Microeconomics: John Maynard Keynes Assignment

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Most surprising pieces of information: Some of the most surprising information that we found in the article was the notion of the paradox of thrift. It seems to be a large political platform that is used that when the economy falls on hard times, it should in consequence tighten its proverbial belt and cut down on spending to help make ends meet, similar to what a household should do. Keynes purports this to be a fallacy however, because if everyone in an economy were to do this at one time, say during a depression, the effects ripple through the economy. Less spending leads to less income for people which can lead to mass unemployment. This makes a lot of sense when thought through, however in the mainstream we hear a lot about reckless spending, and how conservation of funds leads to better economic conditions, when this may not really be the case at all.

Most Important Piece of Information: One of the big take-away messages from the article is how according to Temin from MIT we could be at a juncture similar to the 1937 second economic dip of the great depression. He asserts that were Keynes alive today, would say that we are at a similar junction. After the big economic downturn of 1933, we saw 4 years of steady growth due to the New Deal and reductions in taxes in America; the two economic principles of Keynesianism. However in 1937, due to factors not agreed upon by economic historians, we saw a second downturn. Whatever the specifics, we see that a change in policy away from the Keynesian philosophy is likely to blame. It is important to recognize that we may be in a similar place in our recovery from the financial collapse of the late 2000s, and perhaps be able to rise above political philosophy and learn from our past economic mistakes.