The Real ‘Stimulus Record’ and Keynes – Instant Understanding

Filed in Accounting, Business by on August 30, 2012

I got many favorable comments on my first Real ‘Stimulus Record’ and Keynes post. It made my computer professional son create the terrific ‘instant understanding’ chart below.

This instant understanding chart shows you conclusively, without editorializing, the real record of stimulus in many countries, vs the theories of Keynes. Note that the source data for this chart is the International Monetary Fund, which often talks of stimulating economies.

The horizontal position of each chart dot shows the amount of stimulus, as a percentage of a country’s economy. The vertical position shows the percentage of later economic growth in this country. There are, of course, significant country by country variations. However, the genius of the chart is that you can clearly see the trend. The more a country tried stimulus, to increase growth, the more it hurt its growth and worsened its recession.

This shows dramatically and conclusively that Keynes was completely wrong about stimulus. The only time he got it right was near the end of his life, when he doubted the practicality and applicability of his earlier theories. Every pro-stimulus proponent should have to explain that and the results shown in the chart.

 

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