What’s the answer in today’s crisis? Keynesian or Monetarism?

January 31, 2009 at 3:31 pm Leave a comment

A major discussion is which solution could be the right one for today’s crisis. Should the governmet increase its spending or should it just lower the taxes?

Dan Mitchell of the Cato Institute does an excellent job explaining why Keynesian fiscal strategies do not work in this video.

After watching the video I would agree to his arguments. But… the video does not address the central question of whether “Keynesianism” can be used during crisis periods, such as we have now in 2009. According to the video, government spending is always a negative influence.

Another solution would be the Monetarism which has more or less one proposal only – lowering taxes. Why would/could that work? It would put money in the hands of people (usually, that’s good!). But during a crisis, they could be afraid to spend, and nothing happens.

That’s why direct spending by the government could be a potential solution. Spending on roads, schools, research, which involves employing people, keeping factories open, and building what will be useful to free enterprise in the future.

Time will tell…


Entry filed under: Life.

G1 – first try End of the investment hype in web 2.0 & co?!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed

Who is posting?

This blog is a view from an VC investor, entrepreneur as well as from a private person. You'll find posts about Startups, Technology, Venture Capital, Entrepreneurship and about life and fun. If you enjoy and if you don't please send me your critical comments.

OJ on Twitter


%d bloggers like this: