[PEN-L:30675] Re: debunking greenspan redux or, finance as bubble gum and duct tape

["Devine, James" <jdevine@xxxxxxx>]

Title: Re: [PEN-L:30642] debunking greenspan redux or, finance as bubble gum and duct tape

 Doug Noland writes:
>... This key issue goes all the way back to the John Law's Great
fallacy:  that economic wealth can be created simply by providing
additional money ("finance").  And in reasoning that either lacks
credibility or understanding, Greenspan would like us to believe we can
have our cake and eat it too - that more beneficial "finance" can be
created that leads to more "wealth" and higher living standards, as long
as it is "managed ever more effectively."  ...<

this sounds like the author believes in classical economics.

Keynes pointed out that if there is significant unemployment and unused
capacity in an economy, increased money (or fiscal stimulus) _can_ allow
greater use of resources and thus more production, more wealth and
higher living standards. Is this what Greenspan was saying?

Noland might be assuming (with classical economics) that we _always_
have full use of labor and capacity, so that this Keynesian point
doesn't apply.

Jim