What do you think about the EU solution to give money directly to the banks to lend? The liquidity trap may be bypassed this way because banks won't have problems to lend money at a nominal interest rate below inflation rate, assuming of course, there as borrowers around.
Keynsian economics is dead
- Thread starter Humpy
- Start date
What do you think about the EU solution to give money directly to the banks to lend? The liquidity trap may be bypassed this way because banks won't have problems to lend money at a nominal interest rate below inflation rate, assuming of course, there as borrowers around.
You're comparing essential public infrastructure to privately held assets bought by people who could not afford them? Try again. Also, you may wish to revisit the timing of intervention as prescribed by Keynesian fiscal policy. It's perfectly fine to criticize various economic theories. Everybody does it. But you should at least have a nodding acquaintance with what you are talking about.
Just to take the instance of General Motors
1. The top management have been overpaid for their feeble efforts for far too long. This crisis was obvious from way back in the 70s FGS
The shareholders should demand that the salaries of the top tier drop by 90%, second tier by 80% etc right down to the shop floor for a 10% reduction.
Anyone that doesn't like it can leave and sooner the better. Their loyalty to the company is obviously not enough.
This hard approach however I guess would be bitterly resented and probabably unworkable politically. So the alternative is to go on living in fool's paradise where company employees keep drawing their wages, options etc. until the company is bust.
Maybe a good ole American PR campaign to tell them ALL about how lucky they are to be living the American Dream !!!!!!!!!
lol
1. The top management have been overpaid for their feeble efforts for far too long. This crisis was obvious from way back in the 70s FGS
The shareholders should demand that the salaries of the top tier drop by 90%, second tier by 80% etc right down to the shop floor for a 10% reduction.
Anyone that doesn't like it can leave and sooner the better. Their loyalty to the company is obviously not enough.
This hard approach however I guess would be bitterly resented and probabably unworkable politically. So the alternative is to go on living in fool's paradise where company employees keep drawing their wages, options etc. until the company is bust.
Maybe a good ole American PR campaign to tell them ALL about how lucky they are to be living the American Dream !!!!!!!!!
lol
Read Jim Rogers his view on Keynsian economics:
Abolish the IFM and the World Bank!
http://www.beeland.com/abolish_the_ifm_and_the_world_ba.htm
Abolish the IFM and the World Bank!
http://www.beeland.com/abolish_the_ifm_and_the_world_ba.htm
1.) Moneterists - A re-inflation of an asset bubble will only happen if the deflation is a result of an asset bubble in the first place. That was not the case during the 20's. The stock market got a bit overvalued, but the crash did not cause the deflation.
Around the time of the crash the central bank was involved in a process called "sterilization". That is, it was not allowing the gold standard to function the way it should. This caused a very pronounced tightening of the money supply - one that the modest rate cuts the Fed employed after the crash couldn't overcome.
An overly tight money supply was not the problem in the last few years. Indeed, a very large money supply (expressed in loose lending) was the problem.
Don't blame this on Schwartz. She publicly criticized Bernanke in the WSJ for "fighting the last war".
2.) Keynes - The state creates demand but the state doesn't produce anything. Since a fundamental law of economics is that, in the long run, one can only consume as much as one produces, this model doesn't work. What it does to is saddle the economy with an enormous amount of debt which is merely another way of saying "raises taxes on future production".
Keynes' deficit spending also crowds out private investment, making the task of repaying the loans virtually impossible. Keynsian economic shenanigans extended the Great Depression and buried the economies of countries that employ his machinations.
3.) Austrian - isn't it interesting that every single depression before the Great Depression (which was the first time Keynes' central planning was tried) righted itself without that horrid deflationary death spiral you're talking about.
The liquidity trap is a scare tactic. Nothing more. Assets must fall to a price where equilibrium is reached. Keynes merely argues that government should employ central planning to force an outcome it, in reality, has no power to force.
Hubris.
What's you sample size to claim statistical significance of the result?
1,2 or just 3 at max occasions?
Are you willing to pay for your lack of statistical significance? Philosophy is nice and good until the bill arrives.
Considering that the government borrows from the same entity which also is the backbone of private lending, I think it's a great comparison. Especially since now, those private debts, are being backed by taxpayer money. It's pretty much the same thing.
Have you looked at the currency you use lately? It's a debt instrument.
Better yet, find one example where this Keynesian theory has ever worked out. I'll even give you hint where you can attempt to form an argument: defense/prison complex.
On the flipside, Austrian School of economics has been preaching the perils of the fiat/fractional reserve system for centuries. It is unfolding as we speak.
Actually, depressions happened every decade or so.
Why? How large is your sample size for the Keynsian model and show me ONE incident where the outcome of central planning was better than the outcome of the market righting itself.
Remember to include
Japan
France
The Great Depression
The 1970's
Germany
England (70's)
In your sample.