Tokyo's Ginza on Sunday  (photo by Groink)

Keynes was a failure in Japan – No need to embrace him in Europe

Draghi’s volte-face two weeks ago has emboldened the Keynesian majority in the media and in economic research departments. It has injected new life into their relentless campaign for yet more state intervention in the Eurozone economy. It wasn’t anything the ECB actually did (or announced) that initiated this new euphoria. As usual, the measures fell short of what the tireless advocates of “stimulus” demanded. To the true Keynesian, no interest rate is ever low enough, no “quantitative easing” program ever ambitious enough, and no fiscal deficit ever large enough. But with his talk of “stimulating demand” and his calls for “fiscal flexibility”, Draghi was finally speaking the Keynesian lingo. It was this that got hearts racing. “Choirs of angels must have sung over the statement that the eurozone has a problem with demand,” enthused Martin Wolf, … [Read More...]