John Maynard Keynes Economy & Governments

I still find it very interesting that very often the topics being covered in my digital civilization class are being taught to some degree in another one of my classes.  For this particular week one of our two main topics is on the man John Maynard Keynes, an economist.  His discoveries identify the need of government intervention in certain economic situations in order for a country to not lose all control of its system.

Here's a short breakdown of who John Keynes was and his accomplishments :

• He was born in 1883 at Cambridge England, where he later taught
• He was a British economist who spent his career amongst England's most intellectual individuals
• He was appointed director of the bank of England
• One of his large accomplishments was he helped form capitalism in the 20th Century
• He actively participated and aided the British in both world wars.

Keynes theories gained so much popularity that they developed into a category of their own, now known as Keynesian economics.  Wikipedia states that "it (Keynesian economics) argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle."

President Obama has been putting a lot of money into the economy while he has been in office.  His mentality of stimulating the economy fits nicely into Keynes principles.

In my Managerial Economics class we've been discussing the moral hazards of government intervention regarding company bailouts classified as "too big to fail."  When a company reaches this classification and fails, a domino effect begins to take place and the hundreds of businesses which relied on the success of the large company now also start to go under.   Companies that know they're ensured to stay running via government intervention have a large tendency to make more radical  and risky decisions.  Doing so may result in very large returns, yet the contrary exists where it could also put them under very quickly.  

Remember the year 2009 and watching the stock market plummet from approx 12,000 to less than 6000 in less than half a year?  Remember all the news articles about AIG bailouts, Bear Sterns, or the housing mortgage issues?  If you'd like to watch a really well put-together PBS video on what caused the economy to fall so rapidly as it did, click here.  The video is approximately an hour long.  It discusses the very essential need of government intervention and how the public understood and interpreted its actions.

Here's a fun music video of Keynesian Economic principles put into a rap if you're interested.