Bubbles were not created by kenysian economics. Surely you know that.
Bubbles have always occured in capitalist systems. Up until the 1930 it was fairly routine to have severe and painful economic depressions. Keynesian economists have never claimed they had some magic method to eliminate bubbles. Surely you know that as well.
Keynsian economics, as I understand it, was intended to take the roughest and harshest edges off economic downturns. To flatten out the troughs and peaks of the business cycle, to the extent possible.
There was never a strong middle class before the 1930s. There has never been another severe depression since the 1930s. The last 80 years have been unparalled in terms of the growth of the middle class, economic growth, and prosperity. At least in the developed world.
This is what you call a "failure"?
The difference between Kenynsianim, and the policies you promote is that Kenynsianism has been tested. Over and over. And while any economic systems have imperfections, the broad span of historical time has proven Kenynes right. That's why EVERY single government on the planet is employing it.
You're defending a system that has never been tested. Can you name a single country on the planet that has adopted the Austrian method, or whatever you call it? Its easy to defend a system that's never been tested. Ideology sounds good on paper, where's the proof that it works? I still can't understand why its not being employed anywhere in the world.
And if you can't convince any nation, government, or economic ministry on the planet that your theory is the correct one, then you have to at least look at the possibility that your theory really isn't that convincing. This is the free market place of ideas, after all. Isn't the free market place something the austrians believe in? And if their ideas can't sell in the market place of ideas, isn't it possible that they're not convincing or robust enough for anyone to buy?
First off, I never said Keynesian policy created bubbles. My position is that they exacerbate them.
Second of all, so if the theory has never been implemented, and all that we do know is it "looks good on paper", then I'm not seeing any significant reason to disregard its use. Because, as I see it, looking good on paper as a first step seems just fine to me. I'm sure you're aware of the scientific method. The problem is you don't agree that Keynesianism has caused bubbles worse than what would otherwise occur. You're ignoring the fact that if you create trillions of dollars out of nowehere and throw it into the system, it's going to overinflate an asset, or assets. Sure, what it does is create a temporary fix because the liquidity in this borrow and consume economy we have creates "growth". But at what price? BUBBLES. Not just little bubbles with various short lived recessions, but massive ones like we are seeing today. You both seem to ignore how the new money creation affects the economy. Recessions are necessary evils, and I'll never abandon that particular belief. They happen regardless of the economic system that's being implemented because allocation will always be imperfect. If there was sufficient capital and cash during the last boom to create prosperity, then there will still be sufficient cash and capital again in the future, regardless of a recession. The problem is that people can't stomach the temporary pain of the recession long enough to handle the natural correction, so they demand more new money to be thrown at the problem. Figure out where this new money is going, and you can prosper from it. If you are clueless economically, like most people, you'll suffer the consequences, i.e. our current situation.
There are consequences to creating too much money to fix a problem caused by creating too much money. How can you argue that? It's been proven time and time again. To assume this entire cause is strictly due to insufficient regulation is foolish, ignorant, and lacks any and all critical thought. Even Toro, who defends Keynesian policy, admits the Fed played a prime role in this mess. I never see you challenge HIM though, because ultimately he agrees with your overall ideology of necessary regulation, so you sleep well knowing that and prefer not to challenge his other positions.
Make no mistake. I enjoy these discussions. I'm not belittling you, I don't think less of you, etc, because you don't agree with me.
Truthmatters is a different story though. She's obviously not knowledgable in econ enough to make an impact on this debate. All she knows is what she reads and hears in articles and TV news stories. At least you can spell and utilize proper grammar. For that, I give you credit.
