:47:34 AM EST
Keynesian economists - as opposed to the "crass Keynesian" saltwater types - very often discuss resource scarcity. They just don't cite Keynes on that subject, because Keynes didn't really have anything interesting to say about resource scarcity.

Keynes did not write the Economic Theory of Everything, after all.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 5th, 2014 at 02:01:05 PM EST
[ Parent ]
Keynes did not write the Economic Theory of Everything, after all.

Keynes is mainly (but not exclusively) about the business cycle, and how it can be managed. This might sound like just a small thing - it is not.


Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue Jun 24th, 2014 at 07:11:55 PM EST
[ Parent ]
It is a crime when money is scarce, there should be an adequate provision of such to allow the economy to function at full capacity.

so few people get this point. I wonder: do people outside of Germany understand this point? I remember a few years ago I was having lunch with a guy from Greece...and he was complaining to me about inflation!
I was speechless.  

by rz on Fri Jun 6th, 2014 at 03:46:25 AM EST
[ Parent ]
Two things tend to get conflated, as I see it: Money and physical resources.
Follows straight from the frame money as a thing.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Jun 6th, 2014 at 04:52:24 AM EST
[ Parent ]

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