Economic thought today

The level of economic understanding today noticeably LOW. That is why it is not  hard for a second year economics student like me to feel  light-years ahead of many of the people you see on TV talking about these things. The problem is, you have to know where to look, to find the stuff that makes sense.
Economic thought today is dominated by a theory predicated about a century ago by the (in)famous John Maynard Keynes.
It has been so long that for most people, and even economists, the keynesian economic model has become the only economic model, disregarding over two thousand years of economic thought.
So you may be sitting there thinking, well if everyone has stuck to it it must be because it was ever so wonderful, complete and accurate in describing the workings of the economy, but personally I think there’s a little more to it.
The main reason for its success can be attributed very simply to this: It provides a legitimate (if you do believe it) reason for government to step in and fiddle with the economy.
Put very simply this can happen in two ways.
1. The government can go ahead and spend a load of money, on whatever, it seems, and this will “boost” the economy.
2. The government, the Central Bank really, though it’s almost the same can lower interest rates, (this is a more complex issue which I will cover more in depth, though none the less wrong) this of course will make investing “easier” and also boost the economy.
Now, what kind of economic thinking do you think the government would favor. The one that says government should stay out of the economy, be relatively small and laissez-faire.
Or perhaps the one that says government should be big, spend a lot, have a lot of power and control over the economy, and while they are at it take a big cut of the cake for themselves.
Yeah, you guessed it. But what the state wants is not what the people need. But of course, at this point the government gets what it wants and makes the people THINK it’s giving us what we need.
Nothing could be further from the truth. In fact big government deficits and jiggering with the currency (the lowering interests part) are proven to be major economic setbacks. But like I’ve said before, this can only change if everyone understands what’s really happening.


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