THE LEGACY OF JOHN MAYNARD KEYNES: KEYNESIAN ECONOMICS AND ITS IMPACT ON THE ECONOMIC STIMULUS PACKAGE OF 2008

In the early 1930’s the world saw the most widespread and devastating depression in history. Poverty spread, unemployment rose, and economies stood stagnant. These results were partially attributable to the Great War and the unreasonable reparations Germany was forced to pay. As Germany failed to pay these reparations, governments who were relying on these payments began defaulting on their own loans. As a result, economic turmoil ensued. British economist John Maynard Keynes decided, as a result of a falling British economy, to come up with new, revolutionary ideas that could be used to pull economies out of depression. Some of these ideas were presented in Keynes ’ essay “The World’s Economic Outlook, ” in which he argues that deficit spending is one way to overcome economic depressions.i He later published the remainder of his theories in his most famous book, The General Theory of Employment, Interest, and Money. Despite the revolutionary and controversial nature of these ideas, today they have grown into an entire school of modern thought: Keynesian economics.ii In light of the United States ’ recent economic turmoil, it appears that Keynes’ theories have been deeply examined by American economic and political leaders. Afte