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Keynesian Impact On The United States

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John Maynard Keynes first created the Keynesian economics in the 1930’s. Ironically during this period, the United States was amidst an economic collapse. Keynes thought process in developing the Keynesian economics was to analyze the practices that lead to the failure of the United States Economy. Keynes stipulation was that if the United States government would increase spending the demand would follow suit and increase. With demand increasing the end of the Great Depression would then follow. Keep in mind that The Great Depression began in 1929 and impacted the United States so greatly. Additionally, the United States Great Depression significantly debilitated many other countries across the world. This influence I believe truly thrust …show more content…

Department of State indicated that, “According to Keynes, people did not have enough income to buy everything the economy could produce, so prices fell and companies lost money or went bankrupt. Without government intervention, Keynes said, this could become a vicious cycle. As more companies went bankrupt, he argued, more people would lose their jobs, making income fall further and leading yet more companies to fail in a frightening downward spiral” ("Monetary and Fiscal Policy"). Keynesian economics was highlighted during World War II, as the United States Government increased spending on war interconnected items the economy seemed to flourish. For many years the Keynesian economics practices were unequivocally used. However, the government like in past, made numerous key choices that fractured the Keynesian Theory. These decisions of course then instigated fiscal policy to be examined again and it was truly necessary("Monetary and Fiscal Policy"). Lets also look at the issues that President Johnson created that somewhat “severed” the economy once again. As the U.S Department of State underlined “President Lyndon B. Johnson (1963-1969) and Congress launched a series of expensive domestic spending programs designed to alleviate poverty. Johnson also increased military spending to pay for American involvement in the Vietnam War. These large government programs, combined with strong consumer spending, pushed the demand for goods and services beyond what the economy could produce. Wages and prices started rising. Soon, rising wages and prices fed each other in an ever-rising cycle. Such an overall increase in prices is known as inflation” ("Monetary and Fiscal

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