Please note that my book Keynes Hayek: The Clash That Shaped Modern Economics is published by W.W.Norton in October.
Professor John B.Taylor says that: “Nicholas Wapshott brings the Keynes-Hayek fight of the 20th century back to life, making the clash both entertaining and highly relevant for understanding economic crises of the 21st century.”
Read an extract at: sites.google.com/site/wapshottkeyneshayek/
yep and the rethuglican masters and the absentee dems are just sitting around doing nothing about the unemployeed i am so thankful i got a job and it was NOT easy i almost didn't get one myself, but my job came after not being allowed to continue unemployment after they denied unemployment twice second time after the nov 2010 repiggies took office, i know how hard it is for the unemployed now in 2011 there are still people who can't get jobs.
Huh? I don't recall government spending being effective or spontaneous. He seems more like a salesman for what projects the government ought to get into than an economist...
is it just me, or is paul krugman seriously hard to understand compared to milton friedman. simply saying, i dont have a single shred of clue what he's talking about. He jumps from A to D, skipping B and C.
@rainzoro I have a basic understanding of his explanations. I'd be happy to try and break them down. The idea is that the government gives money to people. When people have money, they spend it. This is an increase in demand and helps revive and ailing economy. Otherwise, people spend less...which means people lose jobs..which means people spend less...and a cycle of deflation can happen. This was part of what happened in the Great Depression.
@majinspy So the government gives money to the people. Isn't that money tax money? If so, the government would be giving money to the people which was originally theirs from the first place.
If not, and the government is actually injecting NEWLY PRINTED MONEY, then won't that create a devaluation of dollar? Ah, but Paul Krugman is saying EVEN AT THE EXPENSE of devaluation, this stimulus is worthwhile because it atleast gets the economy running. Slow engine is better than a dead engine. right?
The problem that is trying to be solved is deflation. People spend less. Businesses close. Those people (newly let go) spend less. More business close. And on and on in a downward cycle. This cycle is a drop in demand leading to a drop in prices which leads to a drop in demand.
The government, however, can step in and start buying. This increases demand and puts people back to work. Which gives them money. Which they can spend, which means new biz must open to fill THAT demand.
Peer-reviewed study finds Paul Krugman is the most partisan economist. Krugman was the only economist to "significantly" change his stances for partisan reasons. Krugman has even gone so far as to contradict his own findings to bash Republican politicians.
The peer-reviewed research was published in May 2010 issue of the Econ Journal Watch (EJW), edited by Daniel B. Klein.
Seven Nobel laureates are members of the EJW Advisory Council
its ashtonishing how someone like krugman who has gotten everything so wrong and has no understanding of true economics is stil somehow respected. he should be laught at everywhere he goes. somehow he still shows his face around. I guess thats the publics fault for being too ignorant to see how insane he is. keynsian bullshit is one of the great downfalls of modern economics
i'm just completely shocked at the level of idiocy of the Nobel Prize commission. Obama gets a peace prize despite being in the midst of 3 wars (we're now on the verge of invading pakistan), and this tool has a peace prize even though he can't understand the concept of scarcity.
I THINK that the science end of Nobel Prizes is still non-corrupted... i think....
lol its to the point where I would be shocked if they actually got it right and gave someone like ron paul some nobel prizes lol. But as is the precursers to every falling empire, its citizens and institutions embrace mediocrity and failure, while shunning competence, success and logic
they are not that different. greenspan claims to be a free market guy (he might have been 50 years ago) but they are both keynsian bullshitters who dont understand true and real economics
"True" AND "real" economics. Whoa, that sounds impressive. I've heard of true economics, and I've heard of real economics, but never economics that is both true AND real. Impressive pontificating. And enlighten me, what is your true and real version of economics? Let me guess, some turn of the century Austrians? Bad information does always crowd out good, especially in the public forum. Keep drinking that tea, and I'll worry about effective demand. Read a book written by an economist.
yes real economics as appose to krugmans, just like real life and make believe. just because you want to ignore history logic and common sense doesnt mean that your right, infact it by definition means that your wrong. I guess you can just name call and be sarcastic and tell me to read a book and that means that you must be smart and correct lol. keep buying into ponzi economics and fantasy land, but for me Id rather live and think in the real world not some texbook bs model
You did not answer my question. You did not even try. That is very suspicious. But tell me for a moment, if not textbook economics, then what do you believe? What economists do you respect? What theories do you support? Be specific, share the insight.
well of corse when I say text book economics im referring to mainstream teachings not simply anything in a text book is bad. I read many economists from keynes to mises, however in studying all I can see that the austrian school is certainly correct, especially in its business cycle explanation. milton is very good on free market economics however I disagree with him on the fed and its role in the economy. hayek rothbard hazlitt and so on are great,current contributers like schiff and paul also
Good reading list, but I'm always curious, why do you prefer Austrian over Neoclassical? It seems to me that Neoclassical would be the logical alternative to Keynes.
the logical alternative to keynes is austrian, because keynes is the opposite if logic. this whole idea that something is bad during good times and good during bad times is nonsense. government spending during good times is a tolorable burden, government spending during bad times is an intolarable burden. neoclassical is a lot closer to pure keynesian than pure austrian. in my mind keyens was proven wrong during the great depression which was even before the term gained notoriety.
I respectfully, and forcefully, disagree with you on Keynes, but I also think, though it is of no importance to me, that you do not understand the neoclassical school, which I consider the only respectable alternative to Keynes. I would urge Austrians to consider the neoclassical school if they want to oppose Keynes. And you're wrong on the Depression.
well if you want to know the school that is the furthest and most contradicting to keynes it is by far the austrian school. everythingelse is in between (except pure socialism). the austrian school is really really right and keynes is really really wrong. As far as the GD, it was caused first by the fed fueled speculation of the 20s (see austrian business cycle) and then it was the keynesian massive government spending of the hoover and especially fdr years that turned it into a 10+ years dep.
Again, I disagree with your first point, but there is little sense in arguing it. But explain something to me. Austrians say that recessions/depressions are necessary to make up for excesses. But this makes no sense. Why does bad investment in the past mean that current workers should be unemployed? why should we have lower present investment, production, and employment because of mistakes made in the past? And Hoover did not increase spending, he cut it to balance the budget.
well one way to look at it is if there was never a need for a recession after phony booms than they wouldnt be phony and you could just invest without saving and no one would have to work. but bad investments in the past means unemployment for the future because those bad investments have to end, home builders have to shut down, financial services firms have to shut down, starbucks have to downsize, things like this. its a temporary unemployment, but its needed.
hoover certainly did increase spending after the crash,and then fdr did it on steroids (just like bush and obama) remember you cannot allocate the same labor and resources in two different places, although when the fed prints money it distorts the real level of savings (unclaimed labour and resources) and it has the illusion of more available labor and resources than there are. so when the unsustainability is realized a liquidation phase must insue. if you make a wrong turn you must turn around
"Must turn around," interesting. So present labor and production must sit idle because of a necessary correction from the past? Please, explain to me, why is present unemployment a necessary thing.
a car has to be stopped at one point to turn around,same thing with employment. it's impossible for all the excessive realtors and service sector workers to be laid off friday and start a new job monday. the temporary unemployment comes with the territory of re allocating labor and assets. its the government action to try to stifle this process that results in prolonged and snow balling unemployment. in 1921 there was a collapse worse than 1929, but because the gov did nothing it was a non event
I find it odd that the thing you disagree with is the fact that resources and labor must be temporarily idle as it restructures??if you agree that for instance in this recent fed bubble that there were too many people in the financial services sector and home builders and realtors and detroit and so on,and if you agree that they need to be employed in more productive and sustainable sectors how can you not understand that the transition process will include temporary unused labor and resources?
Aha, now we come to it. The classic difference between Keynes and the classical school, the difference between frictional and real unemployment. The classical school argued that real unemployment was impossible, whereas Keynes knew that if savings were in excess of investment, effective demand could be lacking and equalibrium could be reach under full employment. You are talking about frictional unemployment, not real unemployment, which is what we have.
yes you are right we are now coming to some fundamental differences. unemployment is "frictional" there is no "real" unemployment. There is no permanent unemployment, it is always in a process of allocating labor and resources.Its the fed and gov policy that make it seem like perpetual unemployment is possible. remember with real interest rates saving cannot grossly out pace investments, if you dont claim your labor and choose to save then a borrower will use that claim instead.
But that does not happen in a liquidity trap. Then, as now, people decide that money in the mattress is better than money in the bank, and banks decide that money in the vault is better than money lent out. So savings outpaces investments. Remember, interest is not the reward for saving, its the reward for not hoarding. Which is what the banks are doing now. There is a present slump in consumer and investment spending which is causing real unemployment.
the only thing causing excessive and long lasting unemployment is government intervention.Remember it doesnt take a long time to re allocate but when the distortion was caused by government and central banks it can take many years, this is only because the distortions got way way much bigger with government intervention then they otherwise would have been. again when you say liquidity trap you are talking about something that would not have happened without the distortions of fed and congress
"Would not have happened with the distortions," that is so vague and ambiguous is could mean almost anything. Explain to me exactly how fiscal and monetary policy conducted by Congress and the Fed lead to higher and longer unemployment. Because I think they don't.
I think you grossly underestimate the power of distortion that interfering with interest rates have. please study the austrian explanation ofthe business cycle. And Did you really say that legislation and the fed do not lead to market distortions? I mean if that were true then why are they even there? if the fed and congress's economic policies have no effect than why would they do anything? or do you just believe that the effect is somehow a benificial one?
I never said that fiscal and monetary policies have no effect, that would be very antithetical. Monetary and fiscal policies can help restore aggregate demand in a recession to reduce the output gap and bring down unemployment.
ok so you admit that gov and the fed does distort the market. you implied earlier that it was wrong for me to suggest that the gov and fed distort the markets. atleast we can agree on that, it looks like the basic difference is that you think the distortions are benificial and I think they are horrible detrimental.and to that I ask you why capitalism has made the richest country in the world and socialism has created the poorest? why do you think that gov knows better than individuals? evidence?
Ugh. You're now committing one of the capital crimes of economics, willingly confusing Keynesianism with Marxism. Keynes hated Marxism, and said it was illogical and stupid, and he was right. Of course free markets are good, and of course capitalism is the best system. But sometimes free markets do not function perfectly, and government is there to aid in recessions/depressions when the markets fail.
no im not. what im doing is pointing out that the basis of socialism is the same basis as keynesianism. that is that the gov knows better how to allocate pabor and resources than a free market. now there is a difference in the fact that socialist thinks this true always and in every situation, whereas keynes thinks this is true only sometimes and in limited situations. but the truth is that its an incorrect assumption always in every situation, especially during reallocations.
again your own statements prove my point. to say that gov will fix things when free markets fail, it only makes sense if your under the impression that gov is all knowing and it just humors its citizens to try to make it work on its own, like a child, but when us the foolish individual inevitable screws up then the parents gov will step in and "put us back on corse"
No way. Free markets are way better than central planning could ever be, all Keynes would agree on that. Government is not all knowing, and does a terrible jobs at controlling the means of production. In good times a full employment, fiscal and monetary expansion can be inflationary or drive up interest rates and taxes. But its during downturns that government actions becomes necessary.
"Caused by distortions," that is so vague and ambiguous it could mean anything. Explain how exactly monetary and fiscal policy conducted by the Fed and Congress leads to higher and longer lasting unemployment. Because I say they don't.
wouldnt you agree that the more reallocation of labor that has to happen the more unemployment there would be? so if the fed keeps interest rates low and spur a housing bubble dont you think that the process of liquidating the excessive labor and resources in that sector will take longer? dont you think that simulating the effects of high savings when there really isnt is a distortion? arent fanny and freddie buying loans the free market wouldnt a distortion? CRA, FHA, HUD,it goes on and on...
Here's the problem with your theory: far, far, more than just the housing sector has been hit by the recession. If it was just that realtors, agents, and construction workers had to shift employment to new sectors, you would be correct. But unemployment has been rising for years, and currently stands at 10%. Thats not a readjustment, thats real unemployment caused by insufficient demand for goods and services.
yes but far far more people were effected by the distortions than just those industries, these distortions do not only effect some parts ofthe economy, they simply effect some parts more than others. unemployment is still gonna be higher in the short future because a lot more than 10% of americans were adversely effected by the distortions.
no its not a slump in investment that is causing prolonged unemployment it is the fact that the gov and the fed has drained savings. its like blaming a car crash on momentum and not the drunk driver. dont you understand that in a free market savings is always used as investment, and free market supply and demand will make sure that it happens. if no one is investing savings then interest rates will drop until they do, and if no one is saving then interest rates will raise untill they do. period
Yes, the classical theory states that interest rates will always bring savings and investment into an equilibrium, and that interest is the reward for delaying consumption. This is the principle behind Say's Law. But the problem is that its not true. Interest is not the reward for delaying consumption, but the reward for not hoarding cash. In a recession, people and banks hoard cash instead of investing it, causing a decline in investment and aggregate demand.
ofcorse intrest is a reward for delaying consumption,and I dont know how to further explain that to you, I mean the explanation is in the statement. and supply most certainly does create demand, what else can possible compel someone give you a good or a service? If your a plumber are you gonna come fix my toilet just because I want you to? or are you gonna fix it because I have a supply to exchange for your supply? most of your misunderstanding stem from not understanding what a recession is
Now think about this for a moment. If the bank offered you zero interest, would you go out and spend all your money now? No, you don't delay consumption because of the interest, you put your money in the bank to earn interest instead of keep the specie yourself. I would consume all my wealth now if I didn't earn interest, but I might hoard the cash if the bank did not pay me interest. And supply does create demand, but the point is the two are not necessarily always equal.
money in a mattress? I bet you you dont know 1 person who has all their savings under a mattress. I certainly dont. are you somehow saying that if governmeny didnt deficit spend and the fed didn counterfit money and false claims to non existent labout and resources that people would somehow put all their money under their mattress?
A recession occurs when all the sectors in the economy try to hold cash at the same time. All sectors cut back on spending to save cash, leading to a collapse in over all demand, as aggregate income=aggregate spending +NX. In this scenario, the unemployed have to where to go, hence real unemployment, as opposed to when labor shifts from sector to sector, hence "frictional" unemployment.
I understand every word youve said,but its simply wrong. A recession is not caused by everyone magically at the same time "holding cash"that may be one effect of a recession, the cart doesnt pull the horse. you keep listing the effects of a recession as the cause. demand decreases because it reflects the real supply, in other words if everyone thinks their house is worth 2 million bucks there is a false sense of supply which creates demand, a recession happens when the distortions are realized
Hmmm. So it sounds like, according to you, under perfect market conditions, a recession/ downturn would be impossible, if recessions are simply caused by distortions. This is the problem with the neoclassical school, and I see the misconception was spread to the Austrians. Smith and Ricardo did not imagine that capitalism would run into problems in the long run. That's were Keynes came in, he wrote the handbook for what to do when the markets DO run into trouble, which they inevitably do.
under true free markets you would not have massive recessions, this is because there would always be a constant reallocation of labor and resources, as appose to the interfered with free market of today where the distortions make it possible for bad allocation to get so bad that it all comes crashing down when this is realized and a huge part of the economy has to reallocate at once. keynes is wrong in almost all of his theories, keynes himself admitted he was wrong on certain things many times.
Well, there is no way we could actually test that hypothesis. But yes, Keynes did admit he was wrong from time to time. Everyone is wrong sometimes, only an idiot would say they had never been wrong. As Keynes once said, "when the facts change, I change my opinion. What do you do sir?"
well when reality and logic changes then I will change my views. there were no facts than changed in economics. its not the facts that changed to change his mind its his knowlege of the facts that changed. he didnt invent economics, if he learned something it wasnt a changed fact it was a changed knowlege level. economics is a science of human behavior. just like saying that we now think the earth revolves around the sun, its not that that fact has changed in the past few hundred years
to be honest, I think that you are just listing off talking points that youve read or heard without understanding any of it (not intentionally). because I think if you really understood and disected what you were saying you would see the obvious faults. I know that hearing people like krugman say some of the stuff and knowing that keynes was not retarded makes it seem that if it doesnt make sense to you and it does to them that they must understand economics better,but I dont think thats true
At this point, I'm going to ask you once again, have you actually read Keynes? Have you read the General Theory of Employment Interest and Money? Because obviously, Keynes does a better job explaining all this than I could hope to.
well thats my point exactly, you cannot explain it because you dont understand it and it doesnt make logical sense to you, therefore you have to hide behind the old "I know its right but I dont know why, he is smart so he must be right". but dont feel bad because it is a sign of intelligence if you dont understand keynes theories because they are infact mostly wrong. if you understood keynes then he should not be able to explain it any better than you, comming up with it is a different story
Oh come on, you know thats ridiculous. Do you think a college physics professor could explain Einstein's General Theory of Relativity as well as the man himself? What I was implying was that by reading the General Theory yourself you would get a better understanding of Keynes than what I can flesh out in a youtube comment.
einstein is a theory of non human events without any proof or evidence. economics is something that should be able to be understood by me you and keynes all at the same level. its not that complicated. you are giving keynes the status of a discoverer or an inventor. he didnt discover or invent anything. it just seems that all your responses are talking points without showing that you actually understand what it is that you say you believe in. however I am also struggling with youtube limits lol
The point is the same, I am sure Hayek or Schumpeter could explain this stuff even better than you. The fact that I reference Keynes to explain his theories does not detract form my understanding of them (which is admittedly imperfect).
I understand and point well taken, however I view economics as a very very simply thing. so I am sensitive when someone doesnt explain a theory and just references the theory maker, because there are 3 main types of "theories" 1 is socialism, 2 is pure free markets, and 3 is a mixture. all the history shows that pure free markets work best, so when someone says that the 1st or 2nd way is better than the third I want to know why? since there is no logic or history to suggest that.
I believe in a mixture (social security, public schools and roads, public clinics, and a central bank, ect.) but also in powerful private markets to produce goods and services. Ultimately, I think it is the mixed economy that works the best, with the creativity of capitalism and the stability of socialism.
keynes is under the assumption that government spending(phony demand)and private spending(true supply backed demand) are somehow the same or atleast have a similar result of employing labor.This is false, during the industrial revolution there was so much employment that even kids were working 12 hour days. it didnt take the government to allocate all that labor and resources. When the free make allocates resources you have sustainability,when the government does it you have an inevitable crash
Wait, I don't see what the employment scene during the industrial revolution has to do with the current crisis or the great depression. Yes, new factories and plant investment created a lot of employment, and a reallocation of labor from agriculture to industry. But Keynes did not argue that government always needed to allocate the resources, or that markets never worked. Have you actually read the General Theory of Employment Interest and Money?
the industrial revolution reference was to show you an example of how a free market was able to reallocate a huge amount of labor and resources and increase employment and productivity all without a fed and government "guiding" the way. the depression on the other hand did use massive government spending to try to stop high unemployment and a decade+ depression followed. what more evidence do you need that free markets are better at creating employment than gov? not in some cases but it all!!!!
Again, this is the difference in real and frictional unemployment. I'm gonna take a minute and a an Austrian like you. Schumpeter's creative destruction explains the labor shift right well. Workers in the agricultural sector were laid off and transitioned to jobs in factories, but this happened because overall demand for labor did not decrease, it just shifted sectors. A recession is when all sectors lose demand for labor, not just a shift.
you dont understand what causes a recession, your simply listing the effects of a recession. A recession is a reallocation of resources and labor, which then lowers the previous perception of supply-backed demand both current and future. I really think you would understand my arguments better if you studied the austrian business cycle explanation. creative distruction is correct but its the gov trying to stop that in the name of easing what would be temporary unemployment that deepens it
A recession is caused when people and institutions decide that they would rather hold liquid assets than buy good and services, and they decide this all at the same time. The resulting liquidity trap results in diminished investment and consumption demand, leading to real unemployment. Employment grows if each increase in employment is matched by increase in consumption and investment, that does not happen when everyone wants to hold cash. Increasing cash supplies helps break this.
do you really think that that is the cause of a recession and not an effect? do you mean to tell me that you dont see the obsurdity in your own statement? do you mean to tell me that eveyone just by coincidence decides to rather hold liquid assets instead of buying goods as you say? do you really have no curiosity as to what causes that? or are you satisfied with the text book explanation of coincidence and magic? again you are confusing cause and effect. why do people and institutions do this?
what im saying is that there were certainly a lot of unemployed people as the industrial revolution started..there were many unemployed farm workers,many unemployed steam engine makers, many unemployed buggy makers,and so on.but without the government serving those special interest at the expense of progress and everyone else they did nothing and guess what, all those unemployed people transitioned into better paying and more productive jobs,there was massive investment no money under mattresses
Yes, again, Schumpeter's creative destruction explains that very well. Change happens, and change is good. Industries compete for scare labor, capital, and resources, and economies transition to different type of production. The point is that buggy workers found work in car factories, farm hands in textile mills, and steam engine makers in coal engine factories. There was not overall decline in aggregate demand, just a transition in economic composition with frictional unemployment.
in order for your argument of "real"unemployment to make sense you would have to accept the notion that millions of people would sit around and although they want to perform services for eachother will not work and trade.this is exactly what the free market is so great at coordinating. if there are resources and available labor they will not be unemployed forever.thats why all unemployment is transitional.this force is so strong that it even eventually over powers all the gov forces that stop it
Aha, and this is the problem. You have it backwards, that is what you have to believe about unemployment. Keynes said that they do want to work, but real unemployment is caused because of insufficient effective demand (consumption +investment.) They want to work, but because consumers and entrepreneurs are all trying to hold cash instead of buy goods and services from each other.
again in order for your views to be correct you have to believe that millions of people who want to work would all just sit their and stair at a wall forever, and its only the genius of the all knowing government that can make all those stupid citizens to coordinate all of them to perform goods and services for eachother. and again if this is your feeling than how do you explain the fact that socialism (gov decides) has failed and free markets (people decide) has been amazing?
The government, of course, would never make micro decisions, only provide macro-stimulus. The real unemployed would be put back to work not because of specific government coordinations, but because of monetary and fiscal expansion to sustain aggregate demand. Again, Keynes and socialism have nothing to do with each other, thats a novice's mistake.
again your talking as if individuals are like a dog who is sniffing around for his chew toy that is ontop of the dresser, and the gov (the dog owner) is just sitting there letting the dog humor itself until it eventually goes and pets the dog and gives it the chew toy and says good dog. your whole agrument only makes sense if you think gov is smarter and better equipped than individuals both separately and collectively. however rightfully you dont seem to believe that.
No, I don't, and I don't think anyone but a communist really would. The problem is that sometimes everyone working in their narrow self interest does not benefit the economy as a whole. Everyone holding cash in a recession is bad for the economy, even though it might be a good idea on the individual level. Lincoln said the purpose of government is to do that which individuals cannot on their own. And fighting recessions seems to be one of those things.
but hoarding money under a mattress is not in that persons best interest in a free market. and again how do you justify the clear contradiction in your words to rightfully admit that gov is horrible at running an economy especially when compared with a free market, but at the same time say that when you really need to be smart and things are tough then the gov is smarter. does the gov all of a sudden become an all knowing genius during recessions? do individuals all of a sudden become stupid?
Government never "runs" the economy. It simply prints more money and spends more to sustain aggregate demand in a downturn. It never makes investment or micro business decisions, it simply conducts monetary and fiscal policies to maintain a level of demand. I've gotta leave it at that for a few days.
haha, I thought you agreed with me that supply creates demand. are you seriously saying that the fed typing a few zeros in a computer system somehow creates demand? it may distort the market temporarily into behaving as if there is more demand but in reality there is not. and then we come full circle again as to what causes massive recessions. in describing what they do you explained the causes of recessions. aggregate is not a good way to look at it, it implies that gov and private are the same
So you seem to have no great love for the Federal Reserve (no surprise there). Do you support the movement to abolish it? IF so, what monetary system would you advocate in its place? A deflationary gold standard?
yes I am for phasing out the fed completely, however not by law just by incompetence. I want to repeal all legal tender laws except for the constitutional law of gold and silver which will be what taxes are paid in. But that doesnt mean that the private fed cannot compete without a gov granted monopoly. why does competition work in everything else but when in comes to a store of value/transactor you think a secret monopoly is best?
Well, by my understanding, if there were a bunch of legal tender laws in the United States, it would be almost impossible to conduct commerce, what will unlimited different currencies with altering rates of exchange, to say nothing of oversees trade. A single currency in necessary for advanced planning and transactions.
you are missing the point, the point is to not have any legal tender laws, and just because there can be unlimited currencies in theory doesnt mean there will be, its just the market threat that its possible. its just like anyother good or service, you dont have a problem choosing from a handful of cola products do you? in theory there could be millions of soda brands but there are not because people only use the select few best, the same would go for money.
Sorry, but consumer products (cola) and currencies are not the same thing. I don't get paid in cola, and I don't store my wealth or conduct my purchasing transactions in cola. Cola is just a product bought and consumed, not used for transactions bot domestic and international. Even if there were just a few prevalent currencies, I'm not sure the system would be workable.
again I think that you would be saying the same thing if the entire world had one currency and I said different countries should have their own currencies, I think you would say that that would be unworkable and insane. but as we know the world has been doing just find with a non world currency for a long time. in my opinion if competition was allowed there would only be 1 or maybe 2 main money types, infact with competition I think that there would be less money types in use than today
you forget that its not always the fact that there is someone else competing it is the fact that it is possible for someonelse to compete. this would keep money types in check against debasement and instability. Imagine if the fed didnt have a gov behind them to say that people have to use their currency, dont you think it would be managed better and more transparent and they wouldnt have devalued it by 95%? even if the market would let them take it that far they wouldnt want to find out.
Your argument is basically the standard argument for competition, which is right for goods and services, but I don't see how it would be possible for the method of exchange between those goods and services. I would need to see an outline or explanation of exactly how this multi-currency system would function. Because right now I thinks it impossible and would lead to catastrophic confusion in the markets.
first why are you ignoring the fact that the very situation you are saying would be impossible to function actually does function in the world today? second I think that we have a misunderstanding on what money is, I dont know what you think it is but maybe the source of our arguments on this is the fact that money is a good. just like a bond is a product that stores your currency, currency is a product that stores your savings and production. just like a bank and debit card are products
couldnt you say the same for investment products (cd's savings accounts, stocks, bonds, etc)? if there was a single investment vehicle by law and I was saying that those laws should be repealed and there should be competition among investment types would you be saying the same thing? would you say that it would be crazy for people to choose from a theoretical unlimited number of investment types? doesnt the inconsistency in your thinking ever make you second guess yourself?
Nope. Investment products are very different than currency. Different investment products exists because there are, in theory, nearly unlimited investment opportunities that need funding (enterprises are always starting and growing). But the thing is, all of those investment types are denominated in the same unit, because there is one currency. If there were a ton of currencies, all of those investments could not function in the markets, they would be incomprehensible.
come on man, what your saying is just not true, the fact is that there are hundreds of different major currencies in the world and somehow against your logic investment products exist in plenty all over the world. and just like there are unlimited investment opportunities there are also unlimited goods and services, I think on this one you kinda got lost in just trying to disagree with me. think about it man, on this one your not even being coherent. I think we disagree on everything lol
I think we agree on more than you realize. We both agree that markets produce goods and services most efficiently, we both agree that competition is crucial in an economy. But we disagree on the business cycle and unemployment, and I just don't see how competing national currencies would work. Each nation today issues one national currency, but I think different currencies in one market would inhibit transactions and market exchanges.
as far as the business cycle.. let me ask you this. lets imagine that in the movie theater business there was a behind the scenes guy who would arbitrarily buy up a bunch of movie tickets for a particular showing, then he would sell a bunch, then he would print up a bunch of new tickets and sell them, and so on... do you think that this would have an adverse effect on how smooth the theater (economy) would run? or would the situation come to an inevitable "bust"??? money supply is no different.
by the way incase I wasnt clear on my analogy the guy buying up tickets and printing them is the fed lol. why is it that you think the free market cant figure out the supply and demand of money and the price of borrowing it? by denying the feds roll in the business cycle you are implying that if a single person massively interferes with supply, demand, and the price of something that it has no bad effects. do you really believe that? how is that not a distortion in every way possible????
Aha. Here is the problem. Normally, the movie theatre is fully occupied, and all the seats get sold for each show (ie, full employment and output. But sometimes, people try to hoard tickets and save them up instead of going to the show. Normally, this is not a problem, but sometimes everyone does it at once. To combat this downturn in attendance, the guy prints up more tickets so people can get them easily and will spend them again, instead of hoarding them.
well the free market is best at coordinating the most people to see the most movies not gov. you make two mistakes here. 1) you assume that the free market will waste their tickets and not see the movie and at the same time the theater will see this and do nothing about it. 2) you adhere to this notion that the gov somehow knows exactly how many seats are in the movie theater and how many people will show up. it seems I got you to admit that the fed distorts. you think its good, thats the prob
I never said the actions of the Fed do not effect the markets, if thats a "distortion" then alright. But there are times when, by increasing the supply of liquidity in the system, the economy can be aided and brought out of a temporary output slump. This has been macro orthodoxy since the depression, which was caused by a contraction of the money supply because of the gold standard.
first of all yes you did say that the fed doest distort the free market. and second, the depression was not in anyway shape or form caused by money contraction it was caused by money expansion in the 20's the depression was simply the movie screening playing out, but ofcorse it would not have been such a bad depression if the gov didnt further try to mess with the movie theater after the free market figured it out. do you really think less people would have starved if everything cost more?
Even Milton Friedman said the government should have expanded the money supply in the face of the Great Depression. In fact, it was his most well known economic postulation. Its broadly known that an increase in liquidity is essential for combating a downturn in employment and output.
yes and as I stated earlier I disagree with milton on that one very issue. first the fed caused the crash of 29 then the gov took over with its massive keynesian spending which the cause a decade long depression. why do you ignore this historic fact? is it a coincedence that the biggest bubble in the worlds history occurred 4 years after the fed started utilizing its printing tools? are you really going to claim coincedence?
Actually, if you look at the statistics from the time, you will see that the economy improved from 1933-1937, when it dipped again because Roosevelt was convinced to balance the budget. Also, look at the industrial production rates for advanced economies of the time after they began printing money and abandoned the gold standard. And by the way, what do you think ended the Great Depression? Was it the series of spending cuts called the Second World War? (sarcasm).
wow I cant even believe what im hearing. so killing millions of people and destroying billions of dollars worth of assets and employing millions in essentially digging a hole and then burrying it back up (thats what war spending is..the opposite of productive its destructive), thats your cure for a depression? your crazy man, not I think your just fucking with me and if so then your good at it, you had me going for a while now. why dont we just play a huge national game of capture the flag now??
Wow, you totally missed the point, and I think you did it on purpose. Of course war is a bad thing, but the point is that the government spending on it was what provided the stimulus to the economy. After the war, there were more factories, workers had money from the work they had done, and the economy was out of its slump. And, consider the period from 1933-1937.
again when you say workers had money from the work they have done you miss basic economics. the work they have done was building bombs, tanks, planes, massive labor in the army and so on. so after all that all that our economy had to show for that was a bunch of currency and you think thats what makes a strong economy? and the factories that were build were miniscule compared to what would have happened if all those resourses and massive labour wasnt squanderd during the war. are you serious?
No, it is you that seems to miss basic economics, the fact that productivity=wages. People get paid when they work. People spend money when they get paid. And the factories that were built were considerably more than the factories that were... sitting idle before hand. The world was in a protracted depression, and afterwards it wasn't. Surely you can see that.
yes but productivity matters. its not just someone working that creates real wages it is productive work. everyone cant just build a bomb and expect to have real wages just because they are showing up somewhere everyday and getting a paycheck. we then get back to socialism, everyone had a job in communist countries so why is it that they all went bankrupt? as im trying to tell you its because of the fact that it matters how you get those pieces of paper not simply that you get them.
Yes, under conditions of full employment government allocation of labor can divert labor from its most productive employment, it's called opportunity cost. But again, we are talking about times with real unemployment, when the market cannot provide enough demand to sustain full output. Your confusion stems from your lack of understanding of the difference between full employment and unemployment.
incorrect buddy. what the hell are you talking about, "the market cant provide enough demand to sustain full output"? I thought I already taught you that supply creates demand not the other way around. and once again there is no such thing as permanent unemployment under a free market system. and to imply that there is no opportunity cost in war or anyother massive gov spending is utterly insane. THERE IS NO SUCH THING AS REAL OR FAKE UNEMPLOYMENT. its all reallocation, end of story. got it??
You "taught" me that you are making a mistake Thomas Malthus corrected centuries ago. Supply does not always equal demand because savings does not always equal investment, and if investment+consumption do not equal the costs of production, there is inadequate demand. And an perpetually unemployed person is not being reallocated, he's being...unemployed. Real vs. Frictional, man.
wrong once again. I guess your right I didnt teach you anything. you say that someone will invest in production of something that will have a demand to consume and you are right, however they dont invest just to satisfy the demand of others for free. the "demand" is really supply which will be exchanged for other supply. do you really think that business men run a business just because customers want there goods? or am I right and they do it to get the supply of their customers in exchange???
you make the basic common mistake that demand created supply. supply creates demand and the supply created demand is what dictates what types of goods and services are produced and invested in. your whole thinking is ass backwards. I cannot demand a private jet, and its not because I dont want it, its because I dont have enough supply to demand it. are you really not getting this? your way off on this frictional and real unemployment thing, just because its in a book doesnt make it real.
I understand what you are saying about the supply/demand thing, its just that you do not understand that in a recession, people stop demanding things with their supply so that total production falls. Tell me you do not understand that. You should read Thomas Malthus's principles of political economy, he describes how New Spain was poor even though it had great "supply" because of too little aggregate demand.
the difference is that you seem to think that if everyone in a society is sitting on a bunch of supply that that makes them poor, and more astonishingly you seem to suggest that a everyone in a society can have nothing but just want things from each other and that makes them rich. your fundamental understandings on economics are false but even further false is your understandings of even your own fantasy economics system that you can keynes seem to share.
the only slight benifit of ww3 for america was to the extent that before we entered we were producing for other countries and we gained some wealth from europe at the expense of europe. However that only was a small benifit for a short time, when we entered the war we wasted a lot more money and resources then we possibly could have gained in the years before it. It was the massive gov cuts in spending in the mid 40's that ended the GD, that and the years of constant free market reallocation
There were only spending cuts in the mid 40s because WWII was over. Of course the government was not going to keep spending at war levels after the war. But yes, the government expenditure on planes, tanks, bombs, ect, employed idle workers and output and ended the depression.
wow, you dont understand what money is, money is suppose to represent the production behind it, if two sets of 100 people both build a bomb and they get pieces of paper for doing so and then the bomb explodes there is no wealth being created, all that happened was 200 people just wasted a lot of time a resources. why cant you see this man? why cant you see that spending money on war is the same as spending money on people to dig a whole and then fill it back up again. infact its even worse.
By this logic, if a farmer spends a lot of time and investment growing food in a field and then sells his produce to a store and then that store sells it to me and then...I just eat it, nothing was created. Everyone now has paper in his pocket, but nothing happened. In fact, a lot of work can be mischaracterized as such.
wow you are insane man. your really comparing the production of food and things that are consumed to buiding a bomb and then blowing it up?? I dont know what else to say to you when you are so off. you forget that money is not what allows you to consume and enjoy wealth, it is the actual production of those things, if everyone just built a bomb but had a lot of paper then everyone would starve and no one would have anything, there would be no wealth.why do you act like you dont understand this??
this is a very important point that I think if you understood the everything else would fall into place easier. I cant believe that you think its better for people to be building a bomb then even just sitting at home doing nothing, but ofcorse in a free market they would quickly (provided there is no gov interference) be employed. If your logic works then are you saying that the gov should just borrow.print money and give it to everyone who is unemplyed and have them build a bomb? come on man!!!
Gee, that's kind of the point of a depression, the fact that people are not being quickly employed. The unemployed are quickly employed when there is growth, not when there is a depression. You seem to draw no distinction between bad times and good, as if conditions never change.
again that is the result of a depression not the cause. taking all those temporary "idle" resources and squandering them does nothing but harm. according to you why even make the idle labor dig a hole and then fill it back in for the money, why not just give everyone a piece of paper with a bunch of zeros on it? wouldnt that somehow create wealth? lol I hope your a young kid who is fuckign with me. please dont tell me you are an adult and the school system has failed you this badly.
So taking idle resources and employing them, and taking idle unemployed and employing them, does nothing but harm? No wonder the Austrian School is considered fringe pseudo economics. Again, you do not understand the business cycle. Less consumption=less investment=less production and the cycle continues downward. Its self perpetuating and must be broken, why do you not understand that?
yes your sarcasm is actually literally correct. taking temporary "idle" labor and resources and using them to build a bomb and then explode and destroy all those man hours and physical resources does do harm. and to answer your question NO, I do not understand your logic and I dont understand it because its insane. consumption is not was causes investment and production, consumption is the result of investment and production. you keep putting the cart before the horse in everything. think man
No way. Who would invest in production of a product or service that is not going to be consumed? It is the final consumption that prompts the production process. Goods are made because there is a demand for them, not consumed simply because they are made.
you are right to say that goods are made because of demand,however the demand has to come from offered supply to exchange for the demanded good. maybe if we break it down to the basics you will understand.if there are two people on a deserted island and one wants coconuts but is not nimble enough to climb the tree, he has to first go pick berries(supply) which he can then use to "demand" him to get the coconuts, he will not risk falling to get the coconuts simply because the other guy wants them
Ah, yes, and now we come to it. The two men "demanding" the products of one another a market exchange. When that happens, both benefit, and both are employed. But in a recession, people are not demanding things. The berry picker would simply hoard his berries and pick less of them, and the coconut guy is unemployed. Of course this behavior is illogical, but so are recessions.
again we come back to allocation of resources and who is better at doing it. according to you the berry picker and the tree climber will both be unemployed forever because they are too incompetent or too stupid to exchange eachothers product. whereas according to you what is needed is for the smart all knowing gov to step in and give the berry picker a piece of paper if he picks berries and then give a piece of paper to the coconut guy, its not nearly that simple. this would be insane right????
You are acting like recessions do not/ cannot happen. According to your models, the economy would never fall into a recession, and market actors would always maintain equilibrium and full employment. Smith and Ricardo thought that would be the case. But its not. It simply doesn't happen. Assume for a second that the guys do not do barter, but use a currency of sea shells. Say they both start hoarding shells and stop buying berries/nuts. Neither gets picked, nothing happens.
yes and in your assumption you are saying that the free market is stupidly "hoarding" and is too stupid or oblivious to see that they are harming themselves, and then the gov who smartly sees this comes up with a solution to induce them to not hoard and they happily ever after. This proves my point that ive been trying to make to you for what seems like months now lol, which is your logic only works if you believe that the free market is inferior to the gov on how to allocate labor and resources
recessions are extreamly logical. whats not logical is house prices doubling every few years or borrowing money to consume, or record trade deficits year after year, or typing a number in a computer and thinking that wealth will magically appear from the great economic puppet master that is bush, obama, and pelosi. your whole argument lies with the mentality that the pelosi is smarter than bill gates
Of course she's not. After all, if she's so smart, how come she's not rich, right? But if you hadn't known, Bill designs computer programs, not the macroeconomy. You're not making a larger point, except that maybe markets never go wrong, in which case I would direct you to the facts of common observation. If markets were perfect, they wouldn't malfunction. And the housing bubble was bad, thats true.
Im not sure but are you suggesting that the housing bubble was a result of undistorted free markets? are you saying that the massive consumption binge and perpetual trade deficits we not the result of the chinese and us gov?
Oh yes, of course. It is the government's fault that people choose to spend more than they earn, and chose to not save or invest enough. At some point, you have to realize that not all economic ills are the fault of the government, get real.
your ignorance is really shining on this one man.the fed has discouraged savings and encouraged borrowing by artificially lowering interest rates, without that fed action not only would the high interest rate have encouraged savings but it would have made this much borrowing impossible. not to mention all the gov programs like the cra and tax code manipulations of peoples decisions. some recent ones include the cash for clunkers, where the gov borrows money to give to people if they borrow money
Whoa, slow down buddy. We were discussing the merchandise trade deficit. You are being intentionally vague on this one, make a specific case. Cash for clunkers was a boon for a the ailing auto industry and contributed to improved GDP for the quarter. Its called the multiplier effect.
you asked how the gov effects people and their borrowing and spending habits and I just taught you that you were wrong and the gov and fed does effect peoples spending and borrowing habits very much. and its amazing to me that you think its so great for the gov to borrow money to give to people if they too borrow money and destroy a working asset and then those numbers bring up the gdp. if thats your def of legitiment gdp growth then why not destroy everything and rebuild it on credit?seriously?
why do you ignore the fact that you have said many things that I have disproved? you said that the gov and fed doesnt distort markets, you implied that peoples spending and saving behavior is there own doing and not effected and manipulated by gov, you say that cash for clunkers borrowed money is somehow a legitament component of gdp. its insane. I still cant get over the fact that you think borrowing money to destroy things is a good thing, and furthermore the borrowed money to do it is gpd!lol
Where did you get this whole "destroying things" idea? I never said we ought to destroy things, that is absurd. Are you refering to the WWII ending the depression idea? It is a widely accepted fact, by almost everyone except you. GDP is the measure of goods and services produced in the economy.
must I keep correcting your own previous statements? you cant see your contradictions? you said that cash for clunkers was a good thing that helped our "gdp growth" and cash for clunkers destroyed billions in existing working productive assets and it didnt even replace those assets with new ones, because the new bought cars that the gov manipulated people into buying were already in existence on backed up car lots. that was nothing more then borrowing money to destroy.
Oh, you are talking about the cars traded in. Well tell me, why is it companies make new cars? Because there is a demand for them. And making new cars requires employment. If nobody ever traded in a car, there would be no new ones. Don't you know that inventories must be reduced before production can resume?
haha, wow I cant believe that even you will keep defending destroying cars as good for the economy. So why dont we borrow money and then give it to the cash for clunkers people if they destroy their new cars? and we can just keep destroying things and then claiming that its good because it will employ people to rebuild them right? and please dont act like what im saying is a sarcastic interpretation of what you are saying because this is EXACTLY what you are saying. way off man!!
wow. destroying cars just so you can make a new one is good for the economy? so you didnt answer my question, do you think we should destroy all the new cars that the cash for clunkers people got so they can get a newer new one? do you think we should blow up a bunch of big high rises so the unemployed can rebuild them? that way we can have some of the unemployed building a bomb, and the rest of the unemployed rebuilding what the bomb destroyed, are you serious? even keynes would call you crazy
Really man, all I've said is that when people buy new things it creates...demand for new things. You've put all the rest of that in my mouth and attacked it like a straw man, demonstrating your lack of clear thinking or trained brain.
what are you talking about? we are talking about cash for clunkers and thats all weve been talking about on this particular thread. and you know this, is this your way of telling me was right on this and you were wrong? by acting like you never said that the cash for clunkers program was good because it added to gdp and it employed people? I actually said it half ass sarcastically and I couldnt believe you were actually defending this program.
we were always talking about cash for clunkers man, is acting like you never said that cash for clunkers was a good program your way of telling me im right and your wrong on this one? destroying cars so unemployed people can build new ones is not a good thing in any way shape or form. can you atleast admit this one point so we can end the cash for clunkers aspect of this? your really defending destruction in order to rebuild as a formula for economic growth?
and your wrong anyways, people buying things is not what creates demand that is what demand is and it can only exist with supply havent we gone over this already? people buying things is does not create demand it only dictates who and what is demanded. macro and micro man. I didnt attack a straw man I attacked you and the words you said, I put nothing in your mouth. you said that cash for clunkers (which is destoying cars inorder to sell new ones) was good and grew gdp and helped unemployment
the amazing part is that you think that the dollar amount that was given to people only if they destroy their cars was added to the gdp and accounted for much of the "growth" and you are using that as an example of how gov can complement spending to increase "agragate" demand. your a joke man, instead of sticking to your previous misconceptions of how economics works and gov role just be an adult and learn from what im teaching you, stop having some weird blind alliance to falsehoods. nothing??
you contradictions are amazing. you claim that the gov can effect the economy by its policy and actions yet you find it obsurd that it can effect the saving and borrowing behavior of people lol. it must physically hurt to have your brain and all the ridiculous information that is in it
There is a difference between saying that the government can effect the macro conditions of the economy and saying that everything bad that happens is the government's fault.
well you might think I am wrong for thinking that gov intervention can only do bad, but do you not see the contradiction when you seem to imply that the gov can only do good? or atleast only do good if they do what you think they should do. the difference is id rather air on the side of too much freedom and choice (if there is such a thing as too much) than on the side of too much gov and violence. Its not only an economic argument but a general philosophical one.
That is a cheap mischaracterization. Either way, consumers can still choose what products and services to buy and how to invest/save their money, and this discussion has not touched political rights or freedoms. Freedom and choice do not factor heavily into this debate, but for the record, they are best maintained when there is a balance between government and the markets. If you need further proof, I will provide it.
of corse freedom is a factor. is economic freedom not as important as other kinds of freedoms? why do you feel that freedom to keep the fruits of your labor and freedom to buy what you want not just as important and fundamental as freedom of speech or anyother kind of freedom? why do you feel that the gov forcefully taking money from one group of people and giving it to another is not infringing on civil liberties? why is economic freedom not important? and why must we accept this intervention?
I never said economic freedom was unimportant, but I also do not think it is being infringed upon. Tell me, have you ever personally felt your economic freedom infringed? When were you impaired from buying what you wanted? When did the government prevent you from saving or investing? And why does the government take from the young to give to the old, it is a legitimate question, but one you should better confront your grandmother about than me.
yes the gov takes an enourmons amount of money out of my pocket and my customers pockets and that effects me profoundly. the fed dictates the interest rates I get for savings and am charged for borrowing. I am not allowed to buy and sell certain things. many things are illeagal, many things have to be fda and gov approved, and the distortions go on and on and on. how can you be so ignorant to the answers of your own questions?
one other major thing you keep missing is that its not the demand that falls in a recession its fall of the fake demand. money and interest rates should reflect the supply of goods and services (which is the demand) so when the fed prints more money and lowers interest rates to distort the perception of what real demand is it becomes a bubble. then when the true demand is realized (true supply) things get reallocated. I cant believe you accept this notion of mass coincedences and mass stupidity
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Please note that my book Keynes Hayek: The Clash That Shaped Modern Economics is published by W.W.Norton in October.
Professor John B.Taylor says that: “Nicholas Wapshott brings the Keynes-Hayek fight of the 20th century back to life, making the clash both entertaining and highly relevant for understanding economic crises of the 21st century.”
Read an extract at: sites.google.com/site/wapshottkeyneshayek/
Nicholas Wapshott
nhwapshott 7 months ago
yep and the rethuglican masters and the absentee dems are just sitting around doing nothing about the unemployeed i am so thankful i got a job and it was NOT easy i almost didn't get one myself, but my job came after not being allowed to continue unemployment after they denied unemployment twice second time after the nov 2010 repiggies took office, i know how hard it is for the unemployed now in 2011 there are still people who can't get jobs.
the1tigglet 8 months ago 3
Huh? I don't recall government spending being effective or spontaneous. He seems more like a salesman for what projects the government ought to get into than an economist...
crossxlui 1 year ago
its rather simple, he's explaining how the economy works on a federal level, not how it ought to function
3waybar 1 year ago
is it just me, or is paul krugman seriously hard to understand compared to milton friedman. simply saying, i dont have a single shred of clue what he's talking about. He jumps from A to D, skipping B and C.
rainzoro 1 year ago
@rainzoro I have a basic understanding of his explanations. I'd be happy to try and break them down. The idea is that the government gives money to people. When people have money, they spend it. This is an increase in demand and helps revive and ailing economy. Otherwise, people spend less...which means people lose jobs..which means people spend less...and a cycle of deflation can happen. This was part of what happened in the Great Depression.
majinspy 1 year ago
@majinspy So the government gives money to the people. Isn't that money tax money? If so, the government would be giving money to the people which was originally theirs from the first place.
If not, and the government is actually injecting NEWLY PRINTED MONEY, then won't that create a devaluation of dollar? Ah, but Paul Krugman is saying EVEN AT THE EXPENSE of devaluation, this stimulus is worthwhile because it atleast gets the economy running. Slow engine is better than a dead engine. right?
rainzoro 1 year ago
The problem that is trying to be solved is deflation. People spend less. Businesses close. Those people (newly let go) spend less. More business close. And on and on in a downward cycle. This cycle is a drop in demand leading to a drop in prices which leads to a drop in demand.
The government, however, can step in and start buying. This increases demand and puts people back to work. Which gives them money. Which they can spend, which means new biz must open to fill THAT demand.
majinspy 1 year ago 5
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Peer-reviewed study finds Paul Krugman is the most partisan economist. Krugman was the only economist to "significantly" change his stances for partisan reasons. Krugman has even gone so far as to contradict his own findings to bash Republican politicians.
The peer-reviewed research was published in May 2010 issue of the Econ Journal Watch (EJW), edited by Daniel B. Klein.
Seven Nobel laureates are members of the EJW Advisory Council
islandmuffin 1 year ago
I am shocked how he won Nobel Prize.sometimes if no one deserves a nobel prize it should not be given rather than giving it to a socialist like him.
If you want to learn real economics you will have to knock the doors of Austrian school of thought or school of ratioanal expectations.
Keynsian economics is good for business,governments and military
industrial complex not for indivisuals
of society..It destorys the system
eventually....
akalexi312 1 year ago
Capitalism is a historical anomaly which the right wing turned into a religion to get power, they trashed the economy.
Ranting shopping and greed.
Winning; Ripping everyone else off does not work.
In Greece today, huge general strikes called for big tax evaders and de-regulators to be put on trial.
Even the rich want to pay tax.
The right's inequality and market magic rants caused collapse.
They deregulated which caused the crash and benefited from growth in inequality.
Tax the richest hard !
marsCubed 1 year ago
lol, austrian economics barely even uses math.
misterburek 1 year ago 5
@akalexi312 read what you just wrote and see if it makes sense
rainzoro 1 year ago
A true Keynesian.
bochap21 2 years ago
its ashtonishing how someone like krugman who has gotten everything so wrong and has no understanding of true economics is stil somehow respected. he should be laught at everywhere he goes. somehow he still shows his face around. I guess thats the publics fault for being too ignorant to see how insane he is. keynsian bullshit is one of the great downfalls of modern economics
slickbtk 2 years ago
i'm just completely shocked at the level of idiocy of the Nobel Prize commission. Obama gets a peace prize despite being in the midst of 3 wars (we're now on the verge of invading pakistan), and this tool has a peace prize even though he can't understand the concept of scarcity.
I THINK that the science end of Nobel Prizes is still non-corrupted... i think....
evangrogers 2 years ago
lol its to the point where I would be shocked if they actually got it right and gave someone like ron paul some nobel prizes lol. But as is the precursers to every falling empire, its citizens and institutions embrace mediocrity and failure, while shunning competence, success and logic
slickbtk 2 years ago
Krugman seems to have GDP conflated with "wealth creation". That's my impression, anyway.
gunsandbullhorns 2 years ago
I would like to see some kind of academic debate between Alan Greenspan and Paul Krugman.
hoodoo961 2 years ago
they are not that different. greenspan claims to be a free market guy (he might have been 50 years ago) but they are both keynsian bullshitters who dont understand true and real economics
slickbtk 2 years ago
"True" AND "real" economics. Whoa, that sounds impressive. I've heard of true economics, and I've heard of real economics, but never economics that is both true AND real. Impressive pontificating. And enlighten me, what is your true and real version of economics? Let me guess, some turn of the century Austrians? Bad information does always crowd out good, especially in the public forum. Keep drinking that tea, and I'll worry about effective demand. Read a book written by an economist.
hoodoo961 2 years ago
yes real economics as appose to krugmans, just like real life and make believe. just because you want to ignore history logic and common sense doesnt mean that your right, infact it by definition means that your wrong. I guess you can just name call and be sarcastic and tell me to read a book and that means that you must be smart and correct lol. keep buying into ponzi economics and fantasy land, but for me Id rather live and think in the real world not some texbook bs model
slickbtk 2 years ago
You did not answer my question. You did not even try. That is very suspicious. But tell me for a moment, if not textbook economics, then what do you believe? What economists do you respect? What theories do you support? Be specific, share the insight.
hoodoo961 2 years ago
well of corse when I say text book economics im referring to mainstream teachings not simply anything in a text book is bad. I read many economists from keynes to mises, however in studying all I can see that the austrian school is certainly correct, especially in its business cycle explanation. milton is very good on free market economics however I disagree with him on the fed and its role in the economy. hayek rothbard hazlitt and so on are great,current contributers like schiff and paul also
slickbtk 2 years ago
hahaha... do you have your GED yet?
shahen13 2 years ago
Good reading list, but I'm always curious, why do you prefer Austrian over Neoclassical? It seems to me that Neoclassical would be the logical alternative to Keynes.
hoodoo961 2 years ago
the logical alternative to keynes is austrian, because keynes is the opposite if logic. this whole idea that something is bad during good times and good during bad times is nonsense. government spending during good times is a tolorable burden, government spending during bad times is an intolarable burden. neoclassical is a lot closer to pure keynesian than pure austrian. in my mind keyens was proven wrong during the great depression which was even before the term gained notoriety.
slickbtk 2 years ago
I respectfully, and forcefully, disagree with you on Keynes, but I also think, though it is of no importance to me, that you do not understand the neoclassical school, which I consider the only respectable alternative to Keynes. I would urge Austrians to consider the neoclassical school if they want to oppose Keynes. And you're wrong on the Depression.
hoodoo961 2 years ago
well if you want to know the school that is the furthest and most contradicting to keynes it is by far the austrian school. everythingelse is in between (except pure socialism). the austrian school is really really right and keynes is really really wrong. As far as the GD, it was caused first by the fed fueled speculation of the 20s (see austrian business cycle) and then it was the keynesian massive government spending of the hoover and especially fdr years that turned it into a 10+ years dep.
slickbtk 2 years ago
Again, I disagree with your first point, but there is little sense in arguing it. But explain something to me. Austrians say that recessions/depressions are necessary to make up for excesses. But this makes no sense. Why does bad investment in the past mean that current workers should be unemployed? why should we have lower present investment, production, and employment because of mistakes made in the past? And Hoover did not increase spending, he cut it to balance the budget.
hoodoo961 2 years ago
well one way to look at it is if there was never a need for a recession after phony booms than they wouldnt be phony and you could just invest without saving and no one would have to work. but bad investments in the past means unemployment for the future because those bad investments have to end, home builders have to shut down, financial services firms have to shut down, starbucks have to downsize, things like this. its a temporary unemployment, but its needed.
slickbtk 2 years ago
hoover certainly did increase spending after the crash,and then fdr did it on steroids (just like bush and obama) remember you cannot allocate the same labor and resources in two different places, although when the fed prints money it distorts the real level of savings (unclaimed labour and resources) and it has the illusion of more available labor and resources than there are. so when the unsustainability is realized a liquidation phase must insue. if you make a wrong turn you must turn around
slickbtk 2 years ago
"Must turn around," interesting. So present labor and production must sit idle because of a necessary correction from the past? Please, explain to me, why is present unemployment a necessary thing.
hoodoo961 2 years ago
a car has to be stopped at one point to turn around,same thing with employment. it's impossible for all the excessive realtors and service sector workers to be laid off friday and start a new job monday. the temporary unemployment comes with the territory of re allocating labor and assets. its the government action to try to stifle this process that results in prolonged and snow balling unemployment. in 1921 there was a collapse worse than 1929, but because the gov did nothing it was a non event
slickbtk 2 years ago
I find it odd that the thing you disagree with is the fact that resources and labor must be temporarily idle as it restructures??if you agree that for instance in this recent fed bubble that there were too many people in the financial services sector and home builders and realtors and detroit and so on,and if you agree that they need to be employed in more productive and sustainable sectors how can you not understand that the transition process will include temporary unused labor and resources?
slickbtk 2 years ago
Aha, now we come to it. The classic difference between Keynes and the classical school, the difference between frictional and real unemployment. The classical school argued that real unemployment was impossible, whereas Keynes knew that if savings were in excess of investment, effective demand could be lacking and equalibrium could be reach under full employment. You are talking about frictional unemployment, not real unemployment, which is what we have.
hoodoo961 2 years ago
yes you are right we are now coming to some fundamental differences. unemployment is "frictional" there is no "real" unemployment. There is no permanent unemployment, it is always in a process of allocating labor and resources.Its the fed and gov policy that make it seem like perpetual unemployment is possible. remember with real interest rates saving cannot grossly out pace investments, if you dont claim your labor and choose to save then a borrower will use that claim instead.
slickbtk 2 years ago
But that does not happen in a liquidity trap. Then, as now, people decide that money in the mattress is better than money in the bank, and banks decide that money in the vault is better than money lent out. So savings outpaces investments. Remember, interest is not the reward for saving, its the reward for not hoarding. Which is what the banks are doing now. There is a present slump in consumer and investment spending which is causing real unemployment.
hoodoo961 2 years ago
the only thing causing excessive and long lasting unemployment is government intervention.Remember it doesnt take a long time to re allocate but when the distortion was caused by government and central banks it can take many years, this is only because the distortions got way way much bigger with government intervention then they otherwise would have been. again when you say liquidity trap you are talking about something that would not have happened without the distortions of fed and congress
slickbtk 2 years ago
"Would not have happened with the distortions," that is so vague and ambiguous is could mean almost anything. Explain to me exactly how fiscal and monetary policy conducted by Congress and the Fed lead to higher and longer unemployment. Because I think they don't.
hoodoo961 2 years ago
I think you grossly underestimate the power of distortion that interfering with interest rates have. please study the austrian explanation ofthe business cycle. And Did you really say that legislation and the fed do not lead to market distortions? I mean if that were true then why are they even there? if the fed and congress's economic policies have no effect than why would they do anything? or do you just believe that the effect is somehow a benificial one?
slickbtk 2 years ago
I never said that fiscal and monetary policies have no effect, that would be very antithetical. Monetary and fiscal policies can help restore aggregate demand in a recession to reduce the output gap and bring down unemployment.
hoodoo961 2 years ago
ok so you admit that gov and the fed does distort the market. you implied earlier that it was wrong for me to suggest that the gov and fed distort the markets. atleast we can agree on that, it looks like the basic difference is that you think the distortions are benificial and I think they are horrible detrimental.and to that I ask you why capitalism has made the richest country in the world and socialism has created the poorest? why do you think that gov knows better than individuals? evidence?
slickbtk 2 years ago
Ugh. You're now committing one of the capital crimes of economics, willingly confusing Keynesianism with Marxism. Keynes hated Marxism, and said it was illogical and stupid, and he was right. Of course free markets are good, and of course capitalism is the best system. But sometimes free markets do not function perfectly, and government is there to aid in recessions/depressions when the markets fail.
hoodoo961 2 years ago
no im not. what im doing is pointing out that the basis of socialism is the same basis as keynesianism. that is that the gov knows better how to allocate pabor and resources than a free market. now there is a difference in the fact that socialist thinks this true always and in every situation, whereas keynes thinks this is true only sometimes and in limited situations. but the truth is that its an incorrect assumption always in every situation, especially during reallocations.
slickbtk 2 years ago
again your own statements prove my point. to say that gov will fix things when free markets fail, it only makes sense if your under the impression that gov is all knowing and it just humors its citizens to try to make it work on its own, like a child, but when us the foolish individual inevitable screws up then the parents gov will step in and "put us back on corse"
slickbtk 2 years ago
No way. Free markets are way better than central planning could ever be, all Keynes would agree on that. Government is not all knowing, and does a terrible jobs at controlling the means of production. In good times a full employment, fiscal and monetary expansion can be inflationary or drive up interest rates and taxes. But its during downturns that government actions becomes necessary.
hoodoo961 2 years ago
"Caused by distortions," that is so vague and ambiguous it could mean anything. Explain how exactly monetary and fiscal policy conducted by the Fed and Congress leads to higher and longer lasting unemployment. Because I say they don't.
hoodoo961 2 years ago
wouldnt you agree that the more reallocation of labor that has to happen the more unemployment there would be? so if the fed keeps interest rates low and spur a housing bubble dont you think that the process of liquidating the excessive labor and resources in that sector will take longer? dont you think that simulating the effects of high savings when there really isnt is a distortion? arent fanny and freddie buying loans the free market wouldnt a distortion? CRA, FHA, HUD,it goes on and on...
slickbtk 2 years ago
Here's the problem with your theory: far, far, more than just the housing sector has been hit by the recession. If it was just that realtors, agents, and construction workers had to shift employment to new sectors, you would be correct. But unemployment has been rising for years, and currently stands at 10%. Thats not a readjustment, thats real unemployment caused by insufficient demand for goods and services.
hoodoo961 2 years ago
yes but far far more people were effected by the distortions than just those industries, these distortions do not only effect some parts ofthe economy, they simply effect some parts more than others. unemployment is still gonna be higher in the short future because a lot more than 10% of americans were adversely effected by the distortions.
slickbtk 2 years ago
no its not a slump in investment that is causing prolonged unemployment it is the fact that the gov and the fed has drained savings. its like blaming a car crash on momentum and not the drunk driver. dont you understand that in a free market savings is always used as investment, and free market supply and demand will make sure that it happens. if no one is investing savings then interest rates will drop until they do, and if no one is saving then interest rates will raise untill they do. period
slickbtk 2 years ago
Yes, the classical theory states that interest rates will always bring savings and investment into an equilibrium, and that interest is the reward for delaying consumption. This is the principle behind Say's Law. But the problem is that its not true. Interest is not the reward for delaying consumption, but the reward for not hoarding cash. In a recession, people and banks hoard cash instead of investing it, causing a decline in investment and aggregate demand.
hoodoo961 2 years ago
ofcorse intrest is a reward for delaying consumption,and I dont know how to further explain that to you, I mean the explanation is in the statement. and supply most certainly does create demand, what else can possible compel someone give you a good or a service? If your a plumber are you gonna come fix my toilet just because I want you to? or are you gonna fix it because I have a supply to exchange for your supply? most of your misunderstanding stem from not understanding what a recession is
slickbtk 2 years ago
Now think about this for a moment. If the bank offered you zero interest, would you go out and spend all your money now? No, you don't delay consumption because of the interest, you put your money in the bank to earn interest instead of keep the specie yourself. I would consume all my wealth now if I didn't earn interest, but I might hoard the cash if the bank did not pay me interest. And supply does create demand, but the point is the two are not necessarily always equal.
hoodoo961 2 years ago
money in a mattress? I bet you you dont know 1 person who has all their savings under a mattress. I certainly dont. are you somehow saying that if governmeny didnt deficit spend and the fed didn counterfit money and false claims to non existent labout and resources that people would somehow put all their money under their mattress?
slickbtk 2 years ago
A recession occurs when all the sectors in the economy try to hold cash at the same time. All sectors cut back on spending to save cash, leading to a collapse in over all demand, as aggregate income=aggregate spending +NX. In this scenario, the unemployed have to where to go, hence real unemployment, as opposed to when labor shifts from sector to sector, hence "frictional" unemployment.
hoodoo961 2 years ago
I understand every word youve said,but its simply wrong. A recession is not caused by everyone magically at the same time "holding cash"that may be one effect of a recession, the cart doesnt pull the horse. you keep listing the effects of a recession as the cause. demand decreases because it reflects the real supply, in other words if everyone thinks their house is worth 2 million bucks there is a false sense of supply which creates demand, a recession happens when the distortions are realized
slickbtk 2 years ago
Hmmm. So it sounds like, according to you, under perfect market conditions, a recession/ downturn would be impossible, if recessions are simply caused by distortions. This is the problem with the neoclassical school, and I see the misconception was spread to the Austrians. Smith and Ricardo did not imagine that capitalism would run into problems in the long run. That's were Keynes came in, he wrote the handbook for what to do when the markets DO run into trouble, which they inevitably do.
hoodoo961 2 years ago
under true free markets you would not have massive recessions, this is because there would always be a constant reallocation of labor and resources, as appose to the interfered with free market of today where the distortions make it possible for bad allocation to get so bad that it all comes crashing down when this is realized and a huge part of the economy has to reallocate at once. keynes is wrong in almost all of his theories, keynes himself admitted he was wrong on certain things many times.
slickbtk 2 years ago
Well, there is no way we could actually test that hypothesis. But yes, Keynes did admit he was wrong from time to time. Everyone is wrong sometimes, only an idiot would say they had never been wrong. As Keynes once said, "when the facts change, I change my opinion. What do you do sir?"
hoodoo961 2 years ago
well when reality and logic changes then I will change my views. there were no facts than changed in economics. its not the facts that changed to change his mind its his knowlege of the facts that changed. he didnt invent economics, if he learned something it wasnt a changed fact it was a changed knowlege level. economics is a science of human behavior. just like saying that we now think the earth revolves around the sun, its not that that fact has changed in the past few hundred years
slickbtk 2 years ago
to be honest, I think that you are just listing off talking points that youve read or heard without understanding any of it (not intentionally). because I think if you really understood and disected what you were saying you would see the obvious faults. I know that hearing people like krugman say some of the stuff and knowing that keynes was not retarded makes it seem that if it doesnt make sense to you and it does to them that they must understand economics better,but I dont think thats true
slickbtk 2 years ago
At this point, I'm going to ask you once again, have you actually read Keynes? Have you read the General Theory of Employment Interest and Money? Because obviously, Keynes does a better job explaining all this than I could hope to.
hoodoo961 2 years ago
well thats my point exactly, you cannot explain it because you dont understand it and it doesnt make logical sense to you, therefore you have to hide behind the old "I know its right but I dont know why, he is smart so he must be right". but dont feel bad because it is a sign of intelligence if you dont understand keynes theories because they are infact mostly wrong. if you understood keynes then he should not be able to explain it any better than you, comming up with it is a different story
slickbtk 2 years ago
Oh come on, you know thats ridiculous. Do you think a college physics professor could explain Einstein's General Theory of Relativity as well as the man himself? What I was implying was that by reading the General Theory yourself you would get a better understanding of Keynes than what I can flesh out in a youtube comment.
hoodoo961 2 years ago
einstein is a theory of non human events without any proof or evidence. economics is something that should be able to be understood by me you and keynes all at the same level. its not that complicated. you are giving keynes the status of a discoverer or an inventor. he didnt discover or invent anything. it just seems that all your responses are talking points without showing that you actually understand what it is that you say you believe in. however I am also struggling with youtube limits lol
slickbtk 2 years ago
The point is the same, I am sure Hayek or Schumpeter could explain this stuff even better than you. The fact that I reference Keynes to explain his theories does not detract form my understanding of them (which is admittedly imperfect).
hoodoo961 2 years ago
I understand and point well taken, however I view economics as a very very simply thing. so I am sensitive when someone doesnt explain a theory and just references the theory maker, because there are 3 main types of "theories" 1 is socialism, 2 is pure free markets, and 3 is a mixture. all the history shows that pure free markets work best, so when someone says that the 1st or 2nd way is better than the third I want to know why? since there is no logic or history to suggest that.
slickbtk 2 years ago
I believe in a mixture (social security, public schools and roads, public clinics, and a central bank, ect.) but also in powerful private markets to produce goods and services. Ultimately, I think it is the mixed economy that works the best, with the creativity of capitalism and the stability of socialism.
hoodoo961 2 years ago
"people decide that money in the mattress is better, and banks decide that money in the vault is better than money lent out."
That's what's happen after the bubble burst. Its a needed event to rebuild savings. Investment cannot occur without savings.
"interest is not the reward for saving, its the reward for not hoarding"
I don't get what you mean. Why is interest not the reward for saving?
"present slump in consumer and investment spending"
Because savings have been lost.
bochap21 2 years ago
keynes is under the assumption that government spending(phony demand)and private spending(true supply backed demand) are somehow the same or atleast have a similar result of employing labor.This is false, during the industrial revolution there was so much employment that even kids were working 12 hour days. it didnt take the government to allocate all that labor and resources. When the free make allocates resources you have sustainability,when the government does it you have an inevitable crash
slickbtk 2 years ago
Wait, I don't see what the employment scene during the industrial revolution has to do with the current crisis or the great depression. Yes, new factories and plant investment created a lot of employment, and a reallocation of labor from agriculture to industry. But Keynes did not argue that government always needed to allocate the resources, or that markets never worked. Have you actually read the General Theory of Employment Interest and Money?
hoodoo961 2 years ago
the industrial revolution reference was to show you an example of how a free market was able to reallocate a huge amount of labor and resources and increase employment and productivity all without a fed and government "guiding" the way. the depression on the other hand did use massive government spending to try to stop high unemployment and a decade+ depression followed. what more evidence do you need that free markets are better at creating employment than gov? not in some cases but it all!!!!
slickbtk 2 years ago
Again, this is the difference in real and frictional unemployment. I'm gonna take a minute and a an Austrian like you. Schumpeter's creative destruction explains the labor shift right well. Workers in the agricultural sector were laid off and transitioned to jobs in factories, but this happened because overall demand for labor did not decrease, it just shifted sectors. A recession is when all sectors lose demand for labor, not just a shift.
hoodoo961 2 years ago
you dont understand what causes a recession, your simply listing the effects of a recession. A recession is a reallocation of resources and labor, which then lowers the previous perception of supply-backed demand both current and future. I really think you would understand my arguments better if you studied the austrian business cycle explanation. creative distruction is correct but its the gov trying to stop that in the name of easing what would be temporary unemployment that deepens it
slickbtk 2 years ago
A recession is caused when people and institutions decide that they would rather hold liquid assets than buy good and services, and they decide this all at the same time. The resulting liquidity trap results in diminished investment and consumption demand, leading to real unemployment. Employment grows if each increase in employment is matched by increase in consumption and investment, that does not happen when everyone wants to hold cash. Increasing cash supplies helps break this.
hoodoo961 2 years ago
do you really think that that is the cause of a recession and not an effect? do you mean to tell me that you dont see the obsurdity in your own statement? do you mean to tell me that eveyone just by coincidence decides to rather hold liquid assets instead of buying goods as you say? do you really have no curiosity as to what causes that? or are you satisfied with the text book explanation of coincidence and magic? again you are confusing cause and effect. why do people and institutions do this?
slickbtk 2 years ago
what im saying is that there were certainly a lot of unemployed people as the industrial revolution started..there were many unemployed farm workers,many unemployed steam engine makers, many unemployed buggy makers,and so on.but without the government serving those special interest at the expense of progress and everyone else they did nothing and guess what, all those unemployed people transitioned into better paying and more productive jobs,there was massive investment no money under mattresses
slickbtk 2 years ago
Yes, again, Schumpeter's creative destruction explains that very well. Change happens, and change is good. Industries compete for scare labor, capital, and resources, and economies transition to different type of production. The point is that buggy workers found work in car factories, farm hands in textile mills, and steam engine makers in coal engine factories. There was not overall decline in aggregate demand, just a transition in economic composition with frictional unemployment.
hoodoo961 2 years ago
in order for your argument of "real"unemployment to make sense you would have to accept the notion that millions of people would sit around and although they want to perform services for eachother will not work and trade.this is exactly what the free market is so great at coordinating. if there are resources and available labor they will not be unemployed forever.thats why all unemployment is transitional.this force is so strong that it even eventually over powers all the gov forces that stop it
slickbtk 2 years ago
Aha, and this is the problem. You have it backwards, that is what you have to believe about unemployment. Keynes said that they do want to work, but real unemployment is caused because of insufficient effective demand (consumption +investment.) They want to work, but because consumers and entrepreneurs are all trying to hold cash instead of buy goods and services from each other.
hoodoo961 2 years ago
again in order for your views to be correct you have to believe that millions of people who want to work would all just sit their and stair at a wall forever, and its only the genius of the all knowing government that can make all those stupid citizens to coordinate all of them to perform goods and services for eachother. and again if this is your feeling than how do you explain the fact that socialism (gov decides) has failed and free markets (people decide) has been amazing?
slickbtk 2 years ago
The government, of course, would never make micro decisions, only provide macro-stimulus. The real unemployed would be put back to work not because of specific government coordinations, but because of monetary and fiscal expansion to sustain aggregate demand. Again, Keynes and socialism have nothing to do with each other, thats a novice's mistake.
hoodoo961 2 years ago
again your talking as if individuals are like a dog who is sniffing around for his chew toy that is ontop of the dresser, and the gov (the dog owner) is just sitting there letting the dog humor itself until it eventually goes and pets the dog and gives it the chew toy and says good dog. your whole agrument only makes sense if you think gov is smarter and better equipped than individuals both separately and collectively. however rightfully you dont seem to believe that.
slickbtk 2 years ago
No, I don't, and I don't think anyone but a communist really would. The problem is that sometimes everyone working in their narrow self interest does not benefit the economy as a whole. Everyone holding cash in a recession is bad for the economy, even though it might be a good idea on the individual level. Lincoln said the purpose of government is to do that which individuals cannot on their own. And fighting recessions seems to be one of those things.
hoodoo961 2 years ago
but hoarding money under a mattress is not in that persons best interest in a free market. and again how do you justify the clear contradiction in your words to rightfully admit that gov is horrible at running an economy especially when compared with a free market, but at the same time say that when you really need to be smart and things are tough then the gov is smarter. does the gov all of a sudden become an all knowing genius during recessions? do individuals all of a sudden become stupid?
slickbtk 2 years ago
Government never "runs" the economy. It simply prints more money and spends more to sustain aggregate demand in a downturn. It never makes investment or micro business decisions, it simply conducts monetary and fiscal policies to maintain a level of demand. I've gotta leave it at that for a few days.
hoodoo961 2 years ago
haha, I thought you agreed with me that supply creates demand. are you seriously saying that the fed typing a few zeros in a computer system somehow creates demand? it may distort the market temporarily into behaving as if there is more demand but in reality there is not. and then we come full circle again as to what causes massive recessions. in describing what they do you explained the causes of recessions. aggregate is not a good way to look at it, it implies that gov and private are the same
slickbtk 2 years ago
So you seem to have no great love for the Federal Reserve (no surprise there). Do you support the movement to abolish it? IF so, what monetary system would you advocate in its place? A deflationary gold standard?
hoodoo961 2 years ago
yes I am for phasing out the fed completely, however not by law just by incompetence. I want to repeal all legal tender laws except for the constitutional law of gold and silver which will be what taxes are paid in. But that doesnt mean that the private fed cannot compete without a gov granted monopoly. why does competition work in everything else but when in comes to a store of value/transactor you think a secret monopoly is best?
slickbtk 2 years ago
Well, by my understanding, if there were a bunch of legal tender laws in the United States, it would be almost impossible to conduct commerce, what will unlimited different currencies with altering rates of exchange, to say nothing of oversees trade. A single currency in necessary for advanced planning and transactions.
hoodoo961 2 years ago
you are missing the point, the point is to not have any legal tender laws, and just because there can be unlimited currencies in theory doesnt mean there will be, its just the market threat that its possible. its just like anyother good or service, you dont have a problem choosing from a handful of cola products do you? in theory there could be millions of soda brands but there are not because people only use the select few best, the same would go for money.
slickbtk 2 years ago
Sorry, but consumer products (cola) and currencies are not the same thing. I don't get paid in cola, and I don't store my wealth or conduct my purchasing transactions in cola. Cola is just a product bought and consumed, not used for transactions bot domestic and international. Even if there were just a few prevalent currencies, I'm not sure the system would be workable.
hoodoo961 2 years ago
again I think that you would be saying the same thing if the entire world had one currency and I said different countries should have their own currencies, I think you would say that that would be unworkable and insane. but as we know the world has been doing just find with a non world currency for a long time. in my opinion if competition was allowed there would only be 1 or maybe 2 main money types, infact with competition I think that there would be less money types in use than today
slickbtk 2 years ago
you forget that its not always the fact that there is someone else competing it is the fact that it is possible for someonelse to compete. this would keep money types in check against debasement and instability. Imagine if the fed didnt have a gov behind them to say that people have to use their currency, dont you think it would be managed better and more transparent and they wouldnt have devalued it by 95%? even if the market would let them take it that far they wouldnt want to find out.
slickbtk 2 years ago
Your argument is basically the standard argument for competition, which is right for goods and services, but I don't see how it would be possible for the method of exchange between those goods and services. I would need to see an outline or explanation of exactly how this multi-currency system would function. Because right now I thinks it impossible and would lead to catastrophic confusion in the markets.
hoodoo961 2 years ago
first why are you ignoring the fact that the very situation you are saying would be impossible to function actually does function in the world today? second I think that we have a misunderstanding on what money is, I dont know what you think it is but maybe the source of our arguments on this is the fact that money is a good. just like a bond is a product that stores your currency, currency is a product that stores your savings and production. just like a bank and debit card are products
slickbtk 2 years ago
couldnt you say the same for investment products (cd's savings accounts, stocks, bonds, etc)? if there was a single investment vehicle by law and I was saying that those laws should be repealed and there should be competition among investment types would you be saying the same thing? would you say that it would be crazy for people to choose from a theoretical unlimited number of investment types? doesnt the inconsistency in your thinking ever make you second guess yourself?
slickbtk 2 years ago
Nope. Investment products are very different than currency. Different investment products exists because there are, in theory, nearly unlimited investment opportunities that need funding (enterprises are always starting and growing). But the thing is, all of those investment types are denominated in the same unit, because there is one currency. If there were a ton of currencies, all of those investments could not function in the markets, they would be incomprehensible.
hoodoo961 2 years ago
come on man, what your saying is just not true, the fact is that there are hundreds of different major currencies in the world and somehow against your logic investment products exist in plenty all over the world. and just like there are unlimited investment opportunities there are also unlimited goods and services, I think on this one you kinda got lost in just trying to disagree with me. think about it man, on this one your not even being coherent. I think we disagree on everything lol
slickbtk 2 years ago
I think we agree on more than you realize. We both agree that markets produce goods and services most efficiently, we both agree that competition is crucial in an economy. But we disagree on the business cycle and unemployment, and I just don't see how competing national currencies would work. Each nation today issues one national currency, but I think different currencies in one market would inhibit transactions and market exchanges.
hoodoo961 2 years ago
as far as the business cycle.. let me ask you this. lets imagine that in the movie theater business there was a behind the scenes guy who would arbitrarily buy up a bunch of movie tickets for a particular showing, then he would sell a bunch, then he would print up a bunch of new tickets and sell them, and so on... do you think that this would have an adverse effect on how smooth the theater (economy) would run? or would the situation come to an inevitable "bust"??? money supply is no different.
slickbtk 2 years ago
by the way incase I wasnt clear on my analogy the guy buying up tickets and printing them is the fed lol. why is it that you think the free market cant figure out the supply and demand of money and the price of borrowing it? by denying the feds roll in the business cycle you are implying that if a single person massively interferes with supply, demand, and the price of something that it has no bad effects. do you really believe that? how is that not a distortion in every way possible????
slickbtk 2 years ago
Aha. Here is the problem. Normally, the movie theatre is fully occupied, and all the seats get sold for each show (ie, full employment and output. But sometimes, people try to hoard tickets and save them up instead of going to the show. Normally, this is not a problem, but sometimes everyone does it at once. To combat this downturn in attendance, the guy prints up more tickets so people can get them easily and will spend them again, instead of hoarding them.
hoodoo961 2 years ago
well the free market is best at coordinating the most people to see the most movies not gov. you make two mistakes here. 1) you assume that the free market will waste their tickets and not see the movie and at the same time the theater will see this and do nothing about it. 2) you adhere to this notion that the gov somehow knows exactly how many seats are in the movie theater and how many people will show up. it seems I got you to admit that the fed distorts. you think its good, thats the prob
slickbtk 2 years ago
I never said the actions of the Fed do not effect the markets, if thats a "distortion" then alright. But there are times when, by increasing the supply of liquidity in the system, the economy can be aided and brought out of a temporary output slump. This has been macro orthodoxy since the depression, which was caused by a contraction of the money supply because of the gold standard.
hoodoo961 2 years ago
first of all yes you did say that the fed doest distort the free market. and second, the depression was not in anyway shape or form caused by money contraction it was caused by money expansion in the 20's the depression was simply the movie screening playing out, but ofcorse it would not have been such a bad depression if the gov didnt further try to mess with the movie theater after the free market figured it out. do you really think less people would have starved if everything cost more?
slickbtk 2 years ago
Even Milton Friedman said the government should have expanded the money supply in the face of the Great Depression. In fact, it was his most well known economic postulation. Its broadly known that an increase in liquidity is essential for combating a downturn in employment and output.
hoodoo961 2 years ago
yes and as I stated earlier I disagree with milton on that one very issue. first the fed caused the crash of 29 then the gov took over with its massive keynesian spending which the cause a decade long depression. why do you ignore this historic fact? is it a coincedence that the biggest bubble in the worlds history occurred 4 years after the fed started utilizing its printing tools? are you really going to claim coincedence?
slickbtk 2 years ago
Actually, if you look at the statistics from the time, you will see that the economy improved from 1933-1937, when it dipped again because Roosevelt was convinced to balance the budget. Also, look at the industrial production rates for advanced economies of the time after they began printing money and abandoned the gold standard. And by the way, what do you think ended the Great Depression? Was it the series of spending cuts called the Second World War? (sarcasm).
hoodoo961 2 years ago
wow I cant even believe what im hearing. so killing millions of people and destroying billions of dollars worth of assets and employing millions in essentially digging a hole and then burrying it back up (thats what war spending is..the opposite of productive its destructive), thats your cure for a depression? your crazy man, not I think your just fucking with me and if so then your good at it, you had me going for a while now. why dont we just play a huge national game of capture the flag now??
slickbtk 2 years ago
Wow, you totally missed the point, and I think you did it on purpose. Of course war is a bad thing, but the point is that the government spending on it was what provided the stimulus to the economy. After the war, there were more factories, workers had money from the work they had done, and the economy was out of its slump. And, consider the period from 1933-1937.
hoodoo961 2 years ago
again when you say workers had money from the work they have done you miss basic economics. the work they have done was building bombs, tanks, planes, massive labor in the army and so on. so after all that all that our economy had to show for that was a bunch of currency and you think thats what makes a strong economy? and the factories that were build were miniscule compared to what would have happened if all those resourses and massive labour wasnt squanderd during the war. are you serious?
slickbtk 2 years ago
No, it is you that seems to miss basic economics, the fact that productivity=wages. People get paid when they work. People spend money when they get paid. And the factories that were built were considerably more than the factories that were... sitting idle before hand. The world was in a protracted depression, and afterwards it wasn't. Surely you can see that.
hoodoo961 2 years ago
yes but productivity matters. its not just someone working that creates real wages it is productive work. everyone cant just build a bomb and expect to have real wages just because they are showing up somewhere everyday and getting a paycheck. we then get back to socialism, everyone had a job in communist countries so why is it that they all went bankrupt? as im trying to tell you its because of the fact that it matters how you get those pieces of paper not simply that you get them.
slickbtk 2 years ago
Yes, under conditions of full employment government allocation of labor can divert labor from its most productive employment, it's called opportunity cost. But again, we are talking about times with real unemployment, when the market cannot provide enough demand to sustain full output. Your confusion stems from your lack of understanding of the difference between full employment and unemployment.
hoodoo961 2 years ago
incorrect buddy. what the hell are you talking about, "the market cant provide enough demand to sustain full output"? I thought I already taught you that supply creates demand not the other way around. and once again there is no such thing as permanent unemployment under a free market system. and to imply that there is no opportunity cost in war or anyother massive gov spending is utterly insane. THERE IS NO SUCH THING AS REAL OR FAKE UNEMPLOYMENT. its all reallocation, end of story. got it??
slickbtk 2 years ago
You "taught" me that you are making a mistake Thomas Malthus corrected centuries ago. Supply does not always equal demand because savings does not always equal investment, and if investment+consumption do not equal the costs of production, there is inadequate demand. And an perpetually unemployed person is not being reallocated, he's being...unemployed. Real vs. Frictional, man.
hoodoo961 2 years ago
wrong once again. I guess your right I didnt teach you anything. you say that someone will invest in production of something that will have a demand to consume and you are right, however they dont invest just to satisfy the demand of others for free. the "demand" is really supply which will be exchanged for other supply. do you really think that business men run a business just because customers want there goods? or am I right and they do it to get the supply of their customers in exchange???
slickbtk 2 years ago
you make the basic common mistake that demand created supply. supply creates demand and the supply created demand is what dictates what types of goods and services are produced and invested in. your whole thinking is ass backwards. I cannot demand a private jet, and its not because I dont want it, its because I dont have enough supply to demand it. are you really not getting this? your way off on this frictional and real unemployment thing, just because its in a book doesnt make it real.
slickbtk 2 years ago
I understand what you are saying about the supply/demand thing, its just that you do not understand that in a recession, people stop demanding things with their supply so that total production falls. Tell me you do not understand that. You should read Thomas Malthus's principles of political economy, he describes how New Spain was poor even though it had great "supply" because of too little aggregate demand.
hoodoo961 2 years ago
the difference is that you seem to think that if everyone in a society is sitting on a bunch of supply that that makes them poor, and more astonishingly you seem to suggest that a everyone in a society can have nothing but just want things from each other and that makes them rich. your fundamental understandings on economics are false but even further false is your understandings of even your own fantasy economics system that you can keynes seem to share.
slickbtk 2 years ago
the only slight benifit of ww3 for america was to the extent that before we entered we were producing for other countries and we gained some wealth from europe at the expense of europe. However that only was a small benifit for a short time, when we entered the war we wasted a lot more money and resources then we possibly could have gained in the years before it. It was the massive gov cuts in spending in the mid 40's that ended the GD, that and the years of constant free market reallocation
slickbtk 2 years ago
There were only spending cuts in the mid 40s because WWII was over. Of course the government was not going to keep spending at war levels after the war. But yes, the government expenditure on planes, tanks, bombs, ect, employed idle workers and output and ended the depression.
hoodoo961 2 years ago
wow, you dont understand what money is, money is suppose to represent the production behind it, if two sets of 100 people both build a bomb and they get pieces of paper for doing so and then the bomb explodes there is no wealth being created, all that happened was 200 people just wasted a lot of time a resources. why cant you see this man? why cant you see that spending money on war is the same as spending money on people to dig a whole and then fill it back up again. infact its even worse.
slickbtk 2 years ago
By this logic, if a farmer spends a lot of time and investment growing food in a field and then sells his produce to a store and then that store sells it to me and then...I just eat it, nothing was created. Everyone now has paper in his pocket, but nothing happened. In fact, a lot of work can be mischaracterized as such.
hoodoo961 2 years ago
wow you are insane man. your really comparing the production of food and things that are consumed to buiding a bomb and then blowing it up?? I dont know what else to say to you when you are so off. you forget that money is not what allows you to consume and enjoy wealth, it is the actual production of those things, if everyone just built a bomb but had a lot of paper then everyone would starve and no one would have anything, there would be no wealth.why do you act like you dont understand this??
slickbtk 2 years ago
this is a very important point that I think if you understood the everything else would fall into place easier. I cant believe that you think its better for people to be building a bomb then even just sitting at home doing nothing, but ofcorse in a free market they would quickly (provided there is no gov interference) be employed. If your logic works then are you saying that the gov should just borrow.print money and give it to everyone who is unemplyed and have them build a bomb? come on man!!!
slickbtk 2 years ago
Gee, that's kind of the point of a depression, the fact that people are not being quickly employed. The unemployed are quickly employed when there is growth, not when there is a depression. You seem to draw no distinction between bad times and good, as if conditions never change.
hoodoo961 2 years ago
again that is the result of a depression not the cause. taking all those temporary "idle" resources and squandering them does nothing but harm. according to you why even make the idle labor dig a hole and then fill it back in for the money, why not just give everyone a piece of paper with a bunch of zeros on it? wouldnt that somehow create wealth? lol I hope your a young kid who is fuckign with me. please dont tell me you are an adult and the school system has failed you this badly.
slickbtk 2 years ago
So taking idle resources and employing them, and taking idle unemployed and employing them, does nothing but harm? No wonder the Austrian School is considered fringe pseudo economics. Again, you do not understand the business cycle. Less consumption=less investment=less production and the cycle continues downward. Its self perpetuating and must be broken, why do you not understand that?
hoodoo961 2 years ago
yes your sarcasm is actually literally correct. taking temporary "idle" labor and resources and using them to build a bomb and then explode and destroy all those man hours and physical resources does do harm. and to answer your question NO, I do not understand your logic and I dont understand it because its insane. consumption is not was causes investment and production, consumption is the result of investment and production. you keep putting the cart before the horse in everything. think man
slickbtk 2 years ago
No way. Who would invest in production of a product or service that is not going to be consumed? It is the final consumption that prompts the production process. Goods are made because there is a demand for them, not consumed simply because they are made.
hoodoo961 2 years ago
you are right to say that goods are made because of demand,however the demand has to come from offered supply to exchange for the demanded good. maybe if we break it down to the basics you will understand.if there are two people on a deserted island and one wants coconuts but is not nimble enough to climb the tree, he has to first go pick berries(supply) which he can then use to "demand" him to get the coconuts, he will not risk falling to get the coconuts simply because the other guy wants them
slickbtk 2 years ago
Ah, yes, and now we come to it. The two men "demanding" the products of one another a market exchange. When that happens, both benefit, and both are employed. But in a recession, people are not demanding things. The berry picker would simply hoard his berries and pick less of them, and the coconut guy is unemployed. Of course this behavior is illogical, but so are recessions.
hoodoo961 2 years ago
again we come back to allocation of resources and who is better at doing it. according to you the berry picker and the tree climber will both be unemployed forever because they are too incompetent or too stupid to exchange eachothers product. whereas according to you what is needed is for the smart all knowing gov to step in and give the berry picker a piece of paper if he picks berries and then give a piece of paper to the coconut guy, its not nearly that simple. this would be insane right????
slickbtk 2 years ago
You are acting like recessions do not/ cannot happen. According to your models, the economy would never fall into a recession, and market actors would always maintain equilibrium and full employment. Smith and Ricardo thought that would be the case. But its not. It simply doesn't happen. Assume for a second that the guys do not do barter, but use a currency of sea shells. Say they both start hoarding shells and stop buying berries/nuts. Neither gets picked, nothing happens.
hoodoo961 2 years ago
yes and in your assumption you are saying that the free market is stupidly "hoarding" and is too stupid or oblivious to see that they are harming themselves, and then the gov who smartly sees this comes up with a solution to induce them to not hoard and they happily ever after. This proves my point that ive been trying to make to you for what seems like months now lol, which is your logic only works if you believe that the free market is inferior to the gov on how to allocate labor and resources
slickbtk 2 years ago
recessions are extreamly logical. whats not logical is house prices doubling every few years or borrowing money to consume, or record trade deficits year after year, or typing a number in a computer and thinking that wealth will magically appear from the great economic puppet master that is bush, obama, and pelosi. your whole argument lies with the mentality that the pelosi is smarter than bill gates
slickbtk 2 years ago
Of course she's not. After all, if she's so smart, how come she's not rich, right? But if you hadn't known, Bill designs computer programs, not the macroeconomy. You're not making a larger point, except that maybe markets never go wrong, in which case I would direct you to the facts of common observation. If markets were perfect, they wouldn't malfunction. And the housing bubble was bad, thats true.
hoodoo961 2 years ago
Im not sure but are you suggesting that the housing bubble was a result of undistorted free markets? are you saying that the massive consumption binge and perpetual trade deficits we not the result of the chinese and us gov?
slickbtk 2 years ago
Oh yes, of course. It is the government's fault that people choose to spend more than they earn, and chose to not save or invest enough. At some point, you have to realize that not all economic ills are the fault of the government, get real.
hoodoo961 2 years ago
your ignorance is really shining on this one man.the fed has discouraged savings and encouraged borrowing by artificially lowering interest rates, without that fed action not only would the high interest rate have encouraged savings but it would have made this much borrowing impossible. not to mention all the gov programs like the cra and tax code manipulations of peoples decisions. some recent ones include the cash for clunkers, where the gov borrows money to give to people if they borrow money
slickbtk 2 years ago
Whoa, slow down buddy. We were discussing the merchandise trade deficit. You are being intentionally vague on this one, make a specific case. Cash for clunkers was a boon for a the ailing auto industry and contributed to improved GDP for the quarter. Its called the multiplier effect.
hoodoo961 2 years ago
you asked how the gov effects people and their borrowing and spending habits and I just taught you that you were wrong and the gov and fed does effect peoples spending and borrowing habits very much. and its amazing to me that you think its so great for the gov to borrow money to give to people if they too borrow money and destroy a working asset and then those numbers bring up the gdp. if thats your def of legitiment gdp growth then why not destroy everything and rebuild it on credit?seriously?
slickbtk 2 years ago
why do you ignore the fact that you have said many things that I have disproved? you said that the gov and fed doesnt distort markets, you implied that peoples spending and saving behavior is there own doing and not effected and manipulated by gov, you say that cash for clunkers borrowed money is somehow a legitament component of gdp. its insane. I still cant get over the fact that you think borrowing money to destroy things is a good thing, and furthermore the borrowed money to do it is gpd!lol
slickbtk 2 years ago
Where did you get this whole "destroying things" idea? I never said we ought to destroy things, that is absurd. Are you refering to the WWII ending the depression idea? It is a widely accepted fact, by almost everyone except you. GDP is the measure of goods and services produced in the economy.
hoodoo961 2 years ago
must I keep correcting your own previous statements? you cant see your contradictions? you said that cash for clunkers was a good thing that helped our "gdp growth" and cash for clunkers destroyed billions in existing working productive assets and it didnt even replace those assets with new ones, because the new bought cars that the gov manipulated people into buying were already in existence on backed up car lots. that was nothing more then borrowing money to destroy.
slickbtk 2 years ago
Oh, you are talking about the cars traded in. Well tell me, why is it companies make new cars? Because there is a demand for them. And making new cars requires employment. If nobody ever traded in a car, there would be no new ones. Don't you know that inventories must be reduced before production can resume?
hoodoo961 2 years ago
haha, wow I cant believe that even you will keep defending destroying cars as good for the economy. So why dont we borrow money and then give it to the cash for clunkers people if they destroy their new cars? and we can just keep destroying things and then claiming that its good because it will employ people to rebuild them right? and please dont act like what im saying is a sarcastic interpretation of what you are saying because this is EXACTLY what you are saying. way off man!!
slickbtk 2 years ago
Why the hell do you think people buying new cars is bad for the economy?
hoodoo961 2 years ago
wow. destroying cars just so you can make a new one is good for the economy? so you didnt answer my question, do you think we should destroy all the new cars that the cash for clunkers people got so they can get a newer new one? do you think we should blow up a bunch of big high rises so the unemployed can rebuild them? that way we can have some of the unemployed building a bomb, and the rest of the unemployed rebuilding what the bomb destroyed, are you serious? even keynes would call you crazy
slickbtk 2 years ago
Really man, all I've said is that when people buy new things it creates...demand for new things. You've put all the rest of that in my mouth and attacked it like a straw man, demonstrating your lack of clear thinking or trained brain.
hoodoo961 2 years ago
what are you talking about? we are talking about cash for clunkers and thats all weve been talking about on this particular thread. and you know this, is this your way of telling me was right on this and you were wrong? by acting like you never said that the cash for clunkers program was good because it added to gdp and it employed people? I actually said it half ass sarcastically and I couldnt believe you were actually defending this program.
slickbtk 2 years ago
we were always talking about cash for clunkers man, is acting like you never said that cash for clunkers was a good program your way of telling me im right and your wrong on this one? destroying cars so unemployed people can build new ones is not a good thing in any way shape or form. can you atleast admit this one point so we can end the cash for clunkers aspect of this? your really defending destruction in order to rebuild as a formula for economic growth?
slickbtk 2 years ago
and your wrong anyways, people buying things is not what creates demand that is what demand is and it can only exist with supply havent we gone over this already? people buying things is does not create demand it only dictates who and what is demanded. macro and micro man. I didnt attack a straw man I attacked you and the words you said, I put nothing in your mouth. you said that cash for clunkers (which is destoying cars inorder to sell new ones) was good and grew gdp and helped unemployment
slickbtk 2 years ago
the amazing part is that you think that the dollar amount that was given to people only if they destroy their cars was added to the gdp and accounted for much of the "growth" and you are using that as an example of how gov can complement spending to increase "agragate" demand. your a joke man, instead of sticking to your previous misconceptions of how economics works and gov role just be an adult and learn from what im teaching you, stop having some weird blind alliance to falsehoods. nothing??
slickbtk 2 years ago
you contradictions are amazing. you claim that the gov can effect the economy by its policy and actions yet you find it obsurd that it can effect the saving and borrowing behavior of people lol. it must physically hurt to have your brain and all the ridiculous information that is in it
slickbtk 2 years ago
There is a difference between saying that the government can effect the macro conditions of the economy and saying that everything bad that happens is the government's fault.
hoodoo961 2 years ago
well you might think I am wrong for thinking that gov intervention can only do bad, but do you not see the contradiction when you seem to imply that the gov can only do good? or atleast only do good if they do what you think they should do. the difference is id rather air on the side of too much freedom and choice (if there is such a thing as too much) than on the side of too much gov and violence. Its not only an economic argument but a general philosophical one.
slickbtk 2 years ago
That is a cheap mischaracterization. Either way, consumers can still choose what products and services to buy and how to invest/save their money, and this discussion has not touched political rights or freedoms. Freedom and choice do not factor heavily into this debate, but for the record, they are best maintained when there is a balance between government and the markets. If you need further proof, I will provide it.
hoodoo961 2 years ago
of corse freedom is a factor. is economic freedom not as important as other kinds of freedoms? why do you feel that freedom to keep the fruits of your labor and freedom to buy what you want not just as important and fundamental as freedom of speech or anyother kind of freedom? why do you feel that the gov forcefully taking money from one group of people and giving it to another is not infringing on civil liberties? why is economic freedom not important? and why must we accept this intervention?
slickbtk 2 years ago
I never said economic freedom was unimportant, but I also do not think it is being infringed upon. Tell me, have you ever personally felt your economic freedom infringed? When were you impaired from buying what you wanted? When did the government prevent you from saving or investing? And why does the government take from the young to give to the old, it is a legitimate question, but one you should better confront your grandmother about than me.
hoodoo961 2 years ago
yes the gov takes an enourmons amount of money out of my pocket and my customers pockets and that effects me profoundly. the fed dictates the interest rates I get for savings and am charged for borrowing. I am not allowed to buy and sell certain things. many things are illeagal, many things have to be fda and gov approved, and the distortions go on and on and on. how can you be so ignorant to the answers of your own questions?
slickbtk 2 years ago
one other major thing you keep missing is that its not the demand that falls in a recession its fall of the fake demand. money and interest rates should reflect the supply of goods and services (which is the demand) so when the fed prints more money and lowers interest rates to distort the perception of what real demand is it becomes a bubble. then when the true demand is realized (true supply) things get reallocated. I cant believe you accept this notion of mass coincedences and mass stupidity
slickbtk