$this->bbcode_second_pass_quote('', 'K')eynes's theory was forged in the Great Depression of 1929-1932 - the biggest economic collapse of modern times.
As their economies contracted, governments responded to their mounting budget deficits by raising taxes and cutting spending.
The Great Depression bottomed out at the end of 1932, with British unemployment having reached 20%, American unemployment even higher.
Keynes wrote the General Theory in 1936 to explain why the recovery was so feeble.
His revolutionary proposition was that following a big shock - usually a collapse in investment - there were no automatic recovery forces in a market economy.
The economy would go on shrinking until it reached some sort of stability at a low level.
Keynes called this position "under-employment equilibrium".
The reason was that the level of activity - output and employment - depended on the level of aggregate demand or spending power.
If spending power shrank, output would shrink.
In this situation it was the government's job to increase its own spending to offset the decline in public spending - that is by running a deficit to whatever extent necessary.
To cut government spending was completely the wrong policy in a slump.
When an economy is booming, a hair shirt at the Treasury is the right policy, when it is stagnating it is the wrong policy.
Keynes's message was: you cannot cut your way out of a slump; you have to grow your way out.
Eighty years on we have still not fully learnt the lesson.
PeakOil is You
Someone Disagrees with Hayek's Theories
"For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst and provide for it." - Patrick Henry
The level of injustice and wrong you endure is directly determined by how much you quietly submit to. Even to the point of extinction.
The level of injustice and wrong you endure is directly determined by how much you quietly submit to. Even to the point of extinction.
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Re: Hayek was a Moron
by prajeshbhat » Wed 03 Aug 2011, 08:25:25
One thing to remember is that in 1940s oil was almost free and it was easy to increase the productivity of farms and factories exponentially. So yes, increasing the aggregate demand was the best thing to do. Don't know if it is applicable today.
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Re: Hayek was a Moron
by mattduke » Wed 03 Aug 2011, 08:44:44
At least it's good that Cid_Yama has finally begun working his way towards the key issues of economics. Maybe he'll even get around to reading Keynes "The General Theory" or Hayeks "Prices and Productions", although I would not advise him to begin his education there. He should start with "What has government done to our money." and everything else by Rothbard. That is a good start for the lay person. Hazlitts "Economics In One Lesson" is good too. Don't skip Bastiat or Menger. Eventually work your way to Mises "Theory of Money And Banking". I can lend you my personal copy signed by Ron Paul, 2002! Cid_Yama, send me a personal message and I'll be happy to help you get started learning about economics.
Keynes is popular with politicians because he advocates increasing the size of government. His suggestions have brought us to where we are today. Here is a great truth pronounce by Keynes:
$this->bbcode_second_pass_quote('', '&')quot;If the Treasury were to fill old bottles with bank-notes, bury them at suitable depths in disused coal-mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of repercussions, the real income of the community, and its capital wealth, would probably become a good deal greater than it actually is."
Keynes is popular with politicians because he advocates increasing the size of government. His suggestions have brought us to where we are today. Here is a great truth pronounce by Keynes:
$this->bbcode_second_pass_quote('', '&')quot;If the Treasury were to fill old bottles with bank-notes, bury them at suitable depths in disused coal-mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of repercussions, the real income of the community, and its capital wealth, would probably become a good deal greater than it actually is."
I'll leave it to you to draw your own conclusions regarding Keynes' intellect.
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Re: Hayek was a Moron
by Cid_Yama » Wed 03 Aug 2011, 08:57:41
Von Mises was an idiot too. Fool.
Those that profited on the previous boom do not care about the following long periods of stagnation. But they should, because the masses will burn you out of your mansions.
The object is a stable economy that provides enough at all times to keep them from doing so. If the economy stalls, you have to bring it back to life. It is an absolute necessity.
That was the whole purpose of the food stamp program. Not because you feel warm and fuzzy about the poor. But to keep them from breaking into your home and stealing your stuff, just to feed themselves and their family.
You see, they don't just lay down and die in the streets.
They grab torches and come after you.
They topple governments and replace them with ones that will nationalize everything you own. Forced massive redistribution is a bitch. Usually the property owner does not survive.
Those that profited on the previous boom do not care about the following long periods of stagnation. But they should, because the masses will burn you out of your mansions.
The object is a stable economy that provides enough at all times to keep them from doing so. If the economy stalls, you have to bring it back to life. It is an absolute necessity.
That was the whole purpose of the food stamp program. Not because you feel warm and fuzzy about the poor. But to keep them from breaking into your home and stealing your stuff, just to feed themselves and their family.
You see, they don't just lay down and die in the streets.
They grab torches and come after you.
They topple governments and replace them with ones that will nationalize everything you own. Forced massive redistribution is a bitch. Usually the property owner does not survive.
Last edited by Cid_Yama on Wed 03 Aug 2011, 09:15:16, edited 3 times in total.
"For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst and provide for it." - Patrick Henry
The level of injustice and wrong you endure is directly determined by how much you quietly submit to. Even to the point of extinction.
The level of injustice and wrong you endure is directly determined by how much you quietly submit to. Even to the point of extinction.
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Cid_Yama - Light Sweet Crude
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Re: Hayek was a Moron
by prajeshbhat » Wed 03 Aug 2011, 09:06:21
$this->bbcode_second_pass_quote('', 'K')eynes is popular with politicians because he advocates increasing the size of government. His suggestions have brought us to where we are today.
Nopes. Keynes suggestions pulled the western world out of the depression. What you had after the 1970s was not keynesian economics. It is neo-clasiccal economics of which Milton Friedman was the founding father. It was mostly union bashing and letting the "free market" (read big banks) decide lending practices.
Of course the last thing you need right now is the austrian school austerity nonsense. It's an all pain, no gain measure. People will react violently to imposed austerity. It was mostly promoted by hacks like Von Mises and Von Hayek. They imposed auterity on their Austrian citizens and which destroyed their economy, after which they safely fled to England and America to avoid the wrath of the austrian public. Of course the school of thought is still alive among the neo-classicals.
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Re: Hayek was a Moron
by vision-master » Wed 03 Aug 2011, 09:08:08
Join the conversation VM, whadda ya say?
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Re: Hayek was a Moron
by dissident » Wed 03 Aug 2011, 09:12:39
$this->bbcode_second_pass_quote('mattduke', '
')Keynes is popular with politicians because he advocates increasing the size of government. His suggestions have brought us to where we are today.
')Keynes is popular with politicians because he advocates increasing the size of government. His suggestions have brought us to where we are today.
Really, no government actually implements his suggestion so why is he so popular. Where do you get the notion that government spending during recessions coupled with austerity during boom times is equivalent to big government? Also, what has economic depression policy got to do with actual Big Brother Government policy such as the "Patriot Act" and the Department of Homeland Security. Keynes was not advocating big government, but politicians who like to use him as a whipping boy are the ones who actually push the Big Brother agenda.
$this->bbcode_second_pass_quote('mattduke', ' ') Here is a great truth pronounce by Keynes:
$this->bbcode_second_pass_quote('', '&')quot;If the Treasury were to fill old bottles with bank-notes, bury them at suitable depths in disused coal-mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of repercussions, the real income of the community, and its capital wealth, would probably become a good deal greater than it actually is."
I'll leave it to you to draw your own conclusions regarding Keynes' intellect.
What's funny the inability of some to understand this statement. His point, which is trivially obvious, is that there is no special human economic activity. Any activity that engages people and involves the circulation of money is economics. Recessions and depressions are spasms of existing economic structure and not intrinsic physical states of society. Instead of quaking in fear and promoting through inaction a spiral of poverty, the government (the same one that creates the framework for civilized economics in the first place -- see how long your utopia can run without the judiciary and police) can enable new economic activity. Make-work projects actually work (e.g. the highway network, hydroelectric dams).
Have you gotten your Bush W. trickle down tax cut windfall yet? Bush's cuts are 1 trillion dollars, similar to the size of the deficit by no coincidence, yet the middle class keeps disappearing. Shouldn't small government be a cure-all? Just give the corporations all the freedom they want (like they have none now) and they will keep on shipping middle class jobs to China. Funny how big bad elected government enacting policies for the benefit of the electorate is such a nightmare, but unaccountable big corporations are expressions of freedom. Utopian ideologues should buy a clue, corporations are another form of government. They won't tax you, they'll just make you a serf like in Appalachia.
