2. • John Maynard Keynes was a
famous early 20th century
Economist
• During the infamous American
“Great Depression” Keynes argued
that to combat the widespread
economic hardship, instead of
relying on the free market, the
government should take an active
role in spending money to get
people back to work and
encourage them to resume
spending themselves
Famous
depression era
picture by
Dorothea Lange
3. The President’s response
• Initially the American
President, Franklin Delano
Roosevelt, did not
acknowledge Keynes’
theories as they were
somewhat revolutionary for
the time, but after the two
began exchanging letters and
finally meeting in 1934, his
Economic ideas began to
take hold
4. Outcome
• Many central ideas of
FDR’s “New Deal”, which
is often heavily attributed
to the end of the
depression, tie directly
back Keynesian Ideals
• The Government began
to increase spending on
public works projects
such as the Tennessee
Valley Authority (TVA)
• These efforts, coupled
with the American War
production boom of the
1940’s, seemed to solve
many of the time’s
Economic Woes
5. Flaws
• One important factor to
consider about Keynesian
Economic Policy, is that it
doesn’t equally apply to all
times. Keynesian economics
does a great job to combat the
drain of an economic recession
and ease the crests and troughs
of a business cycle, but it often
works inefficiently during times
of prosperity. At these times, the
increased spending and
regulation can often lead to
redundancies and waste that
can actually lead to more
economic hardship in the future.
• this is, however, not to say it
does not have its place
6. Basic Idea
• The basic idea of Keynesian Economics is that
the Economy cannot always be left completely
to the private sector; that the government can
take an active role to smooth the business
cycle with the spending and regulation of a
mixed market economy.
7. Relevance Today
• Today, more so than in most times of
American history, Keynesian
Economics is an important daily issue.
We are currently battling a crippling
recession that is being called the
worst since the great depression.
• This system is an crucial tool that can,
and is currently, being used to combat
the downturn.
• Perhaps more government spending
can be used to create job creation and
education programs, or more
regulation can be used to prevent the
destructive lending practices that
began this entire mess years ago. Only
time can tell how these theories will
play a part in shaping our lives in the
future