We are seeing a return of Keynesianism in the current economic crisis, writes Jean-Marc Vittori in the business paper Les Echos: "This is the return of John Maynard Keynes and the second death of Milton Friedman. The crisis that is rocking the global economy, ... is also shaking up global economic theories. John Maynard Keynes, hero of the 1930s, is once more being read in earnest. ... After the burst of the biggest financial bubble in history, asset prices, real estate and share prices are all plunging. People lack funds and bankers are having to plug the holes in their financial statements, which puts a damper on their lending fervour. Consumers, for their part, hardly want to borrow. Demand is sinking and no longer provides for full employment. We are really in a 'Keynesian' situation which justifies strong public intervention. The state must spend far more to avoid a catastrophe, and the sooner the better. ... In this hullabaloo the supporters of the free market are not being heard. People want to see the economy rescued according to the prescription of Doctor Keynes. Milton Friedman, in the meantime, remains in his role of architect. His laisser-faire may help us construct a more efficient system when the economy is in good shape, but not when it is almost suffocating." (24/11/2008)
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