Senator Richard Shelby’s Ignorance of Keynesian Economics

I have isolated this clip from the Hearings on Janet Yellen’s nomination to head the Federal Reserve bank.

Why do you suppose that Richard Shelby is so adamant about getting economist John Maynard Keynes’ name so connected with using monetary policy to stimulate the economy? I suspect that he knows that he does not like Keynesian economics and he does not like using monetary policy as a stimulus, thus he wants to connect the two.

In a very diplomatic way and feigning ignorance of what Keynes thought, Janet Yellen attempts to point out that it is economists like Milton Friedman who believe that monetary policy is all you need to stimulate the economy. Milton Friedman is a darling of the right wing and the Republican party. Keynes, on the other hand, is on the sh*tlist of the Republican party.

Ironically, the whole premise of John Maynard Keynes’ economic theory about getting out of the depression of the 1930s was to explain how monetary policy would not work to stimulate the economy under the conditions of the 1930s depression.

It was economists like Milton Friedman who took a very anti-Keynesian position in order to prove that Keynes was wrong and that monetary policy would have worked to end the depression. In fact Friedman even went so far as to fudge the data to prove his point. Friedman won the Nobel Prize in economics for his insight. It was not until recently that people have realized how badly that Friedman fudged the data in order to prove his point.

All Shelby seems to be able to remember is that he dislikes Keynesian Economics. He doesn’t seem to know what Keynesian economics is, nor why he dislikes it. Yet Shelby is looked up to by some Republicans as an expert on economic and banking policy.

See the first paragraph of my previous post How Milton Friedman Fooled The Economists

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