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Comment by gibsonf1 | Hacker News Reader

I have no idea why Keynesian ideas are assumed as the proper way to solve economic problems when, in fact, they never work. Germany is unusual, especially in comparison to the United States, in that they make a point of only spending the money they have. They have been watching the "wonderful" results of Keynesian intervention in the US recently and around the world and likely noticed that the results are always greater economic disasters. What sense is there in pouring gasoline on a fire?

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...they make a point of only spending the money they have.

Germany has the third-highest public debt in the world with only the fifteenth-highest population. Their debt is much higher as a percentage of GDP than the U.S. (83% vs. 62% according to the CIA world Factbook. [1]) They've spent plenty of money they don't have.

[1] https://www.cia.gov/library/publications/the-world-factbook/...

But Germany was/is in a very different situation. We are absorbing since twenty years a formerly communist econom - the GDR. Germany had little choice than invest a lot of money to do so. If you look at current policies, they are much about getting the debt problem under control.

Germany bailed out a bankrupt state in the 90s (the GDR).

Germany uses Keynesian ideas as well for example it launched a Konjukturpaket[1] in 2009. Germany was just not hit as hard and recovered faster, there is nothing particularly unusual about that.

[1]: http://de.wikipedia.org/wiki/Konjunkturpaket_II

The US has been doing extremely half-assed Keynes. It's not working because the bills haven't been large enough to have a measurable effect. Fundamentally I think the problem is the US has been too risk-averse. We've been hamstrung by our inability to accept that we have to take big risks to solve big problems, instead we're neutering any sort of solution to the point here it doesn't present a risk, and consequently can't present a true solution.

I think there's a similar issue with this economist article. The assumption that there is a "correct choice" I think is wrong. There are a variety of bad choices, and it's probable that extremely risky choices are the only ones that have a chance of solving the crisis.

You're making economics sound like a religion rather than a science, there. If Keynesian economics hasn't worked in the US, then there's two possibilities:

1. It was too small or wrongly applied, or

2. Keynesian economics doesn't really work

It's also worth separating the descriptive and prescriptive aspects of Keynesian economic theory. On the descriptive aspects, it seems to be doing fairly well so far. In particular, Keynesian models predicted that we wouldn't suffer significant inflation from the stimulus program + QE/QE2, due to a liquidity trap, whereas some monetarist models predicted that high inflation would result (and the Austrians were even predicting hyperinflation). Since high inflation hasn't materialized, that seems like at least some evidence in favor of the Keynesian macroeconomic models.

For actual Economic theories with a causal basis, the Austrian School wins with Von Mises the clear leader. Keynes simply can't work and never will - more Keynes means an even worse economic disaster.

Are you saying Germany has no debt?

There's a difference between investment and debt. If your cash flow equals your debts, it's an investment.

So, if the US has a net positive year where tax revenue exceeds costs, all the trillions of dollars in debt we are in will suddenly become investments? Fantastic!

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