2010-09-06, 08:54 PM
Keynesian economic theory harkens back to the days of the Great Depression and Roosevelt's New Deal. Since Hoover's "Trickle Down" policy did not work, Roosevelt's idea was to make the economy flush with cash from the ground up. Keynesian economic policy dictates the same idea - when there's a depression, flood the market with money to increase money supply and wealth. This was especially true of this recession due to extremely tight creditors that didn't want to lend for fear of foreclosures, defaults, and bankruptcies. Keynesian theory was the reason behind the $787 billion dollar reinvestment and all the bank bailouts. That's how it works.
In the end, the New Deal made a significant dent, but it was only World War II that pulled us out of the Great Depression. This sent off over 500,000 men overseas and America needed every production facility online to fight the war. So, no one, to this day, knows if Keynesian economic policy truly works during a time of depression.
In the end, the New Deal made a significant dent, but it was only World War II that pulled us out of the Great Depression. This sent off over 500,000 men overseas and America needed every production facility online to fight the war. So, no one, to this day, knows if Keynesian economic policy truly works during a time of depression.