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"Economic" Advice To The President (Laissez-Faire Austrian Vs. Anti-Market Keynesian)
Submitted by Alasdair Macleod via The Cobden Centre,
Your country faces a stagnating economy. Let us assume your Prime Minister (or President if that is who holds the executive power) seeks advice from two imaginary economists.
PM: You two economists have different views on what our economic policy should be. What is your advice?
FIRST ECONOMIST (Austrian school): Prime Minister, the reason we face a stagnant economy is your central bank perpetuated the credit cycle by suppressing interest rates when the economy turned down after the banking crisis and lending risk escalated. That has left us with a legacy of under-performing businesses, which should have been left to go bankrupt. Instead they are struggling under a burden of unrepayable debt. Capital is not being reallocated to the new enterprises of the future. The dynamism of free markets has been throttled.
The extra money and credit created by the banking system has not been applied to the real economy. Instead they are fuelling a financial boom in asset prices, which have become dangerously separated from production values.
Eventually, current monetary policy will lead to a fall in the purchasing power of the currency, and the central bank will be forced to raise interest rates to a level that will precipitate the next financial crisis, if the crisis has not already occurred by then. Overvalued assets become exposed to debt liquidation. It happens every time, and if you think the last crisis, which led to the Lehman collapse was bad, on current monetary policies the next one will be much worse, just as Lehman was much worse than the aftermath of the dot-com boom.
A monetary policy that relies on the transfer of wealth from savers to debtors always fails in the end, as certainly as death and taxes exist. It is also the real reason the bankers are getting wealthy while ordinary people become poorer. The time has come to recognise that your central bank, by licencing and encouraging the banks to create credit out of thin air, is the source of the problem.
Sadly, your central bank seems blissfully unaware of the debilitating effect of monetary inflation on your voters’ wages and savings, and if I may say so Prime Minister, your administration pays little regard to the natural injustice of rewarding profligate borrowing and penalising thrift.
I advise you to stop your central bank from manipulating interest rates and to let the markets sort themselves out. Furthermore your central bank must stop debasing the currency as a cure-all. So this is what I suggest.
First, encourage savers to rebuild their wealth directly through tax policy. When someone has paid tax on his income he should be entitled to keep his savings. The evidence from Germany and Japan in the post-war years is that a stable source of low-taxed savings is a prerequisite for a strong, yet stable, economy. And as savers rebuild their personal wealth, the state can scale back its future welfare commitments, which as you must be aware, are in danger of escalating out of control.
Second, I would reform the financial system. Banks should manage their affairs on the basis of reputation, and not hide behind regulation. Instead of looking after their customers, they use their regulated status to game the system. Regulating the banks has led to crony capitalism of the most pernicious sort. In future banks must set their own standards and be answerable to their customers first and foremost, not to a government regulator.
Third, the state must always run a budget surplus, to pay down its high level of debt. In balancing the books it is important to bear in mind that money taken in taxes destroys wealth. For a truly prosperous economy, you should plan in the longer term to reduce the state’s tax take to below 30% of GDP, and lower still in the fullness of time.
You will only put a stop to successively worsening cycles of boom-and-bust in the future if you return to sound money, free markets and small government. Your ministers must stop pretending they can run the economy. They have no basis for making commercial judgements. Government interventions are always politically-driven. Nor should your ministers listen to big business, which always seeks to influence policy in its favour.
I realise all this will take time to implement and must be done in steps so that the private sector can adjust. For this reason I recommend you structure these changes over a ten year period, announcing the legislative schedule in advance. You will find that businesses will reposition themselves to your new policies ahead of their implementation. The benefits to your economy and your voters are more likely to flow smoothly without disruption, and deliver economic benefits much sooner than you think.
SECOND ECONOMIST (Neo-Keynesian): Prime Minister, I cannot believe what we have heard from my esteemed colleague. He lives in a world that no longer exists. I really don’t see the relevance of nineteenth century values to the economic conditions of today. The disciplines of macroeconomics and econometrics have made great advances, allowing us to plan the course for the economy in greater detail than before.
I am confident that I have the solution to your problem. I firmly believe that your government’s monetary and economic policies are going in the right direction, but you are not bold enough. People are too reluctant to spend, so you must do everything to encourage them to do so, perhaps forcing the banks to cut the cost of consumer credit. Alternatively, you should explore means of distributing extra money to consumers through government spending, along with negative interest rates perhaps, to jump-start economic growth.
I am convinced your government can safely increase its budget deficit, injecting money into the economy by creating more jobs in the public sector. You should bring forward spending on infrastructure, which will boost the construction industries. Creating employment by expansionary measures will reduce the cost of unemployment, offsetting some of the budget deficit.
Prime Minister, it would be a huge mistake to cut back now, because the result will certainly be a deepening recession, widespread bankruptcies and increasing unemployment. I am convinced that with government support, the welfare state and vital industries can be safe-guarded, and if your central bank increases the money supply further and encourages the banks to lend we shall get through this temporary problem. It’s vital we get consumer confidence going again, and I firmly believe progressive economic and monetary policies can save the day.
The time to cut back is not now. When the economy resumes its long-term sustainable growth trend, increasing tax revenues will then close the deficit, bringing government finances back into balance. There really is no need for any cuts in public spending, which will only lead to disaster.
********
I have presented both arguments unadorned with any compromises, but they capture the essence of the chasm between the laissez-faire Austrians and the anti-market neo-Keynesians. The difference between the two is the Austrian argues from a sound theoretical basis, while the Keynesian approach is founded on beliefs and a reluctance to consider second-order effects.
It should be apparent that a politician driven by short-term considerations, which describes just about every leader in Western democracies, will have great difficulty in dealing with the destructive credit cycle. For a start, they all claim that their central banks are independent, which is code for “we don’t understand monetary policy, so we don’t want to be responsible for it.”
This is why the order of events is crisis first, solution second. The solution is always to address the symptoms and not the underlying problem. It is not for nothing that everyone refers to the Lehman crisis as if it was the crisis. No, the crisis was the over-inflation of asset prices relative to their productive capacity, and the speculative greed that drove it. Lehman, AIG, Bear Stearns and all the rest were merely the subsequent casualties.
Very few people understand the fundamental truth that in properly functioning markets, assets are valued by their productive capacity: property yields a rent, or the equivalent use-value for an owner-occupier. Machinery produces manufactured goods, and the value of the goods produced determines the value of the machinery. Even art produces a return in aesthetic value, hard though that is to value. But when speculation drives values for values’ sake, as was the case with the dot-coms and the liar-loan property boom seven years later, a financial crisis always follows. Yet again, this description fits the conditions of today.
The only time asset values can continue to rise on a non-speculative basis is when the public as a whole changes its preference against money and in favour of goods. In this instance it is the purchasing power of money falling, and not the value of goods rising. This does not apply today, as the price of gold attests. However, it is likely to apply when the central banks react to the coming crisis.
The truth is it is too late for our politicians to act, because the speculative peak that precedes the crisis is already upon us. Last time round, the Federal Reserve Board wrote open-ended cheques to save the banking system, estimated at the time to be as much as $13 trillion or thereabouts, though not all this facility was drawn down. It followed this with zero interest rates and three rounds of quantitative easing. What will it take this time?
Whatever it takes, as Mario Draghi famously said in 2012. This time it will almost certainly be currencies that end up taking the hit.
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The only advice I would offer to the President is to go back to Chicago, to your gay bath houses, and leave the rest of us alone!
PS take Michael/Michelle with you, please. Ask Hitlery to join, she would enjoy it, and could teach you a thing or 2 when it comes to licking penis/pussy.
"Ecnomic" Advice To The President"
Just fucking DIE bitch & pretend it WASN'T on your watch.
As your reward (for your PEACE PRIZE worthy efforts & contributions) ~ Get your stupid, 3 PUTTING FROM THE ROUGH, skinny @ss re-incarnated as the NEXT slave bitch strapped to the whipping pole
Looks like the Baltic Dry Index just collapsed to a record low of 498 .. http://www.bloomberg.com/quote/BDIY:IND
<-- Von Mises
<-- Keynes
is truly understand eonomic and secondary effect.
You made me cum .... I had to up vote you ?
If Government spending is good for the Economy, Why doesn't the government just pay everyone 1000 dollars an hour to dig holes in the ground?
Why bother with digging holes?
To the very heart. Thank you!
And, why bother being source of capital for business?
even keynsians know you have to get some value for your spending. think of all the shovel and work-glove maker multipliers.
Why not pay them to break windows?
They will pay us to play games. Probably, augmented reality games, so that we have to run around in the streets rather than just sit on couches.
And all visible signs of the continuing massive inequality will also be removed -- via augmented reality. Your Occulus contact lenses will filter out the sight of the uber-rich, who will be living in nanocrystal towers in the sky.
Date of advent: sometime around 2150.
…eventually, they will pay us for our gold.
(And in doing so will have addressed the problem, in addition to the symptoms).
Milton Friedman once visited a road-building project in India, where thousands of workers with shovels were used instead of much more production heavy machinery. Asking the government official escorting him why, the official replied, "This creates more jobs," to which Friedman replied, "Then why not use spoons?"
We will get there eventually.
Try to imagine what the world will be like in 200 years, when structural unemployment is at 90% because the entire economy is automated. Think AI, etc.
The challenge now is to imagine how an economy could work when no one has a job, but there are still enough goods produced to meet any and all demand.
What happens when capitalism perfects itself so that it does not require labor at all?
Betcha don't have an answer for that. Economists ought to think about that, rather than about inflation or "debt," because the problem I describe is real, not imaginary, and cannot be "spreadsheeted" out of existence using the trick top-hat mathematics that economists make their livings by.
In 200 years, humans will be history . . . to be heralded, however, for what we will have created at least 150 years earlier:
http://marshallbrain.com/second-intelligent-species.htm
Because of inflation, you stupid fuck. Have you actually read The General Theory? Have you read Lerner? Have you read Minsky?
I would like to live on a planet without economists.
Who is the troll who 1 starred this article?
Ah, there he is!
Janet Yellen?
Nothing will ever happen until the socialist fucking scum are removed alive or dead from government.
There is no such thing as a "sound theoretical basis" in economics.
This is the problem with economists -- and with their fanboys like whoever wrote this article. They think that economics is science.
It isn't. It's more like a cross between psychology and sociology. In other words, pure guesswork.
Also, the real problem facing society isn't debt (which no one can see) or inflation (which almost no one can see) but inequality. Every conflict in the modern age has had massive inequality as a primary motivating factor. Debt or inflation are always secondary, and almost irrelevant by comparison.
Of course, saying so is "socialism"... so, you know, it must not be true.
Capitalism: property matters more than people.
Socialism: people matter more than property.
It's that simple.
Actually, Austrian "economics" recognizes economics as a pseudo-science, and relegates itself to clarion for that truth.
If Austrians understand that all economic theories are horse shit, why do they bother to construct one themselves? Especially one that is so obviously simplistic.
The writer claims that Austrian economics has a "sound theoretical basis." There's no such thing, outside of science. So either his description is erroneous or the Austrians are mountebanks like everyone else. I believe it's the latter, because I have read enough of the Austrian school to know that they do believe they have found "the truth," even though there is no such thing.
It's like comparing Judaism and Islam, and claiming that Judaism has a "sound theoretical basis." There are no testable theses in economics. Therefore it is not scientific. Therefore it has no rational basis at all, especially not a "sound, theoretical" one.
Here is a sound theoretical basis for Austrian economics: "The wisdom of the many exceeds the wisdom of the few."
AKA mob rule?
AKA pure democracy...
I have to disagree. There's nothing specail about "the many." They're the same as "the few," except they're a lot poorer. If they had the power & money, they'd behave in the same egregious way.
I'd say there's not a lot of "wisdom" going around in either group.
No. A free market in which everyone "votes" with their productivity and with their money. When real people support the industries they desire the most sustainable economy emerges. When central planners push money here and pull money from there they create malinvestments in industries which are not actually desired by real people and are therefore unsustainable.
Wisdom like in common sense? Not so common nor sensical afterwards. Wisdom is far from any "sound theoretical basis".
"Your wisdom is consumed in confidence"
Keynsian policies only work if an individual has an excess to invest into the economic system to keep up.
Elites like this policy with always an excess, they reinvest far more and actually outstrip the normal person.
That is your inequality gap and how it came to be and it is how they designed the system, growth 2%, I obtain a growth of 2.5% and on a long enough timeline I own everything which is where we are now.
Debt is for the poorest no way to get out because they have no excess.
Inflation is for the middle class seeing their worth falling to the poorest.
Elites, is no debt, inflation means nothing and the easy life.
One of the reason elites will never let this kind of mechanism die, it is just to dam good for them.
Yes, that is true -- and it's true under any economic system.
The elites do not need fancy theories or mathematics for their predations. Their actions are instinctual, built into human nature, and they will always find a way to perpetuate inequality.
The Bible got it half right with "the love of money is the root of all evil." The full truth is: "the love of having more money than the next man is the root of all evil."
This is why the answer is not a change in economic theories, but a change in values. The rich will never change their values. It's easier for a camel to pass through the eye of a needle.
I believe we will continue to have massive and worsening inequality until we are governed by intelligences that are non-human. This could be either AI, or AI-augmented human beings. Unfortunately we probably have a couple more centuries of misery until it is technologically feasible to change our own natures -- to overcome our own evolutionary programming via technology, similar to gene-editing.
At that point we will have become post-economic man, and not homo sapiens at all. And at that point we will be civilized enough to be allowed to conduct interstellar or intergalactic travel... "allowed" by the extraterrestrial races that must be absolutely mortified by our current conditions and behavior, and so keep us quarantined on Earth like the social disease that we are. They may even be actively stymieing our science to prevent us from getting off the planet. I know I would, if I were them.
To bring this full circle: Jesus was an extraterrestrial AND a socialist. All aliens are socialists. No society that fails to evolve beyond the barbarisms of "competetitve markets" ever achieves escape velocity.
USURY is the root of all evil.............
Who determines what "usury" is? Mommy government?
Not that I'm a theologian but I'm fairly confidant that Jesus was not a proponent of the coercion and force used by the state to extract the fruits of effort and ingenuity from the productive segment of the world and redistribute it to those who refuse to DO for themselves... yeah charity kindness and selfless giving sure but definitely not via force.
Keynesianism: Taking water from the deep end of the pool, running to the shallow end while spilling it all over the outside of the pool, then dumping it in the shallow end and claimining the water level has now risen.
The real problem in trying to attempt a different fiscal direction you have to have debt forgiveness to start again.
Any move to a sound fiscal policy while being forced to support an enormous amount of bad debt puts you into stagnation just as if you had carried on in the same direction. The Keynesian game was a one trick pony of debt pretending it all added up until the debt maxed relative to income after that you grind the economy into a stagnant position.
One way out, would be brutal and should have happened in 2009 all bad debt bankrupt, all holders of this debt you lost! At that point tomorrow is another day and everybody can start trying to build a future once again. currently as I see it the system is trying to offload this bad debt onto the population before they do this because they do not want to lose. It really is that simple.
We should never have let the economists allow this debt through Keynesian policies and definitely not allowed it to grow past serviceability requiring QE and ZIRP, soon to be NIRP to support it.
"Mr. President" isn't listening. Economics don't interest him.
There are happier topics like stirring racial tension, fundraising for the DNC and babbling on about manmade climate change to guilt people into redistribution.
While you are dispensing advice, you might also want to include recommendations for increasing society's net energy. Don't think Von Mises tackled that one.
To rebound from a currency crisis currency issuers must have collateral whose value relative to other goods does not depend on the currency in crisis.
Counter-party free monetary assets must be allowed to float BEFORE the crisis, or they will not be available to underpin the new currency.
Everyone works in their own interest even economists.
Malthus – supports the vested interests of landlords and so finds nothing wrong with parasitic landlord rent extraction.
Ricardo – supports the vested interest of bankers coming from a banking family, sees problem with feudal landowners but not bankers that create money out of nothing
The Austrian School – Austrian aristocrats, of the European Leisure class, support investor’s interests. Anti-Government as they are trying to do away with the old European aristocracy. Give preference to those with money:
You are free to spend your money as you choose.
No money, no freedom.
Money is freedom.
Most classical economists differentiated between earned and unearned wealth.
The Austrian Aristocrats benefit from inherited wealth and hide the distinction.
Hidden quote from the right wing hero, Adam Smith, who recognised the dignity of labour and the idleness of the rich.
Adam Smith:
“The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers.”
We are ruled by political correct morons who only adress a problem after it happened as they lack the interest of foresight.
There's simply to many populists to make a change that matters.
Look to europe, every political party was against anything that could be concidered rascist because it was a popular thing so they let everything happen.
Now, suddenly, right wing movements are becomming very popular and every politicians agrees to the measures against the muslims.
Now suddenly they
Realise that it's actually in the koran to lie against an infidel when you're at war with them and that non should be believed if they talk easing words.
You still won't see things like the counsil of Imans in europe where 5 where against the violence and hundreds cheered. It shows the entire muslim community is rallying against the west and we're to stupid to see it as we have been brainwashed by the disney channel to believe that every story has a happy ending.
The US Federal Reserve was designed by the banking parasites and enacted into law by the political parasites in the White House and Congress to do one thing: transfer Main Street wealth to Wall Street parasites. Make no doubt about it, the political parasites know this for a fact because they routinely receive their two bits compensation—I mean, bribes—from the Wall Street parasites. How do you think the Clinton's left the Ehite House broke yet are now worth between $100 million and $200 million? For their scintillating speeches containing unique insights about defending our Constitutional Republic?
As I read this at the end I spoke to my wife as a business owner and am thankfull I am awake and realise whats comming I am out of this fiat system, we have everything we need for the worst thats comming and can buy into the next system if its worth buying into and if not I am outta here. Get ready in 3 2 1 boom
Both schools of "Thinking" is rubbish.
Both accept the monopoly of credit and go against the teaching of Jesus and his war against the Pharieses.
The time value of money is a human construct and not a physical reality.
As for the the Keynesians forcing people to work for purchasing power in the age of machines is extremely wasteful ( it is designed that way to maintain wealth Concentration)
The objective of life is to live, to have enough goods and time units to free yourself for spiritual and intellectual endeavours.
It is not to save.....we first began saving when we switched to a agricultural way of life.
We save out of necessity during the autumn period.
To much saving and the food is likely to become spoiled and therefore this leads to wasted effort compromising the first objective of life.
Too little savings and you are likely to starve during hard times.
The large saving's (Debt) of both the Austrian and Keynesian school point to a needless saving.
In the modern world we can witness this as increased friction or distribution costs relative to the entire economy .
This Mc fellow wants to banish us all to the 4th circle of Hell where the misers ask each other "why save, Why waste"
Um yea/www.youtube.com/watch?v=jt3oAyK_IG8
"In future banks must set their own standards and be answerable to their customers first and foremost, not to a government regulator."
Banks produce accounts that are so opaque that even other banks don't know the true situation, hence the credit crunch, when banks don't lend to each other as they don't know the good banks from the bad.
We de-regulated banks and trusted bankers and they rigged every market they could.
We removed the 1930s legislation designed to prevent another 1929 and they did it again in 2008.
We can thank the bankers for reminding us of the necessity of legislation and why it was enacted in the first place.
There is lots of financial regulation because bankers are incompetent, unscrupulous and entirely without morals.
Folks. You are arguing theory wrt all this, not epistemology wrt economics' intellectual foundation : No experiments are possible, therefore no cause and effect and definitely not a science. Only correlation information to build models with, so the same intellectual class as history, information about the past used to predict the future. That is not zip, but can never be engineering.
The Keynesian model is too simple, has never worked. We knew that before this last experiment in the Western world, but the CB's like the power and the politicians use the created fiat to purchase votes, MSM sells anything as instructed, and the critical 5% of critical voters was bought off with created $.
https://thinkpatriot.wordpress.com/2015/08/10/a-modern-approach-to-secur...
Natural panics are short lived .... serve to reward better economic stewardship .... and punish poor economic husbandry .... they are an important reset .... and should not be interefered with ?
Correct.
But you got your TARP anyway so why complain?
The slightest deviation from Capitalist orthodoxy is criminal !
No, what is criminal is a bunch of political morons assuming they know enough to control anything outside of small government offices doing small and mild things.
You bastard Progressives of the Left, with your welfare systems and regulations of major parts of our society have fubared us. Yes indeed, the equally bastard Progressive of the Right with their drug laws and wars deserve their share, and you both borrowed and spent the money for your favorite constituents, those who most fattened your campaign war chests. You all bought your leadership positions. You all had a conflict of interest from the first day in office, you wanted to keep people contributing, so a lot of incentive to pass legislation. Every item of legislation was a source of contributions, and every public dollar spent was a cash flow to support your side. Surprizingly, society has polarized.
Right, the American Home Economist Federation isn't much, but a few $K here and another few $K there, you work on enough bills, get on enough committees, you are golden. Committee assignments are prime because they make you someone to whom the contributions naturally flow. And the speaking engagements, the invitations to meet with constituents, give a little talk, at a really nice resort at a really nice time of year, spend a long weekend. All expenses paid, of course, as part of your speaking fee.
It has long been obvious that more legislation was making things worse. Why did it not stop? Because that would stop the gravy train. Where would their campaign cash come from?
So this campaign season will be expensive for both parties. Expect the legislation to flow. Every new law, stopping up the arteries of commerce, the exchange of arts and crafts and skills and pleasures.
Thus societies decay. Debaucherie gets the bad rap, but what do you do in a pre-entetainment society when everything is prohibited so there ain't nothing else but you aren't yet starving? Waiting for the peasant revolt, that interval.
Wonder what our symptom of social decay will be?
While waiting, they issue a lot of press releases. Viewing the news as streams in various variously competing and cooperating streams of PR is enlightening.
https://thinkpatriot.wordpress.com/2015/11/22/the-parable-of-the-press-r...
Pro market Hayekianism; aka pseudo laissez faire markets = HFT run Oiligarchy markets on 'intelligent algo' control. "Our way of life non-negotiable" is now a shit pile of debt wrapped up in a shittier pile of fossil energy and its fall-out on oceans and EL Nino hits all continents like an enigma of "climate change". The "creme de la creme" of sour cream going to viral scream like in the painting by Edvard Munch /
Antimarket Keynesianism = "The other function of the economy is to create jobs"; dixit Keynes. "I will never work for those who are rentiers and sleep on their gains but for the State as I despise what is criminal."
Thats what the US was about under FDR and it made America great 'cos it did not forget the common man. What happened after JFK's demise was the victory of "I want moar and those pesky Viets can lump it hard."
What LBJ created and tricky Dicky and Dear Henry ramped up thanks to FRiedmanite float economics comes home to bite America in Neo-con Reaganomics gone global.
"Now the turds are not just American they are also Saudian and Chinese! Can someone please pull the flush on this dump of global fiat debt shitpile?"
Well, when the turds go global and "habemus anus" is a universal mantra why be suprised for unintended consequences ?
The US became great through free enterprise and personal responsibility before FDR became president. Then he, like Hoover, but for longer than Hoover, conducted statist intervention in the economy that turned a normal business downturn into the great depression. Then came WWII which made the US the greatest because it was the only major developed economy not subject to physical destruction from the war, while its 2 chief rivals Britain and Germany were pummelled into bloody messes.
Along the way, FDR looking after "the common man" found time to imprison farmers and shopkeepers who chose to sell their chickens and other products at less than the state mandated price, or even, God forbid, allow the customer to actually choose which chicken he wanted to buy.
Looking after "the common man", FDR started the great ponzi scheme of Social Security, buying votes from near-term beneficiaries while the "common man" mugs who would inevitably be stiffed were yet to be born.
FDR also confiscated most of the common man's gold and made the $US non-convertible into gold, except for exchange with foreign CBs. That left the Fed free to print as much as it wanted, which it did to prop up FDR's economy, and to exchange those worthless US dollars for goods from overseas, so that ultimately a subsequent president (Nixon as it turned out) was faced with the situation of foreign countries then holding essentially worthless US dollars demanding they be exchanged for gold, which would have taken more gold than the US had. So Nixon became the president who had to pull the plug on USD gold convertibility that FDR had put on the path of epic dissolution.
And of course there were all the communists he cossetted in his government, working not for the US but for Stalin and the USSR and introducing policies that undermined the US.
Most of what ails the US started with FDR who left his successors with the job of trying to cope with the avalanche of shit he had started.
hahaha, so he was responsible for 1929 and surely his ghost was responsible for 2008....Dream on.
Hayek and his dream to front run the market of "invisible hand" via a cybernetic intelligence has come true : TBTF HFT, was his wet dream.
Where there is discord I bring harmony...Maggie and her City farm.
True Hayekian dream. We are there thanks to his dirty dozen who made Amreica what it is under Ronnie and Sons!
Yes Stalin was FDR's natural son. So blame HIM for that ping pong game.
Lol, While we are it why don't you blame him for GBW's Jihad and the Frankensteins that spawned.
9/11 was surely a false flag by FDR and his Sancho Panza : that commie Keynes!
Jumping Josephats now we know why we are where we are!
dup
Derp.
Both "school" presentations here are irrelevant because they're not talking about the elephant in the room : who controls money creation, how is it created (as debt or not, hard metal or not) and for what purposes? If you can put in place a monetary system to answer these 3 not so simple questions for good purposes and prevent corruption of said system, I'm pretty sure many economic systems could work for a pretty long time.
World economy is a living entity always evolving just like the people of the world. It's a very complex system full of multiple dependant variables. What worked yesterday could be cataclysmal tomorrow. There is no such things as an ultimate solution. In the end, it's all about conjuncture.
I agree. We are being given a false choice and just like politics we are expected to accept the lesser of two evils. Back in the seventies I could vote for the NZ Social Credit Party and they attracted up to a quarter of the vote. They didn't go full Douglas but their main platform was that only the government could control and issue credit - that was before deregulation so bank lending was still constrained by the level of deposits.
Kick the banksters out of money creation and get government back to its job of taking care of the shit so that we can get on with our lives.
The key aspect of currency creation (not money, only gold is money) is the monopoly that is exercised by the aristocrats. It is not the debt or metal that is the most important part of currency, it is the fact that no one may operate outside the slave system set by the master class. Currency competition leads to freedom and thus prosperity.
The "Austrian School" is not a prescription for how to centrally manage an economy. This notion, that economics as a social science is a tool of the central planners, certainly comes from the Neo Keyensian mystics and their Collectivist religion. While this article is instructive as to some of the different beliefs that Austrian types may hold versus the Neo Keynesian dogma, it should not be taken as a competing theory of governance.
If you want to begin looking at the main difference, you can start with the idea that Austrian economics makes observations based on a priori criteria. This, in contrast to the Neo Keynesians who believe they know the truth, which is based on laws that they claim to have derived from mathematical legerdemain. The problem with mathematical proofs is that they must be based on sound principles, which Neo Keynesianism has never really fleshed out. And which, in economics, always come back to axiom anyway.
This makes some of the Neo Keynesian criticism of the Austrian School laughable, as they tend to go after the its non-math, a priori assumption basis as the source of why Keynesianism is superior. In fact Keynesianism too is based on a different set of a priori assumptions, it's just that they try to obscure this fact by dazzling people with numbers and basic calculus graphs.
If economics were to truly be a science, it would begin with data and end with non-disproof of the hypothesis for the most part. But what we have with standard Economics is the opposite. That's why von Mises said it was not a true science. Von Mises began the process, but it halted when the slaveowner class seized upon Keynsianism as their Grand Vizier in order to justify their continued rule. All science begins with wisdom, and knowing the good questions to ask.
1/2 Black Barack is a useless eater ... a taker ... and Worth absolutely Zero to the average producer.
And once again the biggest win, as in the past 100 years ( http://www.amazon.com/All-Presidents-Bankers-Alliances-American/dp/15685... ), when the too big to fails lose at their own table they send the tab to the tax payer. Here comes the pain comrades.
"The difference between the two is the Austrian argues from a sound theoretical basis, while the Keynesian approach is founded on beliefs and a reluctance to consider second-order effects."
A "sound theoretical basis" indeed. Because "theory" is the best one can call it. The "laissez-faire" school was invented by Adam Smith as a justification for the impoverishment of workers by the bourgeois capitalist class. It was propaganda masquerading as theory, justifying the horror-show conditions in which workers worked and lived.
Moreover, this nonsense was eventually abandoned because it didn't work in the Depression. Governments were forced to adopt Keynesianism, which found its fullest expression in the wholesale government takeover of world economies in WWII.
Even worse, this laissez-faire zombie rose to life again under the tutelage of Milton Friedman. His theory argued that monetary policy was the only thing that governments needed to worry about. If they managed that properly, then everything else could be ignored, including pervasive corruption in the financial system and monumental government incompetence at every level.
I continue to be mystified as to how the current mess, created by the Austrian School's over-emphasis on monetary policy to the exclusion of all else, gets blamed on Keynes when there is honestly nothing even remotely Keynesian being employed in any economy on the planet! Call it one of the ironies of history.
The bottom line is this: there is too much debt in the financial system owed to bankers who have contributed nothing of value to the economy. Likewise, there is pervasive corruption and criminality in the financial system. Any economic or political theory that ignores this is doomed to failure. Period.
Now is not the time to peddle pet theories. Now is the time to arrest, prosecute and jail offenders, regardless of the rhetoric they spew.
Signing off:
http://thetradingcrucible.blogspot.com/