I'm putting together a post on that I hope will help you understand why, after passing a 700-billion dollar bail-out, the markets remain in turmoil.
In my last Carrots and Bicycles post I mentioned that I wanted to look at what happens when you view your microeconomic choices when faced with macroeconomic realities.
If you have time over the weekend, I recommend that you view this video, from Annenberg Media. What we're going to be looking at next week is the C + I + G curve, and some curious effects on you and I as individuals as government attempts to fix things. If you haven't signed up for Annenberg Media yet, please do so. It's free and fast. After you've signed up, look for Program Number 14, "Stabilization Policy". Of all the information you can get over the next few days, having an understanding about the differences between Monetarists and Keynesians is probably one of the most important distinctions I can ask you to have.
To put it into shorthand, most Republican economists are Monetarists. Most Democrats are Keynesians. The reason for this difference I think is that the Keynesian model is so simple. It approaches macroeconomic theory with the tool-kit of the microeconomist, and offers simple solutions to complex problems.
And then the Keynesian wonders why things don't work. Their conclusion is that there must be some sort of perversion in the market, and that requires greater regulatory control. You and I know that less, rather than more regulation is what markets seek. So I guess it's time to tell you, we're going to be looking at diseconomies; the things that cludge markets up.
Watch the video. Please.