What was Keynes' answer to economic development and economic problems?

Question

What did he say the rle of the federal government should be?

Answer 1

Keynes believed that government intervention is necessary in order to balance he economy. Therefore, countercyclical fiscal policy should be implemented.

Answer 2

Keynes believed that the government should run higher budget deficits during downturns to stimulate the economy. The increased government spending would be payed for by increasing the national debt via bond sales.

Supposedly the government would alternately buy these bonds back as the economy improved, and retire the debt thus tightening the money supply.

The deficit spending is always the easy part, obviously since the politicians have no problem convincing the public that it is necessary. The hard part comes when it's time to cut back on spending and pay debt off. The politicians would always prefer this to be done by the next administration.

Keynesian economics has always be lauded by our government as it allows them to "manage" and "control" the the economy to suit themselves. It is an extremely flawed school of economics, and has been responsible for the huge government that we have today along with the 9 trillion dollar national debt.

Answer 3

Keynes did not have an answer to economic development; it was not a problem he was interested in. Development policy is inherently long-term, while Keynes' main interest was in short-term stabilization policy.

The role of the federal government, according to Keynes, is to run a budget surplus during expansion and a budget deficit during recession.

Answer 4

Basically during a recession the Govt should increase spending, and during good econ times reduce spending. A great theory until you try to apply it in Washington.