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Monday, October 27, 2008

Is Keynes the key?

So I was wondering when, if at all, Gordon Brown would announce a rise in public spending, and last week he did just that. Of course the circumstances aren't ideal, national debt is higher than it should be already which will limit the impact, but I believe it's a step in the right direction. The Tories of course are against it - a big step by them towards fiscal conservatism - but then they're hardly going to agree with GB especially when it's so easy to make Keynesianism sound ludicrous if you word it in a certain way.

So for you who have no idea how Keynesianism works let me give you the truth before the Tories get to you.

The idea is that you decrease debt during economic booms and increase it during busts. Increasing public spending is suppose to cause the economy to recover, and would be more effective if GB hadn't let debt rise again after reducing it after 1997. Then once the economy has recovered you decrease debt.

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