Are You A Keynesian Or A Friedman Follower?
Adam Smith may the father of economics but his economic policies are not largely followed today. The two main schools of thought discussed today are those of John Maynard Keynes and Milton Friedman. Both men had different theories on what builds wealth in capitalism and drives the economic engine that is the United States economy.
Keynesian Economics
Keynes philosophy entails governmental intervention during recessionary and depressionary times. The federal government has a role in the economy along with the private sector. Keynes believed that the government has to step in during difficult economic times and provide demand for products and services. Without demand, unemployment would persist and the economy would spiral into a severe depression. The government is the spender of last resorts. Spending, even if it creates a deficit, is needed to prevent depression like unemployment.
Friedman Economics
Friedman had the exact opposite view. Friedman was an advocate for a stable money supply. He was against government regulation and believed that the actions of government has very little effect on the economy. The best thing that the government can do is seek a small expansion of the money supply. His theory became known Friedman believed in keeping the supply of money and the demand for money at the exact same levels.
The most famous recent monetarist is Alan Greenspan and the most famous recent Keynesian is Paul Krugman. Democrats tend to be Keynesians and Republicans tend to be Friedman followers.
Which economist do you think is correct?
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