Don't Mess With The Keynesians
The compare and contrast discussions of Keynes and Hayek have wended their way over the last few years from learned academic texts to YouTube sensationalist rap videos. We have to say we have our preference among those two extremes. However, in a recent interview with Nicholas Wapshott of Reuters, INETeconomics pulls back the veil a little more of the borrow-and-spend short-termist optimism of Keynes versus the 'if it can go wrong, it will' pragmatist pessimism of Hayek. Unfortunately, it seems we are rapidly unlearning a number of the lessons of the eternal optimist - fixing the world right now in favor of solving the underlying problems and furthermore as Wapshott notes, civilization is a lot more fragile than one can imagine. Starting from the perspective that Hayek was engaged by the LSE to take on the establishment Cambridgian, their very different personal experiences of post-war, post-depression life set them looking for solutions from very different perspectives. While their public arguments were seen as ungentlemanly at the time, though published in journals, it became clear that Hayek faced an uphill battle, and perhaps only now, thanks to the collapsing capabilities (or willingness) of governments to borrow-and-spend, are we able to 'mess with the Keynesians'. While avoiding extreme politics and authoritarianism may be a common-sense raison d'etre, the ongoing devaluation wars could perhaps be as capable of pushing the world to these limits as any non-Keynesian solution ever was.
The full five-part interview can be found here.
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Some people can take their medicine with one swallow (Austrians), others cry and bitch and sip on it until it is finally consummed (Keynesians).
More like Austrians will suck it up and go through chemo, while the Keynesians will wait until the cancer metastasizes throughout their entire body and then ask for a dose of morphine to ease the pain.
Even more like people will use increasingly complex words to explain simpler and simpler concepts, whille Keynesians and Austrains continue to drink their respective kool-aids and grind along in an uncomfortable compromise of a life.
ori
/fractal-animal-hypnotic/
Keynesians are all about models and predicting future behavior. They believe in central command economies through "fiscal" aka taxing, borrowing, printing, and central banking, printing money and reducing the money supply.
Austrians are free market, we believe in Mises and the Austrian credit theory which is 180 opposite the Keynes theory. Proper allocation of money, time, and resources between different sectors of society are fundamental, as well as sound money.
The only trick of the Keynesians is to print, borrow, tax, and spread it around to the political elites, Wall Street, and the Federal Reserve. Look at the monetary base in "good" times increasing 15% a year. Pay off money that was taxed from workers through inflation. When this shit crashes and the peasants ever find out about these crooks they will hang em high.
Ron Paul.
Fight of the Century: Keynes vs. Hayek Round Twohttp://www.youtube.com/watch?v=GTQnarzmTOc
History shows quite the opposite. Peasants never find out that they have been robbed by inflation. All they want is sometihng more from government and cry if they do not get it. Just look Europe (and America too if we are unlucky).
I’m just wondering why this Keynes admiration piece was posted here. Hayek is dismissed at almost every turn by this fool.
Propaganda.
SPOT ON.
That is the central tenant. The difference between Keynesians and Austrians.
It's not about actual monetary or fiscal policy, the underlying premise is what differs.
Keynesians believe in central economic planning, that a board of 12 (or less) can determine what spending rates 'should be', what interest rates 'should be', what you 'should eat', what you 'should buy', what you 'should pay'.
Austrians believe in individual liberty and free markets. There is no 'market' as Keynesians believe. A market is just an aggregation of billions of INDIVIDUAL choices. Not a single (central) choice forced on the aggregate. Austrians don't belive in 'should', Austrians just believe in 'IS'. Left unmolested, people will make individual choices. These choices are reflected in the aggregate prices they are willing to buy and sell things at, giving signals to other individuals what IS in demand. There is no 'demand SHOULD be X x Y qty'.
"war" for example. As you know this is our holiday season ORI and i hope there's still some of that spirit left in you given your time and experience here. I will say this: the Civil War that has gripped this country for well over a decade now is over. I'm not sure i'm going to celebrate the victory however.
whille Keynesians and Austrains continue to drink their respective kool-aids and grind along in an uncomfortable compromise of a life.
//////////////////////////////////////////
Propagandists enabling each other... One US citizenism speciality...
What Austrian kool-aid?
praxeology.
Meaningless comment designed to drive traffic to your blog where you will try to sell them a DVD.
Haaaha.
Merry Christmas to YOU Freegolder.
May you be freed of your gold!
ori
Take a look at this plan ORI. LOL:
http://tease.thedailywh.at/2011/12/05/porn-star-pics-of-the-day/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A%20Hawtness%20%28Hawtness%29&utm_content=Google%20Reader
Kudos to Sunny Leone! Not sure if she reads your blog or not.
Do me a solid and upload episodes of Big Boss to your site. It's sure to generate the traffic you so desire.
Right on. Because the key principle is spreading malivestment out over all the people instead of concentrating it on a few. The concept is sound in it's intent. In fact, it is very noble. But, so easily corrupted.
Keynes is a rice paper thin sugar venere that allows Govt scum to continue their spending orgy (indeed a sick excuse to stupendously increase it) into recession, rather than cut their cloth to the economy like everyone else
like all political policies it is wrapped up with the promise it'll do us some good when in fact it's the worst possible policy (digs the hole deeper). It covers also for the fact politicians are spineless pompous Empire builders who have no stomach and no discipline to make cuts to their beloved throne room and see themselves above societies grotty suffering
(see Washington 4 long years into recession and not a budget cut in sight with DC property values still living it up in LaLa Land)
Keynes is an academic (hired Govt crone) sugar coating the steaming turd that is Govt
He absolutely nails it when he points out that Keynes said borrow to boost aggregate demand and pay it back later.
Hayek of course understood (as far as you can) the unpredictable nature of man. And that is that man would never pay it off. And as all good Keynsians will tell you, When your in a slump just break something.
Our economy is officially broke. Call the plumber.
Instead of a plumber we have domino builders racing against time as dominos fall...
even the dominos are made of debt
let them fall where they will ..because i ain't paying the bill
Stupidest fucking idiot.
Replacing government spending with private sector aggregate demand only ensures increased need for government spending to prop up the artificial demand created by the government, more government spending to encourage growth, and higher taxes and inflation to pay for it all. It ensures that the country will never escape the need for continued borrowing until it blows up its own currency.
How does this dumb mother fucker have a job? Oh wait, government spending ...
It is how the USA got out of the Great Depression. We called it..."World War II." Don't think that because Governments must spend they have no clue about "it's the economy, stupid." That is by far the largest misconception of Conservative economists in the USA. They call government spending "wasteful." Is it? Or is the problem..."not enough bang for the buck"? Cuz if it's the latter...there's a LOT more government coming our way.
37% of the GDP went towards war, millions killed, billions of property destroyed, rationing, shortages, dictatorship, sorry I will pass on that economic plan.
Once again the simplistic canard about WWII ending the Great Depression. First, go read what Bob Higgs has to say about this. Then consider that all the big time Keynesians (Samuelson, et al) expected a frightful recession at the end of WWII with the drastic fall in government spending. After all, a lot less G means a lot less AD. Then consider that much of the world's industires were bombed flat (excepting the US) and you won't have to resort to kneejerk liberal fantasies about government spending. Finally, doesn't Krugman want an invasion from outer space to solve our current economic woes? Some solution.
Except the US kept the war machine going, while other countries de-militarised, the US did not. The US has been on a permanent war footing since WWII. 48% of golbal military spending is US spending.
Yep, it’s all bull shit. Government creates nothing; they take from productive members of society. When people realize the only trick in the Keynesian bag is to move money around, printing, borrowing, taxing, the gig is up for them. The real propose of Keynesian economics is to baffle the public with bull shit so the elites in Washington, Wall Street and the Federal Reserve can rip them off though their favorite transmission mechanism, inflation.
If the public ever really understood economics they would hang these mother fuckers from the nearest tree.
classic flimflam, so that Bobby doesn't have to work and gets to tell you how to.
centralists versus decentralists.
commies versus libertarians.
"it's really for the greater good."
"i am from the government and i am here to help."
Yep... politicians like bwankers are the biggest pack of slackers in human history. Imagine your only job is to promise great things spending other peoples money?
despite politicos and bankers destroying country after country throughout history (omitted from all State school history, political and economic text books for some reason?) we still allow this deadly dumb scum duo to 'lead' us
we're precisely where we deserve to be allowing worthless unproductive parasites like Bush, Bumma, Barny Frank, Blankfein, Dimon and Paulson the reigns to power ...we're all out of wealth creators, ruled by lying suckers, the economy rammed with bloated uncompetitive suffocating monopolists and deep in the shit (debt)
How many years do you want me to wait for before they start understanding? May be government will offer some more "free stuff" to forget what they understood?
Austerity is for Greeks. Anglos can spend their way to solvency...
Thuggery. Looting. Thievery. Sounds like London to me.
Meanwhile Moynihan thinks that 2012 is going to be a good year for BAC...
http://www.bloomberg.com/news/2011-12-23/moynihan-says-bank-of-america-i...
"Thuggery. Looting. Thievery. Sounds like London to me."
That'll be the few hundred London financial gangsters, not the few dozen street teenage rioters... how has the FSC dealt with debt, auditors cooking bankrupt bankers books while accepting more depositors money, over-leverage, incompetent risk and compliance officers and hyperfraudification since 2008?
Prime Minister 'Call Me Twat' Camerons socially dysfunctional society is about to blow up in his own elite social circle ..let's hope the village idiot doesn't get indigestion swallowing his own foot stuck in his mouth
the problem austrians have faced in fighting keyensians is that keynesian principles were applied to an economy which was capable of resisting its toxins because it had so much underlying strength...
finally 80 years of a high carb/high fat diet have taken its toll and it is now evident that the crap the voodoo economists were shoving down our throats was complete crap...
more importantly, keynesianism was never an economic theory in the first place...it was intellectuoidal clap trap to fool the fucktards that the toxins it was shoveling down our throats was good for us...
yes, smoke 2 packs of cigarettes a day, eat a box of twinkies daily, and drink 1 gallon of coffee a day and you too can feel like the 6 million dollar man with all of his electronics short circuited....
Yes. Hyman Minsky was an optimist....
Civilization is fragile or something...
First,one has to tell where civilization is and what the expectations of are.
This reminded, look out. Contrary to what US citizens claim, US citizenism is extremelly resilient. Much more than any dictatorship or the rest.
US citizenism allow some people (US citizens) in an eternal nature of behaviour.
Eternal might be fragile but it lasts long.
What?
You should write a whole book of gibberish. Working title: "Eternal Lasts Long-ism"
Time and human nature. Keynes two worst enemies.
The only way they could expand the public sector any further would be to create manufacturing jobs.. what could they manufacture? guessing weapons, it seems like this guys opinion is that hayek didn't "get" what keynes was saying, because keynes was saying that the elite have the right to start wars to thin the herd, him being a lord and all.
o ho ho, chortle chortle, those fools! we'll just print money and pay them to make weapons to kill each other with! brilliant plan! cheers!
I love it, arrogant fucks.
The addiction model is the best parallel.
You don't give an addict their drug of choice to cure the addiction; you allow consequences to occur.
Keynesians are dysfunctional enablers; Hayek and Austrians are tough love pragmatists.
What a loon- he fails to mention the riots are a direct result of Keynesian policies- but now we need big govt to save us-
He discounts Hayek by saying he just didn't understand Keynes. LOL.
If you disagree with Keynes, you must be a racist...
Most Keynesians don't understand Keynes, most Marxians don't understand Marx and most free-marketeers don't really understand what Adam Smith described as a free market. Most Austrians haven't read much of Menger and Mises, and instead go with bigots like Ayn Rand and Milton Friedman.
People just like to be in a team, without really understanding the theory or having read the books carefully.
Most people know "Economics" is a scam science of bullshit. Make a difference: get a real job.
Not if you understand it, Austrian. It makes millionaires out of those that understand it.
That's a crock in my experience. I was an Economics major before I knew better and it had nothing to do with making millions, a topic I am familiar with.
Go Redskins!
Uhh, the Vikes kicked their asses.. Obviously unexpectedly..
I'm just rootin' for the team, don't care if they win or lose.
The Vikings, methinks, deserved a win (considering).
Uh, Ayn Rand was a Objectivism and Freidman was a Monetarist.
kropotkin.
but you are correct, it feels good to be accepted. they know this, and so enforce ideas which make the masses feel isolated.
Wapshott is just another worthless WASP leech.
OK, i GET THAT for ease of purpose the title is a bit simple. I do find it disturbing that you never mention that ke6ynes advocated a surplus in good times to spend in bad. what you say as keynes really isn'5t, because thezse fuckers never sAVE in good times. what you label as keynesian realy isn't/ it's the"new economic synthesis" as discussed by minsky. for ease of sound bite, etc I get it, and in fact I'm much more of an austrain, hayek. But keynes doesn't all the time deserve the crap he gets here.
It goes hand-in-hand with the main fallacy of central banking, namely that capital and debt are interchangeable. Can't get a capitalist to invest in your business? No problem—just borrow it from the bank. Same thing, right? Hell no—a capitalist can wait a long time for your business to develop, but the banker wants payments to start right away, or at least at some predictable date in the near future. The banker is only interested in getting payback, not in the long-term success of your business.
Our whole culture has become obsessed with short-term profit and cash flow, and nobody seems to care about the long-term viability of our economy. So much so that the word “millionaire” no longer refers to how much you have (capital), it's now a reference to how much you make (cash flow).
I would like to rehypothecate my green arrow to your articulate comment!
Okay, as long as you know that your green arrow is going to the UK and it's not coming back!
Capital-A Asshole:
http://blog.mises.org/18039/incredible-video-of-keynes/
Our Keynesian/CentralBank/Socialsm obsession leaves the US with a NONEMPLOYMENT RATE OF 45.2%!
Jobless Claims and General Employment Trends - The Bigger, Badder Picture - Non-Employment Rate at 45.2%
http://confoundedinterest.wordpress.com
I like your comment but have you considered TPTB don't want their sheeple to have jobs? It certainly seems like the policy goal is making as many people as possible reliant on Big Brother, no?
Human nature? In fact markets have emergent characteristics which cannot be understood by studying Robinson Crusoe. The next thing you'll be saying is market demand curves slope downwards because individual demand curves slope downwards.
The Slick Keynesian Propaganda of Nicholas Wapshott
http://www.libertariannews.org/2011/12/24/the-slick-keynesian-propaganda-of-nicholas-wapshott/
Anyway, Merry Christmas everybody. I know there are many well-meaning Christians on ZH. You just don't jump down the throat of anyone who broaches the topic! May God bless you, and spread The Word! The times seems dark but Evil loses in the End.
Writing Credit Bubble Bulletins since 1999
12 years after the infamous "Coin in the Fusebox" piece, and poor Doug Noland is still sitting slack-jawed, watching the Ponzi Pyramid get even bigger.
With no end in sight.
He's learned a lesson on how to respect "Infinite Fiat" and the power of paper.
http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10610
RowboatTraitor after jumping off the Empire State building:
"Well, I've passed the 90th, 80th, 70th, 60th, 50th, 40th, 30th and 20th floors, with absolutely nothing bad happening so far --- therefore, nothing bad can possibly happen to me now as a result of my jump."
But like the short-term-obsessed, momo-chasing lemming that he is, RowboatTraitor refuses to, or is incapable of, ever looking more than five minutes (at most) into the future.
Answer your critics here, you fucking bastard, or continue to play the cowardly troll. Or are you actually Tyler(s) just fucking with us for shits and giggles? I am increasingly coming to suspect that the latter is precisely the case; there is something very suspicious in how you ALWAYS and only post near the tail-end of any thread here. And the fact that "Tyler" has NEVER responded to any of your bullshit comments here is revealing in and of itself.
+1000 for bringing the funny.
he's a tyler.
I have actually seen a Tyler reply to Robo. I guess we all talk to ourselves now and then, no?
Interesting. I will have to take your word for that, Rocky, as I have never seen that myself --- not that it absolutely proves anything either way.
I must admit, though, that this RobotTroll's comments are so formulaically anti-gold, pro-equities and pro-bankster, and are always so perfectly designed to antagonize the anti-establishment, anti-corruption consensus here, that I cannot believe that they actually represent the even half-honest opinions of anyone posting with even a minimum of sincerity. The fact that he NEVER responds or replies to any other poster challenging his shallow, fly-by, antagonistic trolling only adds icing to the cake of suspicion. He/she/it never responds to ANY posts by anyone, under any circumstances, for that matter --- is it only a bot?
Anyway, Merry Christmas Rocky, and to all other ZeroHedgers!
(Except for RobotTroll --- I hope you are lonely and suffering.)
And a jolly holiday to you my friend!
I'm enjoying the image of Gorilla Ben squeezing quarters into the market fusebox with sparks flying.
Computer trading and keystroke trillions came along just in time for Greenspun, Bernank, and company, eh?
Messing with Keynesians isn't the same as messin' with Sasquatch. You have to provoke Sasquatch.
http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/
Was there a video in this post because I cannot see it?
I'm a javascript handicap.
If there was a video does anyone have the linkie?
It's considered poor form if you do not include the direct link in your article. Might as well spell Keynesians, Kensians.
Next time I see my favorite lawyer Trav7777 I'm going to talk to him about ZH policy vis-à-vis The Americans with Disabilities Act.
Aw shucks! Just when I was getting comfortable with the notion of extreme politics and authoritarianism and engaging in guerilla warfare with the Obamanistas for the rest of my life.
Keynesians work with an extremely flawed model, as if the ongoing economic crisis and their stupid attempts to fix the wrong problem didn't make that obvious. Here's one of the guys who years ago showed them how wrong they are:
http://en.wikipedia.org/wiki/Hyman_Minsky
Only a devout, strict adherence to Capitalism will get the World out of it's Keynesian Sociopathic Funk ! Only Capitalism can delegate decision making down to the grass roots of realism ! Capitalism is a benevolent master....firm, real and just....no Korean Cult of the Personality ! Capitalism works without a bureaucracy ! It's efficiency on parade ! The people rule ! Monedas 2011 Comedy Jihad Waiting For The World To Come Back To A System That Works !
It's all a buncha hooey. Kinda like going into a bookstore in the Self-Help section and looking for one of the new diet books. Everybody has a new, revolutionary diet on the market. If you look at the last half of any of those books you'll find the diet and exercise section of the "Plan". No plan is complete nor effective without some common-sense application of a good food and exercise regimen. None of these crappy economic plans is worth a hoot without some basic age-old wisdom and reason applied. Stuff that we all know, but are too lazy or crooked to implement. The front part of the book is useless without them.
Go right ahead and junk the fuck out of this, like I fucking care.. What the fuck are you all talking about that the government never creates anything?!? Cellular, electronics, jet propulsion, the space program, the national highway system, nuclear power, national parks, on & on all developed & built by the US Government. Not always profitable or done particularly efficiently but it's not Spain or Japan either. Pretty good bang for the buck at least until the last 30 years. What other entity could possibly do the Superfund sites and not be totally bankrupted by them? It costs money to do big things and you can do it with yes fiat money if you want to as long as you create real capital as you increase the money supply. Keynesianism and Austrian labels don't even matter, all that matters is having law & order for everyone and big giant balls to take real risk like the Space Race and the National Highway Program that will provide real capital opportunity for generations. You don't do it for the temporary jobs building roads or rockets, you do it to make new places to put plants and businesses and communities and space stations and incidentally once that all gets there the people that built it have the skills necessary to create things and initial capital to invest in themselves. There's nothing even close to new here, this is a most basic concept and its been around since Adam Smith described it, really it goes back to Rome, this is how they did it..
Whoa dude, get a clue! The govenrment HIRES the rpivate sector to do all that stuff, and that includes the deign and conception of it.
Jet propulsion came from captured German technology. Since it was known to work, private compaies like Lockheed, Grumman, Boeoing etc. jumped in and in about a year devliered the first practical jet engines.
Ever wonder what it would be like if we had a passnger train system instead of interstates? GM & Ford made sure that would never happen.
Modern electronics are based ENTIRELY on the trasnsistor discovered at Bell Labs, a private company.
The space program was an employment policy for the scads of aeronautical engieers left over from WW-II. It was an offshoot and compliment to the weapons programs for intercontinental missles. The design, planning and execution was done by private contractors.
Nuclear power began with University research done by physicists like Enrico Fermi. The manhattan project was run by UC Berkeley's Oppenheimer, and the actual government was kept out of until an actual weapon was delivered. The government footed the bill, but was clueless about what was going on.
Bureaucrats can't do anything accept tell other productive people not to do things. It is necessary to exclude them from critical human edeavors.
I have no idea about National Parks accept that John Muir did NOT work for the Gvoernment.
Of course we stole a bunch of scientists and technology from Germany (the German GOVERNMENT, DUH), that's the way it works and you'll notice that the Germans were so far ahead because of their massive expenditures in education and R&D. And yes Oppenheimer was a professor at a UC -THAT MEANS PUBLIC AS IN GOVERNMENT SUBSIDIZED- school. Bell Labs, everything else was ultimately either subsidized or directed by the government. As for the highway system it was the best option at the time and worked and continues to work. Trains were slower then. Now they go way faster, we should be building high speed rail all across the country. I'd love to take a train instead of drive into The City and from there to LA & Seattle instead of flying. We could do it as a public works or a private-public coop, I don't care just do it already.
Now explain the Superfunds Free Market Boy. Explain how the divine efficient markets would have ever done those in a thousand years and while you're at it I'd love to know what the good part of rivers on fire & 3 eyed toxic fish are from the massive pollution. I'm waiting with baited breath.
Bell Labs ... a private monopolist (first by patents and later through regulation).
ha ha, I thought it read, "Don't mess with the Kenyan"
I read it as "Keynesians are a mess!"
yean, the Kenyan in Chief is a Keynesian and is a mess
LOS- transistors, jet propulsion, space program, interstate system, nuclear power, national parks, all developed by government BEFORE we went off the gold standard. Ever since, the only new things government has made are paper, food stamp recipients and maybe 10,000 Government Motors Volts.
Uhh we went off the gold standard in 1933. No matter how you spin it this absoluteism is just stupid and nonsensical. Policy and theory can never replace honesty, ingenuity and willingness to live within & enforce fair law & order. The fiat money isn't the problem, the problem is the people gaming the system on one side & ignorance & apathy on the other. Going back to a gold standard right now would just make the system easier to manipulate. So it is what it is, there's no revolution if the vast majority doesn't care if they are debt slaves or not. The Middle Ages lasted a long fucking time and so will this bullshit.
Check what happened to military spending between WWII and the Korean War. America was almost as unprepared for Korea as it was for WWII.
There are different ways to look at this. FOFOA divides mankind into savers (Austrians/creditors) and spenders (Keynesians/debtors). This division holds across society and even down to the family level. Debtors have been in control for almost a century now, but debt's marginal utility is fast approaching zero.
http://fofoa.blogspot.com/2010/07/debtors-and-savers.html
The always-readable Nathan Lewis is worth a look here as well:
http://www.newworldeconomics.com/archives/2011/120811.html