INTRODUCTION AND DEDICATION

KEYNESIAN ECONOMICS 101
LEARN HOW WE CAN EMPLOY EVERYBODY
WHILE REDUCING OUR DEBT RATIO
BY REBUILDING OUR INFRASTRUCTURE
Please join my economics class by clicking on the
"Lecture 1" link at the right after reading the
following dedication.
If the lectures are not listed, click on "August".

You don't have to
 register,
 pay a fee,
 keep a schedule,
 do homework,
 or pass an exam for credits or degrees.

You don't have to
 log-on,
 enter a user name,
 or remember a password.

But if you study these lectures,
 you will discover the ONLY way out of this mess.

Economics is too important to be left to the economists.
 and the most important
 and the most controversial economic question
 dividing our government,
 our voters,
 and perhaps your family,
 is the theory of the British economist,
 John Maynard Keynes (1883-1946). Biography review

Our current “Great Recession” brought us
 plummeting tax revenues,
 exploding recovery costs,
 a large federal budget deficit,
 and hysterical cries for less government spending
 NOW,
 exactly when we should be employing our idle resources
 to rebuild our decaying and obsolete infrastructure.

With effort, anyone with an above-average IQ
 can understand Keynesian economics.

But that’s only half of us
 so, our half must out-vote the other
 and so, I am offering you this free learning opportunity.

The following is a short summary of Keynesian economics
 that requires only a 12-year-old’s knowledge of arithmetic
 and, since it is more difficult than the course itself,
 serves as an entrance examination of sorts.

If you can't follow the arithmetic,
 ask a 12-year-old for help.

            THE KEYNESIAN CATECHISM

Unemployment rate ≈ 9%.
National Debt = ND ≈ $14.5T.
Gross Domestic Product = GDP ≈ $14.8T.
Debt Ratio = DR = ND / GDP ≈ 98.0%.

What should Congress do?

Just as World War II DEstruction
 ended our Great Depression,
so will massive, nation-wide CONstruction
 end our Great Recession.

With a stimulus large enough to employ everybody who can work
 (à la World War II),
 the newly employed will
  rebuild our infrastructure,
  spend their paychecks,
  boost tax revenue,
  and multiply GDP. 

The magic of stimulus is in the multiplier: M ≈ 2.5.

If the stimulus = S dollars spread over five years,
 then average GDP growth
 = ΔGDP
 = Multiplier × Stimulus / 5
 = M × S / 5.

Since GDP growth increases tax revenue
and, relative to GDP,
 our tax burden (for all levels of government)
  = TB
  ≈ 30%,
 therefore,
  our five-year tax revenue growth
 = ΔTR
 = GDP growth × Tax Burden × 5 
 = ΔGDP × TB × 5
 = (M × S / 5) × TB × 5.
 = M × S × TB.

And our Infrastructure Purchase Discount
 = IPD
 = ΔTR/S 
 = (M × S × TB) / S
 = M × TB
 ≈ 2.5 × 30%
 ≈ 75%,
 which ain’t bad.

But
 if M = 3.0 (Yes, it’s possible!)
 and TB = 33% (as it should!), 
 then IPD = M × TB
          = 3.0 × 33%
          = 99%!! and that comes with full employment, too!

And
 if M ≈ 2.5
 and S = $4T,
 then average GDP growth
 = ΔGDP,
 = M × S / 5
 ≈ 2.5 × $4T / 5
 ≈ $2T.

And the average GDP growth rate
 = ΔGDP / GDP
 = $2T / $14.8T
 = 13.5% (as during WW II)
and our Treasury bond rating goes to AAAA++++!!!!
and our Treasury bond interest rate drops!!!!


And five-year tax revenue growth
 = ΔTR,
 = ΔGDP × TB × 5
 ≈ $2T × 0.3 × 5
 ≈ $3T.

And the new (post-stimulus)National Debt
 = ND + S - ΔTR
 ≈ $14.5 + $4T - $3T
 ≈ $15.5T.

And the new (post-stimulus) GDP
 = GDP + ΔGDP
 ≈ $14.8T + $2T
 ≈ $16.8T.

And the new (post-stimulus) Debt Ratio
 = new ND / new GDP
 ≈ $15.5T / $16.8T
 #8776; 92.3%.

And the Debt Ratio change
 = ΔDR,
 = the new (post-stimulus)DR − DR
 ≈ 92.3% − 98%
 ≈ −5.7%!!

So, with a stimulus of $4T,
 we can re-employ millions
 to rebuild our crmbling infrastructure
 at maybe zero deficit increase
 and also reduce our debt ratio by over 5%!

Just as World War II spending hired millions
 who traded their "Victory" bonds
 for cars and homes
 and turned old farms into new suburbs,
 so will rebuilding our infrastructure restore our prosperity.

But what determines the value of the multiplier, M?

My course answers your questions about Keynesian economics.

I have tried to simplify the theory
 so that,
 by understanding the facts and logic,
 every citizen with an above-average IQ
 can cast an informed vote.

Did I succeed? You tell me!
I welcome your comments and questions.

In any case, I did my best.
 Now,it's your turn.
Marvin Sussman, retired engineer

©2011 Marvin Sussman All Rights Reserved

After reading the dedication below,
Please click on "Lecture 1", above on the right.
If the lectures are not listed, click on "August".

DEDICATION
This web site is dedicated
 to my fellow World War II
 4th Cavalry Reconnaissance Squadron
 “A” troopers.

My “Fighting Fourth”
 was a regular US Army unit
 with a history reaching back
 before the Civil War.

Before entering combat,
 all the commissioned officers
 were graduates of West Point
 or of the Virginia Military Institute.

All the non-commissioned officers
 had five to 25 years of service
 in the mounted cavalry.

These were men
 who devoted their lives
 to the defense of their nation.

All the privates
 were wartime volunteers
 from every corner of the nation:
 Brooklyn Italians,
 Chicago Poles, Irish, and Jews,
 Minnesota Scandinavians,
 Carolina Appalachians,
 Dakota Sioux.

For the D-Day assault on Normandy,
 in the wee hours of the morning,
 long before H-Hour,
 “A” troop
 cleared a fortified island
 lying off the coast,
 opening the way to the mainland.

My sergeant, Harvey Olson,
 and Corporal Thomas Killoran,
 both of the 2nd platoon,
 were the first American soldiers
 to land on a French beach,
 swimming ashore from a raft,
 with flashlights
 to guide the landing craft. 

As a boy,
 Sergeant John Onken,
 of the 3rd platoon,
 came to America from Germany
 with his parents after World War I
 and retained a slight accent.

Especially friendly
 toward Jewish troopers,
 John could not understand
 why Germany followed the Nazis.

John Onken
 was the first American soldier
 to die on a French beach.

In 11 months of combat,
 from Utah Beach
 to the heart of Germany,
 “A” troop,
 no more than 140 men at full strength,
 (and never at full strength),
 suffered
 more than a hundred battle wounds
 and 36 deaths,
 including
 two captains
 and
 four lieutenants.

President Franklin Delano Roosevelt
 awarded his Distinguished Unit Citation
 to the
 4th Cavalry Reconnaissance Squadron 
 for its:

   “...gallantry and esprit de corps...
    above and beyond the call of duty...”
      
 during the “Battle of the Bulge”.

These troopers
 saw their nation in peril,
 and,
 in keeping with the highest traditions
 of the US Cavalry,
 rode to its rescue,
 and did extraordinary deeds of valor.

While honoring their service,
 may this web site also enhance
 the heritage they preserved.

       Marvin Sussman

Thanks for your interest.
  Marvin Sussman, retired engineer

Copyright © 2011 Marvin Sussman All rights reserved. 
  
Please click on "Lecture 1", above on the right.
If the lectures are not listed, click on "August".