What to say...where to start.

[RonPaul507]

News paper comments. Lots of people see this. Where to start and what to say to this beauty?

"Actually, GOP507 you're very mistaken.

Keynes introduced the idea of aggregate demand. He saw government spending as an important piece of overall demand; something the classical economists ignored. Keynes believed that during downturns and to assure full employment it was necessary for the government to stimulate the economy. However, not through debt financing, but by placing aside money during the good times to spend for stimulus during downturns.
The Friedman/Rand/Laffer side doesn't agree that the government has a role in stimulus. However, where you're wrong is in your belief they are against monetary policy involvement in the economy. In fact, they are pure monetarists and strong advocates of Federal Reserve policy; but only Federal Reserve Bank and private business involvement in the economy.
Now ask yourself; who caused greater harm to the economy: Wall St. or the Federal Government? Keep in mind the bankers, investment houses and insurance companies have been bailed out to the tune of about 13 trillion dollars."

[Simple]

http://www.foxbusiness.com/markets/2010/12/07/federal-reserves-bailout-rich-connected/

The members of the Fed bailed themselves out.

We're not saving for downturns, we're now the biggest debtors in the history of the world.

[enoch150]

The guy isn't really wrong with what he wrote, but he's aiming at the wrong target. I'm less familiar with Rand, but Friedman and Laffer aren't Austrians. We might agree with Friedman 98% of the time, but we do disagree on monetary policy.

And Simple is right. Keynes said to pay for government stimulus programs from savings. But that's not what modern Keynesians do.

You can argue against him a couple ways. Probably the easiest is to go after the final bit: "Now ask yourself; who caused greater harm to the economy: Wall St. or the Federal Government? Keep in mind the bankers, investment houses and insurance companies have been bailed out to the tune of about 13 trillion dollars."

The Federal Reserve bailed out the bankers and the insurance companies. The Federal Reserve was created by the government and has a government enforced monopoly over the money supply that allows it to do bailouts like this. And the bankers know it. That creates a moral hazard which encourages them to take on excessive risk, knowing that they will be bailed out because they are To Big To Fail. There would not by systemic excessive risk in a free market because there would be no one to bail them out. The Federal Reserve itself would not exist. The federal government is responsible both for the need for the bailouts and for the bailouts themselves because it created the Federal Reserve.

But you might have to distance yourself from Friedman a bit to do that.

[Acala]

Another angle would be to point out that Keynes asserted that consumer spending drives production when in fact it is capital accumulation that drives production. That is why the full recovery of consumer spending we see now has not driven a recovery of production. And that is why having the Fed manipulate interest rates causes havoc in the economy - it LOOKS like capital is accumulating in accordance with consumer preference but it isn't, it is a Fed-created mirage that causes malinvestment that must later be shed in a painful contraction.

Furthermore, there is no way to keep government stimulus spending from being corrupted by politics.