The new Democratic Party or New Deal as it was called by Franklin D. Roosevelt, used Keynesian Economics to pulled us out of the Great Depression we inherited from the Republicans in 1932.

Keynesian Laws of Economics are as valid today for the economy as Newton's laws of motion are in physics. But what about all these offshoots of economics from Keynes's original writings? Yes there are many offshoots, but the basic science is as valid today as it was at when first introduced. In the same way quantum physics is an offshoot of Newton's laws of Physics, which are as valid today as when Newton first compiled them in the 17^th Century.

Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and, therefore, advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.^[1] The theories forming the basis of Keynesian economics were first presented in The General Theory of Employment, Interest and Money, published in 1936.

Keynesian Economics is a science – not a political philosophy. It was not political philosophy that got us to the moon. It was science.

Likewise, it was not political philosophy that pulled us from the Great Depression. It was science – the science of Keynesian Economics.

And it was Keynesian Economics that pulled us from the recession that John F. Kennedy inherited from the Republicans in 1960.

Because of the success of the Kennedy Administration in producing a surpuls (the only surplus in the history of USA until that time) the Republicans followed suite. President Nixon declared, "We are all Keynesians now."

But when Ronald Regan became President, the political climate changed. he started what was then called, "Regan-omics," and later, "Trickle Down Economics," which is the economics of the Republican Party in 2011. The national debt increased 400% under the Ronald Regan Presidency: that is, Ronald Regan quadrupled the US National Debt -- more than any other US President.

Please click on: Regan's 400% Increase of US Gov. National Debt   

Then President Clinton created a surplus -- the second ever in US history.    

But what is the science of Keynesian Economics?

The science is simply this: scientifically, a free economy can not exist in a state of perpetual prosperity. This is because each new boom brings upon itself demand for more goods and services. And this demand causes inflation, which in turn creates higher and higher prices. And these higher prices stagnate sales for two reasons:

First higher prices means there's less actual money (buying power) to purchase the goods and services offered.

And secondly, higher prices results in the unwillingness of people and sometimes inability to actually purchase the products for sale at higher prices.

Lower demand, usually because of inflation and contracted buying power is what cause all Recessions and Depressions.

Higher demand, usually because of low prices and increased buying power is what causes all Recoveries and Boom periods that follow.

Ultimately it was inflation in the housing market! People didn't have the money and some were unwilling to make the higher mortgage payments created by adjustable rate mortgages  -- that caused the mortgage defaults -- that snowballed into the present Recession. 

The basic logic of Keynesian Economics is this: it's necessary for the government to do for the economy and the people – what the economy and the people can not do for themselves.

Because of these factors, the science of Keynesian Economics requires government intervention in order to stabilize the economy. There are two ways of doing this:

First there is government, monetary policy: regulating the money supply and interest rates, like lowering and raising the Discount Rate. Although monetary policy is good for regulating the economy to curb inflation -- during a boom -- monetary policy has limited ability to reverse a recession -- especially the recession of 2011.

And secondly there is fiscal policy: that is, actual government spending! This has a direct affect on both recessions and booms. It's beneficial during times of recession! It's detrimental during times of Boom because it causes inflation. 

But unfortunately in the 2011 political climate, all government spending becomes deficit spending and there are those – not versed in Keynesian Economics – who oppose any spending – supposedly because we can't afford it and some think it will even hurt the economy. 

The purpose of this web page is to show that using basic Keynesian Economics, targeted deficit spending will not create debt. It will actually create a surplus. That is, not only do we get back 100% of the Government deficit spending in the form of Direct Tax Revenues, but in addition, it will create a Direct Surplus.

President Obama is proposing a $450-Billion Deficit Spending, Job Plan. Not only will this pan Directly pay for itself, but it will Directly cause the Gross National Product to increase by $2,250- Billion. This is because the $450-Billion will not stop circulating in the economy. It's called the multiplier affect of Keynesian Economics.

In order to understand how this works:
Please click on Video: Multiplier Effect

But this is only part of the good news: That's because this $2,250-Billion is what is called marginal. That is, Gross National Product that would not have happened without the Jobs, stimulus, government spending. And the best part is this: $2,250-Billion in Gross National Product will trigger all kinds of taxes, like sales taxes, state and federal income taxes, etc.

And so it's estimated that the Marginal Sales will trigger Marginal Tax Revenues – both State and Federal of $517.5-Billion. Now if this is true which it is, what prudent person would not invest the $450-Billion?

Again this is just good business.

How the $517.5-Billion was computed:
Please click on Video: Marginal Tax Revenue

Why the Monetary Policy proposed by the Republicans can not be used to pull us out of the recession.
Please click on: Monetary Policy

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Yes, lets cut government spending and raise taxes to pay down the National Debt! But the time to do this is during a Boom in order to curb inflation and prolong the prosperity-- not during a Recession! This only helps us get deeper in the hole.

This is the Science of Keynesian Economics. It's not a Political Ideology. It's science!