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Finance: Who is Keynes? 9 Views


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Description:

Who was John Maynard Keynes, and how did he contribute to economics?

Language:
English Language

Transcript

00:00

Finance a la shmoop. Who is Keynes? That's John Maynard and Keynes rhymes with

00:10

vaccines all right well he was a British economist and founder of modern-day [Someone getting vaccinated]

00:15

macroeconomics yeah popular in the 1960s his big book yep everybody poops well [Book titled 'Everybody Poops']

00:22

yes that one but his big economics book well it was called the general theory of

00:27

employment interest and money and that was actually the original title of [Woman running from a dinosaur]

00:32

Jurassic Park but a lot of people don't know that so you get that information

00:35

for free at Shmoop. All right well the book was published in 1936 written in

00:40

the middle of the Depression when spending was hugely well declining and [Pictures of people during the depression]

00:45

the notion of putting all your cash in your mattress was actually not such a [Hand sliding cash under a bed]

00:49

bad idea at least it didn't appear that way at the time. Keynes also wrote that [Keynes writing at a desk]

00:54

once employment dropped a new balance with low employment was created and the

01:00

depression might continue on and on and on unless the government started

01:04

spending to you know kind of stimulate the economy and fix things and get [Chargers being attached to the economy]

01:08

things going again well according to Keynes the big

01:11

solution aside from lowering taxes so that the wealthy would spend more in

01:15

hire bartenders for their wild and crazy parties was to have the government spend [Someone spraying champagne and the bartender is drinking it]

01:19

and spend and spend to get things moving economically even if it meant that the [People passing a dollar along]

01:23

government had to go into debt to do so well the big goal here was to stimulate

01:27

demand and this went against the ideas that economists had before i.e. that

01:32

the economy would eventually correct itself no interference needed well not

01:37

everyone likes Keynes ideas but President Roosevelt and the rest of the [People chucking tomatoes and Keynes presentation]

01:41

administration eventually did create what was called the New Deal which took

01:45

on a broadly Keynesian quality of bigmama government taking care of us it [American Economy as a baby]

01:51

was characterized by major and unprecedented government interventions

01:55

in the economy tons of spending and that's where that whole thing about [Someone giving out 100 dollar bills]

01:59

paying people to dig a hole and then fill it back up it all came from people [Someone digs a hole and then puts the dirt back in]

02:03

kind of did that... Well Keynes also believed that the

02:06

economy could not function on its own it needed parental help to correct it [Parents pushing a kid along on his bike]

02:11

kind of always that is in times of depression [They let go and he speeds up and starts screaming]

02:14

the government needed to lower taxes and increase spending or the economy would

02:17

stay in a funk like a generally unfed cranky child and at the other end of the [Kid sat on a toy bike crying]

02:22

stick to control inflation like when times were good and everyone was

02:26

employed and people were spending and spending and spending well then the

02:29

government needed to raise taxes and decrease spending and little things

02:33

matter a lot in Keynesian economics. Witness the multiplier effect and no [Blackboard full of complicated equations]

02:38

this has nothing to do with rabbits it's kind of like that TV commercial you know [Rabbit in snow]

02:42

or the woman with the awesome hair well she tells two friends about her

02:46

conditioner and they tell two friends who tell two friends who tell two

02:49

friends who then tell these guys it's a multiplier. [People on the phone to each other]

02:52

It grows fast that is a government tax cut puts an extra 5 grand in the

02:56

hands of a lawyer who spends most of that five grand on well yes parties [Confetti falling]

03:00

because that's what they do you got to to offset being a lawyer employing caterers

03:04

and deploying his friend Mr. Walker black who then deploys money on wheat

03:09

and rye distilleries such that while the tax cut of five grand ends up being an [Money cascading down through all the people]

03:15

economic stimulus of some ten to twenty times that number like 5 grand becomes a [Small pile labelled tax cut next to big pile of cash labelled economic stimulus]

03:21

hundred grand or something like that in GDP.

03:23

Well Keynesian demand focused ideas went on to dominate academic and government

03:27

thinking about political economy through the 1960s right about the time the first

03:32

edition of everybody poops hit the shelves... [Someone taking 'everybody poops' off a library shelf]

03:35

okay so Keynes didn't write that one but you know still stimulating the economy

03:39

stimulating your bowels yeah six and one half a dozen on the other and it's all [Someone sat in a toilet cubicle]

03:43

about your !$%*

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