Keynsian economics is dead

[mccd]

Krugman has posted up an excellent explanation of the current liquidity trap, and an explanation of how stimulus works under these conditions. it also includes an absolutely brutal takedown of Amity Schlaes

http://www.princeton.edu/~pkrugman/nominal_wage.pdf

even if you are anti-keynesian, it is very much worth reading if you at least want to understand where keynesians are coming from.

 

[Anaconda]

Quote from trefoil:

I'm not even a Keynesian. But if someone is going to contribute to a thread which depends on a basic knowledge of economics and of the history of economics for it to be even mildly intelligible, they should at least have that basic knowledge.
Otherwise, shut up and let those of us who actually know what we're talking about do the talking.

So why are you even posting?

What's really funny is that 90% of the posters in this thread have not even the slightest idea how fractional reserve banking works and its origins. Let alone the concept & history of money.

I would bet that half the posters rarely, if ever, even heard the term fractional reserve banking.

 

[mccd]

anaconda, we all know what fractional reserve banking is. I'm quite familiar with the positions of Ron Paul, Hayek, Rothbard, Mises etc. sound money and all that. You sound like a child who has just found out that there is no Santa and can't figure out why everyone else isn't as upset as you are, and doesn't really care when you tell them that there is no Santa. They print money out of thin air! *gasp* the horror!

FYI - I support abolishing the Federal Reserve and instituting 100% reserve banking, abolishing the FDIC, etc. etc. I'm just realistic enough to realize that Austrian economics isn't a panacea that magically solves everything, and that most people who have even the slightest interest in economics are fully aware of what it has to offer - they are just unimpressed.

 

[Humpy]

Quote from Anaconda:

So why are you even posting?

What's really funny is that 90% of the posters in this thread have not even the slightest idea how fractional reserve banking works and its origins. Let alone the concept & history of money.

I would bet that half the posters rarely, if ever, even heard the term fractional reserve banking.

This is the Fed's definition so now we all know

The fact that banks are required to keep on hand only a fraction of the funds deposited with them is a function of the banking business. Banks borrow funds from their depositors (those with savings) and in turn lend those funds to the banks’ borrowers (those in need of funds). Banks make money by charging borrowers more for a loan (a higher percentage interest rate) than is paid to depositors for use of their money. If banks did not lend out their available funds after meeting their reserve requirements, depositors might have to pay banks to provide safekeeping services for their money. For the economy and the banking system as a whole, the practice of keeping only a fraction of deposits on hand has an important cumulative effect. Referred to as the fractional reserve system, it permits the banking system to "create" money.[4]

 

[John Paterson]

Quote from mccd:

Krugman has posted up an excellent explanation of the current liquidity trap, and an explanation of how stimulus works under these conditions. it also includes an absolutely brutal takedown of Amity Schlaes

http://www.princeton.edu/~pkrugman/nominal_wage.pdf

even if you are anti-keynesian, it is very much worth reading if you at least want to understand where keynesians are coming from.

He states:

"But in liquidity trap conditions, the interest rate isn’t affected at the margin by either the supply or the demand for money – it’s hard up against the zero bound. And as a result the usual explanation for the downward slope of the AD curve doesn’t work."

I think he is making a basic mistake. The interest rate people are charged during a liquidity trap is NOT equal to nominal rate but whatever rate the banks want to charge.

We already saw in several countries credit card rates surging because of the liquidity trap. That will surely cause a decrease in demand and a downward sloping AD curve.

Actually, I think he is another "strawman".

 

[Humpy]

Just to return to the bailout or not of General Motors I think B Ob will be very tempted to give them say 5 years to get their act togethor but with strict compliance rules to qualify for taxpayers cash.
This should include huge reductions in GM salaries especially of the top fat cats who may have to be replaced.
He might even put a tax on competing foreign imports for this period of make or break.
Sell off ALL loss making parts of the company in a fire sale.

 

[Anaconda]

Quote from mccd:

anaconda, we all know what fractional reserve banking is. I'm quite familiar with the positions of Ron Paul, Hayek, Rothbard, Mises etc. sound money and all that. You sound like a child who has just found out that there is no Santa and can't figure out why everyone else isn't as upset as you are, and doesn't really care when you tell them that there is no Santa. They print money out of thin air! *gasp* the horror!

FYI - I support abolishing the Federal Reserve and instituting 100% reserve banking, abolishing the FDIC, etc. etc. I'm just realistic enough to realize that Austrian economics isn't a panacea that magically solves everything, and that most people who have even the slightest interest in economics are fully aware of what it has to offer - they are just unimpressed.

And you sound like a willful sheeple who listens to CNBC in spite of knowing better. See, I can throw unnecessary insults too.

This goes way beyond Mises institute, these monetary games are thousands of years old. Now it's on a global level, instead of just one village after another. I doubt you even read most of the material by the individuals you mentioned. It's amazing how much more common sense people had even a thousand years ago and how they used to deal with those who manipulate money.

The concept of sound money has not been practiced in a very long time. So instead of thinking that it won't solve anything how about realizing that you have never seen it enacted in your lifetime and it is doubtful even your parents and or grandparents have had a chance to see it. Unless you are Swiss, and even then, it's only partially applicable.

The alternative is listening to mainstream economists (who are just shilling for the banksters, unknowingly) and arguing whether the Fed should create more money or the government should start spending even more like crazy. Cause it's not like that has been tried before.

 

[Anaconda]

Quote from John Paterson:


Actually, I think he is another "strawman".

All Keynesians are.

Keynesian economics is just an excuse for government spending, which, in turn, is actually forced by the monetary system. Of course, instead of having people understand that the system is designed to be a vicious debt cycle with government debt as a vital component, let's just create an intellectual smokescreen to help explain why the government is perpetually growing debt. "It's good for the economy" after all.

 

[John Paterson]

Quote from Anaconda:

All Keynesians are.

Keynesian economics is just an excuse for government spending, which, in turn, is actually forced by the monetary system. Of course, instead of having people understand that the system is designed to be a vicious debt cycle with government debt as a vital component, let's just create an intellectual smokescreen to help explain why the government is perpetually growing debt. "It's good for the economy" after all.

More or less, you are correct. What are you proposing they do, by the way, in the present crisis?

 

[Anaconda]

Quote from John Paterson:

More or less, you are correct. What are you proposing they do, by the way, in the present crisis?

For whom?

For individuals or the whole nation? Honestly, I think this nation is beyond saving as noted by the participation in this election for two mainstream candidates. Too many wilful morons & sheeple. By the time the situation will reach unbearable conditions for the millions living on Hope in Obama, it will be too late. The military is mobilizing as we speak.

There is no easy solution. There is no quick fix for almost 100 years of a parasitic monetary system. I think Ron Paul had a good plan, so does Bob Barr. They both say, it's not easy and don't expect it to be. You're talking about repositioning the economy back to being built on basics such as real production, shrinking the government, the military and revamping the monetary system. Hence the whole financial industry, which is the major component of the current economy, being shrunk several times over.

As for individuals, it's pretty basic, learn self sufficiency. Food, water & basic commodities. There will be opportunity as well. Also, getting the f**k outta Dodge is a good solution too, just pick your destination wisely and be able to produce something of value.