Have We Reached Peak Keynesianism?

The text presents a critical analysis of Keynesian economic policies, suggesting that the U.S. has reached "peak Keynesianism" much like the late 1970s and early 1980s. The main argument is that Keynesianism, which advocates for boosting demand through government deficits and redistribution, has been the dominant policy during recent economic challenges, such as the Financial Crisis and COVID-19.

However, this approach is now seen as unsustainable due to high federal deficits and rising interest rates on national debt, which have doubled from 1.5% of GDP in FY 2021 to an estimated 3.0% in FY 2024. The text also highlights the inadequacy of current savings rates, which have fallen significantly from pre-COVID levels, undermining the effectiveness of redistribution strategies aimed at stimulating consumption.

The implication is that traditional Keynesian tools may not be viable in the face of future economic downturns, necessitating a shift towards supply-side policies that emphasize low taxes, high savings, and minimal regulation. The author suggests that, much like the shift away from Keynesianism in the 1980s, a change in economic strategy is possible and necessary, facilitated by democratic processes.