You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Ayn Rand Forecasts Economic Disaster from Collectivism & Socialism
- Thread starter startraitor
- Start date
Quote from benwm:
Gordon Brown in the UK also followed the Bush route of running fiscal deficits when times were good. That's a big problem with Keynesian solutions - we only ever get the fiscal deficit side, good times or bad. In the good times when tax revenues are high, they never run the budget surpluses like they're supposed to and start paying down the debt. Where is Keynes then?!
That's exactly right.
Keynesian economics doesn't work because self-serving politicians and bankers refuse to impose restraint in favor of endless borrow-spend-bail-and juice policies that create wealth-destructive bubbles.
A much bigger problem: America has been reliant on a structural deficit to increasingly bolster GDP for over 30 years. Remove the deficit and the economy would contract easily by 15%.
So Keynes is all that's wrong with the world, eh? Certainly its misapplication doesn't add much value on balance. But how exactly did Keynesian economics contribute to the bubble leading to the '29 crash and the various other panics that preceded it?Quote from achilles28:
That's exactly right.
Keynesian economics doesn't work because self-serving politicians and bankers refuse to impose restraint in favor of endless borrow-spend-bail-and juice policies that create wealth-destructive bubbles...
Quote from achilles28:
That's exactly right.
Keynesian economics doesn't work because self-serving politicians and bankers refuse to impose restraint in favor of endless borrow-spend-bail-and juice policies that create wealth-destructive bubbles.
A much bigger problem: America has been reliant on a structural deficit to increasingly bolster GDP for over 30 years. Remove the deficit and the economy would contract easily by 15%.
Yeah this is precisely the problem.
Keynsian economics might work if there was a dictatorship, with a responsible dictator, or if politicians were only allowed to be elected to one term, or if politicians werent a bunch of self serving assholes.
Imagine the outcry we would hear if politicians upped taxes during a balanced budget, so that they could save for the future. You could also say that a large part of the problem is people in general, who think good times will last forever, and are unable to see that the economy operates in waves.
Quote from Gabfly1:
So Keynes is all that's wrong with the world, eh? Certainly its misapplication doesn't add much value on balance. But how exactly did Keynesian economics contribute to the bubble leading to the '29 crash and the various other panics that preceded it?
You misunderstood.
I said Keynesian economics doesn't work in practice because bankers and politicians only adhere to the borrow and spend side, and not the fiscal restraint and debt repayment side. Keynes looks great on paper. But in the real world, special interests highjack the printing press for their own short-term political and financial gain, which contributes to unchecked inflation, eroded wages, and a bubble-bust cycle.
The Great Depression is just another example of cheap credit run amok. The crushing aftermath resulted when the FED "mistakenly" hoarded excess gold reserves and refused to act as lender of last resort (one of its mandates) and support commercial banks. Bernacke admitted as much.
As for the rest of the panics, you'll have to more specific. Most panics (if not all) can be directly tied to cheap, plentiful money.
Quote from Gabfly1:
As an aside, since corporates can largely be characterized much the same way, that's not exactly a ringing endorsement for laissez faire, eh?
That's a silly remark.
Private economic actors create wealth by acting in their own self-interest. The Government is charged to act in the interest of the common good. Not for the personal gain of its leadership or appointees (or their special interest financiers). Clearly, the two are diametrically opposed. The reason the economy and political landscape is such a mess is exactly because our leaders charged with the common good have neglected their responsibility and sought re-election at the expense of a future debt and a bubble-bust cycle.
I agree. My comment had nothing to do with the Keynesian discussion that preceded it. That is why I identified the tangent as an aside. Further, your observation supports the reason that laissez faire is flawed at its root even in theory. Again, please note the segue.Quote from achilles28:
...Private economic actors create wealth by acting in their own self-interest. The Government is charged to act in the interest of the common good...
Quote from Gabfly1:
Fair enough. However, and as an aside, would you agree that for that very same reason a laissez faire regulatory environment is equally inappropriate?
laissez faire would have worked just fine, if the fed, and the government didnt add fuel to the fire. Imagine how much different the outcome would have been if interest rates were at 7% -10% throughout the entire 90's, and Bush's term. And if no tax cuts had ever came in.
The problem was that the fed, and the government threw fuel on the fire, and kept on pushing the inevitable bust back, further, and further, and further, until the whole thing turned into a gigantic mess which inevitably exploded. We could have had a bunch of small recessions in between, but the only thing the government and the fed ever wanted to fight was recessions, they have no interest in curbing bubbles.
Not only would we be better off today if the government hadnt tried to get involved, we also wouldnt have grossly inflated asset prices.