My understanding is that it was widely discredited before the financial crisis, back when economists thought they actually understood economy and that economic crisis were a thing of the past. Then reality happened, and it seems that US government spending has kept the economy going to the dogs. On the other hand, looking around in Europe, I don't manage to find a single country where austerity measures appear to have produced anything than deeper recession.

> My understanding is that it was widely discredited before the financial crisis, back when economists thought they actually understood economy and that economic crisis were a thing of the past.

Keynsiansm thrown away for a reason. Just because we still dont know anything better is no reason to belive that keynsiansm is right.

Thats like saying COBOL is the best language because we have figured out that Java is actually not that good.

> Then reality happened, and it seems that US government spending has kept the economy going to the dogs.

Not sure how you arrive at that.

> . On the other hand, looking around in Europe, I don't manage to find a single country where austerity measures appear to have produced anything than deeper recession.

Its kind of like saing look at these sinking ships fixing parts of the ship is really not working for them.

I main sure you can not reduce goverment spending for some amount of time but not forever. Eventually people will not give you more money. Goverment spending is no solution in greece, anybody can see that, even keynsians, the only thing they want is to wait with buged cuts until the economy is stable but that is not always a option.

The UK is hovering around the recession borderline, but I wouldn't say the recession is deeper than is was pre-austerity.

On the other hand, Greece tried no austerity, and we see how that played out.

//edit//And in the UK - austerity hasn't even started yet. Government spending is still rising in real terms.

Greece has particular problems. A culture of pork barrel, corruption, nepotism and tax evasion (not to mention cooking the books) does not make for sustainable governmental spending. But now that they are implementing unprecedented cuts, the country is going down the drain.

The UK barly did any austerity and they raised taxes. What the UK does has nothing todo with what any economist would think is right.

The are on a good path on the monetary side, I hope so at least.

Keynesian economics is only partially wrong, the only case where it is always wrong is if the Government always buy productivity less efficiently than the free market. Given the rather poor job that financial institutions have done recently I would think it would be hard to argue that this is always the case; we all know public servants don't get paid the insane wages that bank executives do.

Regardless of whether the source is the government or employers giving money to poor people is a good way to boost productivity because poor people spend money, rich people by comparison don't.

Government buys everything less efficiently than the free market. That's what you can do when individuals aren't held accountable (I'm talking about government employees, not elected officials).

* The totally free market is an ideological myth.

* The US spends roughly double the % of GDP of other nations in Europe with single payer on healthcare and gets similar results. That's twice as expensive for the same result. Their "government spending" is 2x as efficient as the totally private US system.

It's widely discredited amongst the same economists who didn't see the crisis coming and whose predictive models don't work for shit.