Is it time to put Keynesianism out of it's misery yet?

[Knoell]

[quote name='mykevermin']

Do you folks remember the Minneapolis bridge collapse of 2007?

I remember reports saying bridges going over the Ohio River in Cincinnati were 'structurally unsound'. That was in 2008, and they were vastly in need of repair. No movement on repairing them since then; evidently, they're standing, so that means they're ok.

Think of the problems that would be solved by seeing the NJ->NYC tunnel. (not funny stuff, like the problems of all those New Jersey people having access to your neighborhood.) Issues of transit, of jobs - of meaning that we'd be improving the Lincoln Tunnel and making it easier to get to the city for the first time since 1934!

But Chris Christie doesn't think so, as he just killed the project. Now, not building a tunnel is somewhat benign compared to what can happen when, say, repairs aren't done on a bridge. Next time you see a bridge collapse, you can thank Jebus, because it means Keynesians weren't in charge. That's more important than some crummy ol' *infrastructure*, isn't it?[/QUOTE]

I thought the stimulus was supposed to fix infrastructure. Oh but it wasn't enough right? Maybe they should have cut back on the signs promoting their project.

"Your stimulus dollars at work....creating signs just like this!"

 

[mykevermin]

Remember those of us who said the stimulus was too small?

Y'ain't fixing all infrastructure on $700B. How do you pay someone in tax cuts?

EDIT: I agree on the signs, but I like the signs as well. They serve as reminders about who paid for what - so when your representative or senator derides the stimulus at the same time they campaign on what they brought to their district in terms of jobs, identifying the hypocrites becomes hella easy.

 

[Msut77]

There is something like three trillions dollars worth of crumbling infrastructure in this country.

The long term rates to borrow are almost historically low, the only ones who cannot see the solutions to our unemployment problems are the legitimately feeble minded or those who intentionally blind themselves to reality.

 

[tivo]

^ That should be the role of the individual State governments. I don't want or think that my federal taxes should fund roads to nowhere in Alaska, high speed rails in Florida or Nevada, or any other state's infrastructure. States have money and they should know where to put it. The Fed stepping in to help only certain roads/bridges/etc. is unfair to everyone else.

 

[Msut77]

Says who?

 

[IRHari]

Should our taxes be funding things in other countries?

Oh and @ Knoell, I believe all the infrastructure money in the stimulus has already been allocated. Just FYI.

 

[tivo]

[quote name='Msut77']Says who?[/QUOTE]

The 10th amendment.

 

[Msut77]

[quote name='tivo']The 10th amendment. [/QUOTE]

Is the tenth amendment an economist now or are you through pretending you even give a shit and you were just dressing up your ideology under the guise of the dismal science?

 

[cindersphere]

So the federal govt should not fund roads, dams, or really anything. Just let the states decide if they want to implement social programs, or devolve down to a anarcho-capitalist state? I would find it funny if you come from a state that receives more than it pays in taxes.

Man whats with all the killing metaphors and threads recently. Video games starting to blend into real life a little too much I think. JK

 

[Msut77]

No, no cinder.

tivo made his words big, therefore he wins the argument.

 

[tivo]

[quote name='Msut77']Is the tenth amendment an economist now or are you through pretending you even give a shit and you were just dressing up your ideology under the guise of the dismal science?[/QUOTE]

you're sounding senile smut. what are you talking about?

 

[speedracer]

[quote name='tivo']The 10th amendment. [/QUOTE]
So now instead of arguing the merits of Keynesian policy, we get to have a tenther debate. Tenthers didn't pay attention in 10th grade civics, but they expect you to explain 200+ years of constitutional case law. Not because they couldn't figure it out on their own, but because they're lazy ing...

See. There I go about to say something shitty again. So I'll try a different tack. Will it work?

Tivo, why can't you be bothered to learn about the laws of America enough to know why the 10th doesn't apply? Do you just plain not care about the rules, or did you just never try to figure out what our laws actually mean? Or is it something else?

 

[tivo]

My position:
I'd rather have my state government build and maintain my state's infrastructure than rely on the government bureaucrats thousands of miles away to dictate what needs to be built where. I don't get it. I thought everyone here was mad as hell about the Alaskan Road to Nowhere. Now you feel that Harry Reid's 8 billion dollar high speed rail is a worthy allocation of federal funds? That tax dollars compiled in one state should be used to improve other, possibly better, state's infrastructure.

If you or smut disagree with that thinking, please explain how special interest deals are good for this country.

 

[tivo]

Also, I threw down the gauntlet about Keynesian economics, challenging yours and everyone's perception of what Keynes really said. He makes some outrageous claims and to rely on anything he says as reason for any policy is fatuous. Dig deep. See what he really said and think about the unintentional consequences before casting your support.

 

[IRHari]

You didn't throw down the gauntlet, and you didn't challenge anyone. You didn't post anything specific, just generalities.

Post his claims. Then post why you think the claims are bullshit.

 

[cindersphere]

[quote name='tivo']My position:
I'd rather have my state government build and maintain my state's infrastructure than rely on the government bureaucrats thousands of miles away to dictate what needs to be built where. I don't get it. I thought everyone here was mad as hell about the Alaskan Road to Nowhere. Now you feel that Harry Reid's 8 billion dollar high speed rail is a worthy allocation of federal funds? That tax dollars compiled in one state should be used to improve other, possibly better, state's infrastructure.

If you or smut disagree with that thinking, please explain how special interest deals are good for this country.[/QUOTE]
Is it time to put Keynesianism out of it's misery yet?

So this is really just super secret code for we hate Alaska's road to nowhere.

But hey, maybe your right the universal service fund.

 

[speedracer]

[quote name='tivo']My position:
I'd rather have my state government build and maintain my state's infrastructure than rely on the government bureaucrats thousands of miles away to dictate what needs to be built where.[/quote]
I'd rather many things.

I don't get it. I thought everyone here was mad as hell about the Alaskan Road to Nowhere. Now you feel that Harry Reid's 8 billion dollar high speed rail is a worthy allocation of federal funds? That tax dollars compiled in one state should be used to improve other, possibly better, state's infrastructure.

But that's not Keynesian policy you're arguing against. That's federalism. Different thread.

If you or smut disagree with that thinking, please explain how special interest deals are good for this country.

I stand before you ready to defend all special interest deals. Wait, what?
[quote name='tivo']Also, I threw down the gauntlet about Keynesian economics, challenging yours and everyone's perception of what Keynes really said. He makes some outrageous claims and to rely on anything he says as reason for any policy is fatuous. Dig deep. See what he really said and think about the unintentional consequences before casting your support.[/QUOTE]
Adam Smith also said and didn't say many things. Capital wasn't born in Wealth of Nations and it didn't freeze in time when he died. Same with Keynesian theory.

Or if it did, someone should tell the neo-Keynesians and New Keynesians (yup, they're different) that they're wasting their time.

 

[mykevermin]

[quote name='tivo']My position:
I'd rather have my state government build and maintain my state's infrastructure than rely on the government bureaucrats thousands of miles away to dictate what needs to be built where.[/QUOTE]

You're conflating resource allocation (federal funds going to states) with federal-level decisions on where/how those funds should be spent. Federal funds for education aren't able to be spent on prisons, sure. But it's insincere to think it's nearly as specific as you imply.

So if it's states making their own decisions that's your concern, then grandstanding about federal funds isn't the most ideal gesture you can make.

 

[tivo]

What Keynes really said:

- Humanity has focused too much on the future and has consequently spent too little and saved too much..
- If the government reduces interest rates, the ultimate target level should be zero.
- Consumption is the sole object of all economic activity. We need more of it.
- High interest rates is the root cause of human poverty.
- The way to bring interest rates down is to create more money. Taxes can prevent inflation.
- Continually lowering interest rates will abolish slumps and we will enjoy a state of perpetual quasi-boom.
- High interest rates caused the Depression.
- The state should decide on the volume of investment.
- The states control of the economy should not stop with interest rates, exchange rates, investment and taxation.
- An incipient financial crash, an economic slump, require prompt and decisive government intervention.
- A country can spend its way to recovery.
- It is unfair and impractical to reduce wages during a depression.
- Booms and bubbles are not wasteful.
- High tax rates can create a more just society.
- Too much saving is bad.
- Government will make better investment decisions than the private sector.
- There is no shortage of useful projects for government to spend money on.


So you can see Keynes said a lot of crap that I don't agree with. I probably should have stuck with the insane philosophy of spending oneself out of debt but I got side tracked with the whole infrastructure argument and felt that I could convince more of you about how, at the very least, the spending of infrastructure projects should be left up to the states. It is obvious that it won't "stimulate" the economy.

 

[IRHari]

tivo:

Post each of Keynes' theories (verbatim, without your spin), then refute it (or refudiate it) with some hardcore evidence. kthxbai.

 

[mykevermin]

[quote name='tivo']What Keynes really said:

- Humanity has focused too much on the future and has consequently spent too little and saved too much..
- If the government reduces interest rates, the ultimate target level should be zero.
- Consumption is the sole object of all economic activity. We need more of it.
- High interest rates is the root cause of human poverty.
- The way to bring interest rates down is to create more money. Taxes can prevent inflation.
- Continually lowering interest rates will abolish slumps and we will enjoy a state of perpetual quasi-boom.
- High interest rates caused the Depression.
- The state should decide on the volume of investment.
- The states control of the economy should not stop with interest rates, exchange rates, investment and taxation.
- An incipient financial crash, an economic slump, require prompt and decisive government intervention.
- A country can spend its way to recovery.
- It is unfair and impractical to reduce wages during a depression.
- Booms and bubbles are not wasteful.
- High tax rates can create a more just society.
- Too much saving is bad.
- Government will make better investment decisions than the private sector.
- There is no shortage of useful projects for government to spend money on.


So you can see Keynes said a lot of crap that I don't agree with. I probably should have stuck with the insane philosophy of spending oneself out of debt but I got side tracked with the whole infrastructure argument and felt that I could convince more of you about how, at the very least, the spending of infrastructure projects should be left up to the states. It is obvious that it won't "stimulate" the economy.[/QUOTE]

You think Thomas Friedman is an economist.

 

[tivo]

[quote name='IRHari']tivo:

Post each of Keynes' theories (verbatim, without your spin), then refute it (or refudiate it) with some hardcore evidence. kthxbai.[/QUOTE]

pick one. All of them would fill a book. And note, Keynes is one of those old guys who would write in a convoluted manner.

 

[mykevermin]

Like, he'd use a thesaurus and alliteration and everything! What a pompous ass!

 

[speedracer]

Sure, I'll take a stab.
[quote name='tivo']- Humanity has focused too much on the future and has consequently spent too little and saved too much..[/quote]
Saving is a growth killer. Look at Japan's lost decade. That's not controversial. There's a macro savings level that damages the economy. But savings isn't obviously all bad, as we know.

- If the government reduces interest rates, the ultimate target level should be zero.

I can't comment intelligently on interest rate target levels on a macro level.

- Consumption is the sole object of all economic activity. We need more of it.

I've seen people disagree with this but I can't understand why. Consumption = growth, no?

- High interest rates is the root cause of human poverty.

That's a bold statement, but I understand the premise. Cheaper access to capital is a good thing, right?

- The way to bring interest rates down is to create more money. Taxes can prevent inflation.

I agree with the first sentence. That's true as far as I can tell..? Taxes will prevent inflation also. Why is that wrong?

- Continually lowering interest rates will abolish slumps and we will enjoy a state of perpetual quasi-boom.

I disagree.

- High interest rates caused the Depression.

I can't comment intelligently.

- The state should decide on the volume of investment.

That's kind of a misleading statement. The state should target optimal rates that minimize waste and lead to boom/bust cycles. I think over investment has lead to our last couple of boom/busts and in that frame of mind, I don't think it's improper for the state to try to curb sharp cyclical action. Do you disagree?

- The states control of the economy should not stop with interest rates, exchange rates, investment and taxation.

What other specific actions are we talking about?

- An incipient financial crash, an economic slump, require prompt and decisive government intervention.

I think that's obvious, though I understand why people disagree.

- A country can spend its way to recovery.

**IF** it has saved and is ready to invest in infrastructure that can reduce costs and increase employment. That's Keynesian theory in a nutshell.

- It is unfair and impractical to reduce wages during a depression.

I disagree. Retooling is an important part of the cycle and wages must reflect that.

- Booms and bubbles are not wasteful.

I mean, I guess? It depends on how that's extrapolated.

- High tax rates can create a more just society.

Sure. You look at all the examples throughout history of highly unequal societies and they always ended badly. Ergo..

- Too much saving is bad.

Of course!

- Government will make better investment decisions than the private sector.

Again, this statement can't just stand on its own. On a macro scale with the end goal being a reduction in the sharp cycle nature, I think that's a reasonable statement. On the micro scale, that's not correct and I don't think many Keynesians would say that.

- There is no shortage of useful projects for government to spend money on.

Do you disagree?

 

[speedracer]

Yup.

Whoops! Small Business Chief Admits Tax Cuts Are Useless, Wants Stimulus Instead

William Dunkelberg of the NFIB was on CNBC this morning unveiling his organization's latest small business optimism survey.

And naturally Dunkelberg and Joe Kernan were trading shots at the current administration and how badly they perceive the government for mismanaging things.

But then, Dunkelberg dropped a bombshell at the end.

Tax cuts for small business, he said, wouldn't do much. What good is a tax cut if you can't justify the spending required to make more profits.

What does he want? He wants to see more end demand -- Keynesian orthodoxy, basically.

But don't you dare call it Keynesian. Otherwise they might think you're a Keynesian.

http://www.businessinsider.com/whoops-small-business-chief-admits-tax-cuts-are-useless-2010-10

 

[tivo]

I was trying to do the quote you and then still have my quote shown but it was too complicated and too long. so ill just try to go down the list again, referencing what you say as best I can....


- Savings are basically a process to transform present goods into future goods. We forgo current consumption in order to achieve greater future consumption and increase the MPL (marginal product of labor). So the entire statement is misleading. Saving is spending. It is only monetary disturbances like inflation/deflation why savings does not equal investments.

- A government artificially changing interest rates disrupts the free market value of money. It is with this that over borrowing and wasteful over spending can occur. Not to mention the fact that who would lend money at 0% interest if they were not offered some type of return or some type of monetary insurance that they would eventually get their money back after a poor decision.

- It is production, and the profits of production that drive the economy, not consumption. It are these genuine profits (not the phony profits of a bubble) which restore the economy. Note: a collapse of profits is usually a result of government interruption into the market by intentions to increase wages, consumption, subsidized areas, or reduce interest rates. All that hurts savings and destroys profits. So we need less govt. intervention as free markets will eventually self correct.

-For IRHari: "That the world after several millennial of steady individual saving, is so poor...is to be explained...by...high rates of interest" [Keynes, General theory page 242]. basically that high interest rates keep the world poor. In this, it is easy to blame the rich, right? However, high interest rates are only secondary effects to the fear of theft, including theft by government (i.e. taxes). It is fear that one won't get their money back or that the government will seize property that people think it is unsafe to lend, which causes the high rates. Now, people are unsure what the government will do in the future and are worried, causing them to refrain from investment or higher new workers. It is fear. Cheaper access to capital is good, as long as it is a sound decision to borrow. And again, artificially changing the price of money is not good.....

- increasing the supply of money and therefore decreasing its value (inflation) will only lead to higher, not lower, interest rates. Inflation causes prices to rise, and the money returned to lenders will not be worth as much. Lenders will either stop lending or lend less, which will rise interest rates. You agreed with it without even thinking.

- skip
- skip (see wikipedia)

- the state should stay out of the free market. as I said above, they can only disrupt the natural flow and price of money, artificially raising or dropping the value. Think of it this way, every single purchase is an individual's vote on something they want. Millions of these votes create the appropriate demand and industries shift to get said production/service profits. The gov. is trying to guess what people need or want and it doesn't work. See communism or facism.

- Keynes contradicted himself here. He said free prices were indispensable but that he favored setting up public boards to manage the prices of commodities. He also predicted that an orderly economic future would contain international cartels for necessary manufactures and import restrictions for nonessential manufactures. [Ibid., 321]

- Keynsian's always say that prompt and decisive action wasn't reached when overlooking why kenysian policies of print, spend, and borrow don't work. You brought up Japan's last decade. Debt levels tripled from 55% in 1990 to over 160% in 2007 and the economy never really recovered even after successive rounds of stimulus projects. Conversely, Germany after the 08' bubble, refrained from having a large stimulus and they're doing the best in the EU.

continued...

 

[Msut77]

- skip (see wikipedia)

tivo throws down clown shoes and calls it a gauntlet.

 

[tivo]

[quote name='Msut77']tivo throws down clown shoes and calls it a gauntlet.[/QUOTE]

alright, fine. Keynes said:

"I attribute the slump of 1930, [The Great Depression] primarily to the...effects...of dear [expensive] money which preceded the stock market collapse, and only secondarily to the collapse itself" [Keynes, Collected Writings, pg 176]

or basically - High interest rates caused the Depression.

After WWI huge, the world (but especially Britain) owed large sums of money to the US. High tariffs made repaying the debt by exports difficult. The Fed. thought low interest rates would allow the US people to buy said goods from abroad and make new loans overseas. (similar to the US-China relationship in the 1990s). Hoover also supported the policy as even bad loans would boost exports and also employment. This was a disguised inflation that had been created and stocks were just speculation until it all crashed. So, the Crash of 1929 was caused by the US Fed. Reservs' cheap loan policy during the 1920s. Like our Crash of 2008, low interest rates, not high, blew up the bubble. Hoover also made things worse by trying to hold wages up as prices fell.

Not to mention, Roosevelt tried to use Keynesian policies to no avail for a decade until WWII finally got us out.

and that is your history lesson for the day children.

 

[tivo]

[quote name='Msut77']tivo throws down clown shoes and calls it a gauntlet.[/QUOTE]

alright, fine. Keynes said:

"I attribute the slump of 1930, [The Great Depression] primarily to the...effects...of dear [expensive] money which preceded the stock market collapse, and only secondarily to the collapse itself" [Keynes, Collected Writings, pg 176]

or basically - High interest rates caused the Depression.

After WWI, the world (but especially Britain) owed large sums of money to the US. High tariffs made repaying the debt by exports difficult. The Fed. thought low interest rates would allow the US people to buy said goods from abroad and make new loans overseas. (similar to the US-China relationship in the 1990s that exists to a smaller extent now). Hoover also supported the policy as even bad loans would boost exports and also employment. This was a disguised inflation that had been created and stocks were just speculation until it all crashed. So, the Crash of 1929 was caused by the US Fed. Reservs' cheap loan policy during the 1920s. Like our Crash of 2008, low interest rates, not high, blew up the bubble. Hoover also made things worse by trying to hold wages up as prices fell.

Not to mention, Roosevelt tried to use Keynesian policies to no avail for a decade until WWII finally got us out.


***you picked it up annnnndddd.... SLAP IN YO FACE***

 

[cindersphere]

[quote name='tivo']alright, fine. Keynes said:

"I attribute the slump of 1930, [The Great Depression] primarily to the...effects...of dear [expensive] money which preceded the stock market collapse, and only secondarily to the collapse itself" [Keynes, Collected Writings, pg 176]

or basically - High interest rates caused the Depression.

After WWI, the world (but especially Britain) owed large sums of money to the US. High tariffs made repaying the debt by exports difficult. The Fed. thought low interest rates would allow the US people to buy said goods from abroad and make new loans overseas. (similar to the US-China relationship in the 1990s that exists to a smaller extent now). Hoover also supported the policy as even bad loans would boost exports and also employment. This was a disguised inflation that had been created and stocks were just speculation until it all crashed. So, the Crash of 1929 was caused by the US Fed. Reservs' cheap loan policy during the 1920s. Like our Crash of 2008, low interest rates, not high, blew up the bubble. Hoover also made things worse by trying to hold wages up as prices fell.

Not to mention, Roosevelt tried to use Keynesian policies to no avail for a decade until WWII finally got us out.


***you picked it up annnnndddd.... SLAP IN YO FACE***[/QUOTE]

It was the abandonment of the the gold standard that sparked the beginning of the recovery. The only thing WW2 did was get rid of unemployment and prop up the lagging sector quicker, an effect that would have happened anyway. Winners of wars always suffer economically while the losers benefit like crazy.

 

[tivo]

[quote name='cindersphere']It was the abandonment of the the gold standard that sparked the beginning of the recovery. The only thing WW2 did was get rid of unemployment and prop up the lagging sector quicker, an effect that would have happened anyway. Winners of wars always suffer economically while the losers benefit like crazy.[/QUOTE]

pretty much right. But I have to mention that the classic or real gold standard was abandoned by Britain in 1914 and did not survive WWI in other countries. In its place was the "gold exchange standard" which wasn't a real standard but only loosely linked to gold (Like the Bretton Woods system) and gave governments more control of money. With that added control, governments were able to do excessive printing and borrowing in the 1920's, something a real gold standard would have restrained. Anyway, the gold exchange standard was worse than the real gold standard and needed to go and when it did, it made things better. but, yea, what you said is right about turning the depression around. But that doesn't refute that Keynsian policies of FDR prolonged the depression and we weren't really out of the woods until WII.

I don't agree with: "winners of wars suffer economically while losers benefit like crazy" as a rule. I see that as only really true in the late 20th/21st century when the USA is the winner. I also don't know what you're getting at with this statement.

 

[Msut77]

[quote name='tivo']Not to mention, Roosevelt tried to use Keynesian policies to no avail for a decade until WWII finally got us out.[/QUOTE]

"No Avail"?

Also, elaborate on how WWII lifted us out of the Depression please.

 

[cindersphere]

[quote name='tivo']pretty much right. But I have to mention that the classic or real gold standard was abandoned by Britain in 1914 and did not survive WWI in other countries. In its place was the "gold exchange standard" which wasn't a real standard but only loosely linked to gold (Like the Bretton Woods system) and gave governments more control of money. With that added control, governments were able to do excessive printing and borrowing in the 1920's, something a real gold standard would have restrained. Anyway, the gold exchange standard was worse than the real gold standard and needed to go and when it did, it made things better. but, yea, what you said is right about turning the depression around. But that doesn't refute that Keynsian policies of FDR prolonged the depression and we weren't really out of the woods until WII.

I don't agree with: "winners of wars suffer economically while losers benefit like crazy" as a rule. I see that as only really true in the late 20th/21st century when the USA is the winner. I also don't know what you're getting at with this statement.[/QUOTE]

Yes, they do, and not just in the USA. What I meant by that is WWII did nothing to get us out of the great depression. Besides the end of unemployment all of the post war effects would have been the same, except maybe the US lending money to the allies and axis to rebuild. There has been some interesting quantitative work done on this by A.F.K Organski. True he is not an economist, but his area of expertise is in international conflict and his research has shown almost every active winner or a war suffers in projected gdp gains post war, than the losers who almost always experience greater growth than expected in pre war times. Look at post ww2 Germany as an example, whose post war gdp gains were greater than their pre war ones after a decade. Admittedly it is hard to be sure this effect was present in ww2, due to the anomaly that was the great depression, but I am deciding to go with it because the study was sound and it provides a pretty clear picture on post world war 2 economics.
The best indicator for growth post war is to look at it's prewar growth, which in the usa was starting to recover because of the dropping of the gold standard and the natural progression of markets.

This effect of winners suffering more than loser post war goes back even before ww1. It is a pretty interesting field of study in international conflict if you get a chance to read up on it. I would post the short version of Organski's research on this site but I am not sure if it is allowed.

The massive government spending did really help the unemployment lagging indicator in the economy, this much can not be disputed. So while Keynesian theory may not be perfect, it has had some basic ideas tested and it seems to have helped the situation. So it is best not to throw out the entire theory just because it has a sentence or 2 you don't like.

BTW- I am not familiar as familiar with economics as others on the board, I am however familiar with international conflict.

 

[Msut77]

cinder,

What people forget is that it wasn't just the war or before it when discussing Roosevelt's policies. The period after the war was one of the greatest expansions (for basically everyone) ever. And then there was the phenomenon some call the Great Compression.

 

[tivo]

[quote name='Msut77']"No Avail"?[/quote]

All of the economists I have read have said that FDR policies during the Great Depression either did not help or even prolonged the depression. These policies are stuff like trying to keep wages up and trying to artificially boost demand by raising interest rates. The graph you provided does not show any correlation between FDR and the economy. Instead, given the above assertion, it is a better example of a self correcting market- something Keynes did not believe in.

Also, elaborate on how WWII lifted us out of the Depression please.[/QUOTE]

As cinder said, WWII created and boosted new industry in the weapons, vehicle, and technology departments, sapping unemployment and money. I think you're trying to imply that government mandated construction is something feasible outside of a world war, which is unrealistic.

Instead of posing these questions which I have to interpret, why don't you take a definitive stance and make some hard statements like "FDR policies worked" and provide support instead of trying to catch me in a technicality or a misstatement.

 

[Msut77]

[quote name='tivo']All of the economists I have read[/quote]

I believe I have identified your problem.

have said that FDR policies during the Great Depression either did not help or even prolonged the depression.

They are wrong.

Instead, given the above assertion, it is a better example of a self correcting market- something Keynes did not believe in.

So FDR's policies definitely did not help and probably prolonged the depression and at the same time his policies had no effect on decrease in the number of unemployed?

I think you're trying to imply that government mandated construction is something feasible outside of a world war, which is unrealistic.

So putting people to work to make things that later blow stuff up fits into your rather sad world view but putting those same people to work but instead constructing useful infrastructure is ing fantasy land?

BTW- tivo you aren't going to get any sympathy from me.

Perhaps you should learn how to construct an argument before (or the list of logical fallacies) before playing the auto-didact?

If you are serious about actually learning I could recommend a few books but I doubt you will even go that far.

 

[cindersphere]

Sorry, messed up the name. It was A.F.K. Organski, who also wrote the war ledger.

 

[speedracer]

[quote name='tivo']I was trying to do the quote you and then still have my quote shown but it was too complicated and too long. so ill just try to go down the list again, referencing what you say as best I can....[/quote]
Totally. It's not a great format for back and forth. Let's promise not to take shit out of context and go.

- Savings are basically a process to transform present goods into future goods. We forgo current consumption in order to achieve greater future consumption and increase the MPL (marginal product of labor). So the entire statement is misleading. Saving is spending. It is only monetary disturbances like inflation/deflation why savings does not equal investments.

Ok. But that's not a knock against Keynesian policy.

- A government artificially changing interest rates disrupts the free market value of money. It is with this that over borrowing and wasteful over spending can occur. Not to mention the fact that who would lend money at 0% interest if they were not offered some type of return or some type of monetary insurance that they would eventually get their money back after a poor decision.

I agree. But a completely market based valuation of currency opens the door to massive gaming and currency crashes. I think the ability to defend a currency against totally bullshit attacks is worth the constraint on market valuation.

- It is production, and the profits of production that drive the economy, not consumption. It are these genuine profits (not the phony profits of a bubble) which restore the economy. Note: a collapse of profits is usually a result of government interruption into the market by intentions to increase wages, consumption, subsidized areas, or reduce interest rates. All that hurts savings and destroys profits. So we need less govt. intervention as free markets will eventually self correct.

This is one of those distinctions that many free market believers say but I can't wrap my head around. Demand = more production to meet the curve. Nothing controversial there. But production != demand. I can make widgets all day but if no one's buying then not only did I not increase wealth, but I explicitly decreased it by way of misallocating labor and capital by way of lack of demand (if you get my meaning). Demand will be met, it's the whole idea behind capitalism. Demand can stand alone. But how can production? I don't get it.

My knee jerk was to disagree that wage intervention, subsidization, and interest rate tinkering would result in market collapse but that pretty much covers every aspect of our economic system. Instead I would argue that a rational capital interest is ALWAYS going to try to defend its position via those things. Doing those things are good capital protection schemes! It's one of those Twilight Zone areas of economics where capitalists will simultaneously say "End all market intervention" and "Protect our interests!" at the same time. The quote I posted from the small business lobby is exactly that. Lower taxes! Lower regulation! Lower intervention! Oh, and give us money...

- increasing the supply of money and therefore decreasing its value (inflation) will only lead to higher, not lower, interest rates. Inflation causes prices to rise, and the money returned to lenders will not be worth as much. Lenders will either stop lending or lend less, which will rise interest rates. You agreed with it without even thinking.

Ok, but then why is the T-bill rate dropping like a stone? Shouldn't required rates of return dictate that the rate should be screaming on T-bills? We're printing dollars, the market T-bill rate goes down (and down fast). How can these both be true?

- the state should stay out of the free market. as I said above, they can only disrupt the natural flow and price of money, artificially raising or dropping the value. Think of it this way, every single purchase is an individual's vote on something they want. Millions of these votes create the appropriate demand and industries shift to get said production/service profits. The gov. is trying to guess what people need or want and it doesn't work. See communism or facism.

But we don't live in a vacuum. When there's currency pegs and distortion all around you, allowing your valuation to be completely market based would be suicidal.

- Keynes contradicted himself here. He said free prices were indispensable but that he favored setting up public boards to manage the prices of commodities. He also predicted that an orderly economic future would contain international cartels for necessary manufactures and import restrictions for nonessential manufactures. [Ibid., 321]

Like I've said before, I don't really feel the need to totally defend Keynes. Early libertarian thinkers (Road to Serfdom) screamed that Britain could result in nothing but fascism within a decade or two. 60 years later, that's obviously not the case. But it doesn't mean we should dismiss everything they said out of hand.

- Keynsian's always say that prompt and decisive action wasn't reached when overlooking why kenysian policies of print, spend, and borrow don't work. You brought up Japan's last decade. Debt levels tripled from 55% in 1990 to over 160% in 2007 and the economy never really recovered even after successive rounds of stimulus projects. Conversely, Germany after the 08' bubble, refrained from having a large stimulus and they're doing the best in the EU.

I think Japan is still too current to draw any firm conclusions other than it happened. And Germany is thanking the Gods that it hooked its currency to Greece and Portugal. The Deutsche Mark would be so wildly powerful right now without them (probably) that they wouldn't be able to export anything at all.

 

[tivo]

[quote name='Msut77']"No Avail"?

[/QUOTE]

why does this graph start at 1933? the stock market crash was in '29 and the unemployment rate did not hit double digits until after the democratic congress imposed the Smoot-Hawley tariffs.

Tariffs do not work!

 

[tivo]

[quote name='speedracer']
Ok. But that's not a knock against Keynesian policy. [/quote]
keynes doesn't want any savings, so it is.

I agree. But a completely market based valuation of currency opens the door to massive gaming and currency crashes. I think the ability to defend a currency against totally bullshit attacks is worth the constraint on market valuation.

i dont think those worries are reasonable. the market is too big and respect for the $ is still high enough to prevent gaming. as long as we all stay responsible, and not spend what we don't have, (cough* Greece) we should be fine. and the lack of intervention would help everywhere else.

This is one of those distinctions that many free market believers say but I can't wrap my head around. Demand = more production to meet the curve. Nothing controversial there. But production != demand. I can make widgets all day but if no one's buying then not only did I not increase wealth, but I explicitly decreased it by way of misallocating labor and capital by way of lack of demand (if you get my meaning). Demand will be met, it's the whole idea behind capitalism. Demand can stand alone. But how can production? I don't get it.

its a slight distinction with a chicken/egg thing but unrealistic demands exist which might be too costly to pursue. profits of production allows the farmer to buy goods from the tailor or employ, invest, etc. as he sees fit. demand is eternal, profits are ephemeral.

My knee jerk was to disagree that wage intervention, subsidization, and interest rate tinkering would result in market collapse but that pretty much covers every aspect of our economic system. Instead I would argue that a rational capital interest is ALWAYS going to try to defend its position via those things. Doing those things are good capital protection schemes! It's one of those Twilight Zone areas of economics where capitalists will simultaneously say "End all market intervention" and "Protect our interests!" at the same time. The quote I posted from the small business lobby is exactly that. Lower taxes! Lower regulation! Lower intervention! Oh, and give us money...

The government has the ability to offer subsidizes, tax breaks, and now with obamacare, grant waivers to decrease the cost of offering healthcare to employees. however, with this ability to give also comes the ability to withhold. Ideally the government wouldn't have this power and everyone, from businesses to individuals, would get the same tax breaks regardless and treated fairly. But real life is different and some people get these government gifts. I don;t blame people for asking for these handouts. its not like they're going away anytime soon. but in the end, lower taxes, regulation, and intervention would be best.

I think Japan is still too current to draw any firm conclusions other than it happened. And Germany is thanking the Gods that it hooked its currency to Greece and Portugal. The Deutsche Mark would be so wildly powerful right now without them (probably) that they wouldn't be able to export anything at all.

At first i thought that was sarcasm. Greece and portugal devalued their currency and are probably going to be kicked off the euro (or should). They screwed the interest rates with their borrowing and spending and it royally ed Germany. Merkel is NOT thanking any gods.

 

[Msut77]

So who of the great faux economists told tivo that FDRs policies were tariffs and nothing else? Does he know anything about the era?

 

[tivo]

[quote name='Msut77']So who of the great faux economists told tivo that FDRs policies were tariffs and nothing else? Does he know anything about the era?[/QUOTE]

First off, it was a democratic congress under Hoover who imposed the tariffs. Secondly, I have already stated a few of FDR policies which hurt the economy (interest rates and wages) so I don't know why you're implying that I don't know anything about the era. Lastly, you never answered by question about the awful graph with little supporting data and only a pusillanimous "No Avail??" attached by you.

In all, you sound like you don't know shit about anything and can't even get a respectable graph to take your stance for you.

I'm thinking this should be my new sig:
The government does not create wealth to pay for any jobs, but only transfers wealth from the private sector. This then leaves less wealth for private employers to create jobs.

 

[Msut77]

[quote name='tivo']I have already stated a few of FDR policies which hurt the economy[/quote]

Hurt the economy so bad they reduced unemployment?

 

[tivo]

[quote name='Msut77']Hurt the economy so bad they reduced unemployment?[/QUOTE]

that's not how it works. hurting the economy creates unemployment. STATE YOUR OPINION and then I won't have to infer what your idiotic passive aggressive questions mean.

 

[Msut77]

[quote name='tivo']that's not how it works.[/quote]

Do you know anything about the New Deal or the Roosevelt era in general?

Is there any particular reason why you believe that the New Deal etc. was literally nothing but tariffs or are you just trying to evade the issue while trying to hide your ignorance?

hurting the economy creates unemployment.

No shit.

And this coming from you who belongs to the "liquidate everything" school of economics.

 

[tivo]

What is your question? Because the two listed above, in their present state, really dumb down the conversation to basically asking me if I'm an idiot.

also, this "liquidate everything" came from left field.


Smutt, on a personal note, can I recommend you taking an effective writing course. learn how to articulate your stance clearly and with supporting reason to deliver a succinct message and achieve your predetermined argument/target. Right now, it seems you're floating around without any focus, blurting out questions that imply insult instead of setting up an objective stance for reasonable discussion. Presently, I find it hard to understand where you're coming from. It seems like you just want me to bend over like your mother and assume you actually know stuff without you ever really saying anything.

 

[Msut77]

[quote name='tivo']Because the two listed above, in their present state, really dumb down the conversation to basically asking me if I'm an idiot.[/quote]

Ignorance is one thing, it is fixable.

Idiocy is another.

also, this "liquidate everything" came from left field.

It came from Andrew Mellon.

What is your question?

Anyway...

Is there any particular reason why you believe that the New Deal etc. was literally nothing but tariffs or are you just trying to evade the issue?

 

[tivo]

[quote name='Msut77']
Is there any particular reason why you believe that the New Deal etc. was literally nothing but tariffs or are you just trying to evade the issue?[/QUOTE]

This is exactly what I'm talking about. I have already stated that artificially keeping wages up (via the 1933 National Industrial Recovery Act) hurt the economy, costing jobs. Obviously taxes rose everywhere which funded projects and created some employment, but there was also the loss of employment in the private sector as a result of rising corporate and individual taxes. And there were other policies affecting interest rates on loans (I've already mentioned this) and a mass power shift to unions (which were proven to hurt the economy myke). But now you've stated twice that I think the New Deal was only tariffs. Why? Even more, you've asked for a "reason" why I believe the New Deal was only tariffs. A better question is, "how am I suppose to answer this stupidity?"

what are you really trying to say? its like I'm trying to guess what a dog is thinking about while it stares blankly back at me.

 

[Msut77]

This is exactly what I'm talking about. I have already stated that artificially keeping wages up (via the 1933 National Industrial Recovery Act) hurt the economy, costing jobs

You stated it, but that doesn't mean anything.

It doesn't change the fact that over all when FDR's policies were placed into effect even before the war unemployment went down significantly.

now you've stated twice that I think the New Deal was only tariffs. Why?

Because when you are asked to actually prove some of the nonsensical word salad you spout you replied with what was basically a tangent exclusively about tariffs.

 

[speedracer]

[quote name='tivo']i dont think those worries are reasonable. the market is too big and respect for the $ is still high enough to prevent gaming. as long as we all stay responsible, and not spend what we don't have, (cough* Greece) we should be fine. and the lack of intervention would help everywhere else.[/quote]
I guess we can agree to disagree here.

The government has the ability to offer subsidizes, tax breaks, and now with obamacare, grant waivers to decrease the cost of offering healthcare to employees. however, with this ability to give also comes the ability to withhold. Ideally the government wouldn't have this power and everyone, from businesses to individuals, would get the same tax breaks regardless and treated fairly. But real life is different and some people get these government gifts. I don;t blame people for asking for these handouts. its not like they're going away anytime soon. but in the end, lower taxes, regulation, and intervention would be best.

Sure. In a fair and just world those things happen. But we gotta work with what we got.

At first i thought that was sarcasm. Greece and portugal devalued their currency and are probably going to be kicked off the euro (or should). They screwed the interest rates with their borrowing and spending and it royally ed Germany. Merkel is NOT thanking any gods.

The PIIGS are dragging the Euro down and making German exports affordable. Granted, the borrowing rate is probably higher than in the US (where it's virtually negative), but the seesaw of the Euro valuation has been the rush back and forth between the PIIGS and Germany. Without PIIGS, the Deutche Mark would be very strong, much stronger than an exporter wants. Just look at Japan, who can't keep their currency under control right now as it soars against the dollar and screws their exporters. They're printing as fast as they can to get it under control. Germany can just sit there.