Interesting bit on Keynes

[Ravi]

we know trickle down economics does not work. so what do we do?

Trickle down economics is better than the alternative, and even when the money trickles nowhere, at least it is in better hands than the government.

Can you prove that? It didn't work well for the last eight years.

 

[FistyTheBadger]

Now if the Miseians had been in charge, we couldn't have borrowed all that money to fight that war.

And we're probably still be in a depression or possibly we'd be speaking German.

This is exactly right and something the "libertarians" never consider. They'd be perfectly happy to sit and watch a hostile nation take us over as long as it wouldn't impact their tax return.

Put those clappers away. That is not true whatsoever, and I don't appreciate your characterizing libertarians as just greedy, money-grubbing bastards that pretend an ideology by it.

 

[FistyTheBadger]

Now if the Miseians had been in charge, we couldn't have borrowed all that money to fight that war.

And we're probably still be in a depression or possibly we'd be speaking German.

This is exactly right and something the "libertarians" never consider. They'd be perfectly happy to sit and watch a hostile nation take us over as long as it wouldn't impact their tax return.

I'm willing to bet you don't know half as much about Libertarianism as you think you do.

You are being generous.

 

[PeterS]

You can listen or read...pretty well describes Keynesian economics.

I found it interesting to learn that economic theories are about as valid as Creationism...in other words, no proof that any of the various theories work.

Obama Gives Keynes His First Real-World Test : NPR

Economic theories in their purest form are never applied fiscally. Democrats use tax and spend and call it Keynesian. Repubulicans use borrow and spend and call it supply side. Neither is an economic theory but a means to appease supporters. The irony is that tax and spend would conform more with supply side and borrow and spend more with Keynes since the latter would produce the debt Keynes thought would prop up the economy. That would make Reagan and Bush Jr two of the biggest Keynesian's yet and yes, I would agree, the theory has been completely debunked...

 

[FistyTheBadger]

...........

If deficit spending got us out out of recessions we wouldn't be in one.

But Kevin, doesn't that beg the question? By that I mean that you're assuming the cause of the recession was government deficit spending. But was it?

I do not think that he believes that government deficit spending necessarily causes a recession, even if he thinks for very good reasons that it is a very bad policy, and greedy. He just means that since we have been spending in deficit for a long time, we wouldn't be in a recession based on the idea that deficit spending pulls us out of recessions.

 

[Diuretic]

Debunked? You mean all those people who said it worked to end the world's Great Depression are wrong?

Well I never.

 

[Toro]

12:39 - KEYNES VS KEYNESIANISM:

After a meeting with other economists in 1944, John Maynard Keynes said "I was the only non-Keynesian at that meeting". I wonder what he would say today when so many politicans and economists discover their inner Keynesian and decide to spend billions and billions on infrastructure to stimulate the economy.

This is what Keynes said about that in 1942:

"Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle."

- Keynes, Collected Writings, vol. XXVII, p.122 (via Mario Rizzo).

JohanNorberg.Net

 

[Ravi]

Now if the Miseians had been in charge, we couldn't have borrowed all that money to fight that war.

And we're probably still be in a depression or possibly we'd be speaking German.

This is exactly right and something the "libertarians" never consider. They'd be perfectly happy to sit and watch a hostile nation take us over as long as it wouldn't impact their tax return.

Put those clappers away. That is not true whatsoever, and I don't appreciate your characterizing libertarians as just greedy, money-grubbing bastards that pretend an ideology by it.

You are welcome to prove me wrong.

 

[PeterS]

we know trickle down economics does not work. so what do we do?

Trickle down economics is better than the alternative, and even when the money trickles nowhere, at least it is in better hands than the government.

Huh? Government doesn't hoard money but people do. When money trickles now where economies crumble...

 

[FistyTheBadger]

If you flood the market with oil, the price goes down. If you flood the market with money and create jobs, you give people money to spend. Spending is really what the economy is all about.

Of course the key is when to stop, and I don't think Keynes ever addressed that point. Not knowing when to stop is basically what caused these policies to fail thirty years after they were started, no?

Very interesting thought.

It reflects what is the overwelhming problem of our time: ideological extremists holding whatever they believe to be the absolute and only truth for all time.

Reality dictates that, in most things, a balance of various approaches works best and that there is no one formula that works for all time.

I have no doubt that truly unbiased research would show an abundance of failures of both supply-side and keynesian economics as well as an abundance of successes for both - it's the time and circumstances in which they're applied that matters.

We've had 30 years of rule by supply-side economists and now our economy has gone bust.

Before that 30 years of Keynesian policies caused a downturn in the economy, but it was NOTHING compared to what's happening now.

My bet is that a good 10 years of Keynesian spending is just what this country needs.

Hope someday people can figure out that there is no one almighty way that always works for all time and they figure out a kind of dynamic middle-road for managing the economy.

Friedman economics works. The two problems with the economy that caused it to crumble was a demand based upon a supply that was not the reality, and poor people that instead of being responsible and living in an apartment until they could afford a house, they were greedy and demanded a house. They knew the reality of their situation, but they didn't care because they saw a bright, shiny object in front of them. People are very resistant to accepting this reality because we have been taught that money and victimhood enjoy an indirect causal relationship.

 

[FistyTheBadger]

If you flood the market with oil, the price goes down. If you flood the market with money and create jobs, you give people money to spend. Spending is really what the economy is all about.

Of course the key is when to stop, and I don't think Keynes ever addressed that point. Not knowing when to stop is basically what caused these policies to fail thirty years after they were started, no?

But just like with oil, flooding the market with money causes the value to drop. With money not worth as much per unit as before, people need more of it to get the same stuff. This cancels out any benefit of having more units of it. This is why inflation is so harmful and misguided. Has anybody posted this yet, because I don't think that this concept is very original or unique.

Flooding the market with money MIGHT cause the value of money to drop. But we aren't talking about flooding the market with money in the same way...the money isn't going nowhere, it's going to create jobs.

How long after FDR started his jobs program did we go without inflation?

Now we are hovering around the edges of deflation. Which is worse?

But you won't be able to get the jobs that you want because the price of an employee will be far higher in units than before, which will cancel out any benefit from having more units.

 

[editec]

Been thinking about how WWII socialism and deficit spending got us out of the depression.

As I noted previously, during that period they put millions of people to work making weapons of war.

But let's remember that they also demanded sacrifices from people, too. There were no consumer goods being made, everything was rationed and so people had nothing to spend their money on.

People worked in factories and then what did they do with their money?

They bought WAR BONDS...duh...how could I have forgotten that? My parents had those and hung onto them long enough for me to know they had them so that means they had those bonds for at least a decade after the war!

So look at the perfect loop the monetary policy made..

They created money out of basically nothing,

They used that fiat money to put people to work making war goods,

But the people didn't spend that money on stuff for themselves, instead they gave that money back in return for WAR Bonds.

In other words: AMERICA funded LABOR on fiat dollars, and labor accepted DEBT to fund the war when they purchased War Bonds with their fiat dollars

Brilliant, so far right?

Okay so then the war is over, the USA has massive debts. War bonds, debts to industrialists, too.

So how did the USA deal with that?

Look at the tax rates post WWII....they were staggeringly high.



A fairly brilliant application of Keynesian economic policy followed up by hard headed HONEST ACCOUNTING post the war to close the DEBT LOOP.

And here's one more thing...

Remember that when they were building war materials with those fiat dollars right?

Why is that important?

Because almost everything they made was something that ultimately was destroyed.

War materials did NOT HANG OVER AS INVENTORY after the war and depress the DEMAND side of the consumer driven economy.

So there was huge pent up DEMAND for consumer goods in the 50's, and industries could start making consumer goods and they could sell them like crazy, right?

So even though the richest people in America who were paying 90% tax rates, they made huge amounts of money post the war because they were selling CONSUMER GOODS.

Sure, the super rich were being taxed like crazy, but what did it matter?

They were making huge amounts during the war and AFTER THE WAR, too.

BRILLIANT!

Obama are you reading this?

If you issue fiat dollars you HAVE to put people to WORK to support the VALUE of those fiat dollars.

And you have to put people to work doing things that do NOT create INVENTORY that compete with the PRIVATE market which sells to consumers when you put those people to work, either.

When the people start making money again, they're start demanding consumer goods thus kickstarting the private sector to make stuff.

Now I suggest that we invest all that work being paid for with fiat dollars into public works projects that the PRIVATE SECTOR would not undertake.

Do things which are too risky for any private concern to try on its own but which, once they're up and running, can become be sold back to the private sector.

Here's the kind of projects I mean...

A truly functional interstate/intercity maglev commuter rail system?

The costs will be huge, the end product very useful, and private investment can get onboard during the building, leading to private interests ultimately buying it ALL as a going concern when it looks like it will be profitable.

Obviously projects surrounding creating a functional energy system might suit that need, too.

Again government/private infrastructure investments (much like the cross continent railroad was financed in the 19th century) are the ticket to investing fiat dollars wisely such that they don't hang over us screwing up the private sector later.

My point here is that any "solution" which doesn't put Americans to work on TRULY useful projects will only screw things up MUCH LIKE THE MISIANS ARE COMPLAINING ABOUT.

If we do this wrong, we kill our economy.

If we do this right?

We can not only save this economy, but kick start up off into a new economy (a new capitalist golden age if you will) for the 21st century.

In other words if we pork up this OPPORTUNITY we probably won't get another chance EVER to recover from out mistakes

But if we do it right?

Then this economic meltdown might be a blessing in disguise.

 

[FistyTheBadger]

we know trickle down economics does not work. so what do we do?

Trickle down economics is better than the alternative, and even when the money trickles nowhere, at least it is in better hands than the government.

Can you prove that? It didn't work well for the last eight years.

I am sure, just based upon mathematics, that if Bush hadn't cut taxes to put more money back into the hands of the people, the economy would have collapsed sooner, and instead of talking about the markets collapsing in the final months of Bush's presidency, they would have collapsed three years ago, for example.

 

[Diuretic]

12:39 - KEYNES VS KEYNESIANISM:

After a meeting with other economists in 1944, John Maynard Keynes said "I was the only non-Keynesian at that meeting". I wonder what he would say today when so many politicans and economists discover their inner Keynesian and decide to spend billions and billions on infrastructure to stimulate the economy.

This is what Keynes said about that in 1942:

"Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle."

- Keynes, Collected Writings, vol. XXVII, p.122 (via Mario Rizzo).

JohanNorberg.Net

Bear with me el Toro. So, was Keynes advocating government spending as a stimulus as a sort of emergency response to a huge crisis, a sort of a rescue attempt rather than saying it should be routine?

 

[FistyTheBadger]

This is exactly right and something the "libertarians" never consider. They'd be perfectly happy to sit and watch a hostile nation take us over as long as it wouldn't impact their tax return.

Put those clappers away. That is not true whatsoever, and I don't appreciate your characterizing libertarians as just greedy, money-grubbing bastards that pretend an ideology by it.

You are welcome to prove me wrong.

What "proof"? This is a matter of identity. Libertarians are not like you described. You are just creating ridicule to discredit them.

 

[FistyTheBadger]

12:39 - KEYNES VS KEYNESIANISM:

After a meeting with other economists in 1944, John Maynard Keynes said "I was the only non-Keynesian at that meeting". I wonder what he would say today when so many politicans and economists discover their inner Keynesian and decide to spend billions and billions on infrastructure to stimulate the economy.

This is what Keynes said about that in 1942:

"Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle."

- Keynes, Collected Writings, vol. XXVII, p.122 (via Mario Rizzo).

JohanNorberg.Net

Bear with me el Toro. So, was Keynes advocating government spending as a stimulus as a sort of emergency response to a huge crisis, a sort of a rescue attempt rather than saying it should be routine?

I do not know Keynes's intentions, but that is how I understood its possible usefulness.

 

[Ravi]

Trickle down economics is better than the alternative, and even when the money trickles nowhere, at least it is in better hands than the government.

Can you prove that? It didn't work well for the last eight years.

I am sure, just based upon mathematics, that if Bush hadn't cut taxes to put more money back into the hands of the people, the economy would have collapsed sooner, and instead of talking about the markets collapsing in the final months of Bush's presidency, they would have collapsed three years ago, for example.

I happy for you that you are sure, based on mathematics. But unless you present the mathematics I can't say that I agree or disagree with you.

 

[Diuretic]

.............


I do not know Keynes's intentions, but that is how I understood its possible usefulness.

Fisty I'm not pronouncing, I'm battling to understand this stuff.

 

[Toro]

12:39 - KEYNES VS KEYNESIANISM:

After a meeting with other economists in 1944, John Maynard Keynes said "I was the only non-Keynesian at that meeting". I wonder what he would say today when so many politicans and economists discover their inner Keynesian and decide to spend billions and billions on infrastructure to stimulate the economy.

This is what Keynes said about that in 1942:

"Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle."

- Keynes, Collected Writings, vol. XXVII, p.122 (via Mario Rizzo).

JohanNorberg.Net

Bear with me el Toro. So, was Keynes advocating government spending as a stimulus as a sort of emergency response to a huge crisis, a sort of a rescue attempt rather than saying it should be routine?

What he is saying in that quote is that infrastructure spending to spur the economy works best when there is a structural problem with demand, i.e. if people are hoarding money and not spending, also known as the Paradox of Thrift. It may not be useful in a normal business cycle.

I would contend this is not a normal business cycle.

 

[editec]

Now if the Miseians had been in charge, we couldn't have borrowed all that money to fight that war.

And we're probably still be in a depression or possibly we'd be speaking German.

This is exactly right and something the "libertarians" never consider. They'd be perfectly happy to sit and watch a hostile nation take us over as long as it wouldn't impact their tax return.

Put those clappers away. That is not true whatsoever, and I don't appreciate your characterizing libertarians as just greedy, money-grubbing bastards that pretend an ideology by it.

You don't appreciate it?

Ahhhhhh.

You're the same selfish nitwits who don't give a fuck that people are losing their liveihoods and who would rather see this nation go down than pay taxes?


Go fuck yourself, lad