Some of you probably have seen these videos but they are pretty cool, I just saw the most recent one a few days ago. They are pretty good at showing the differences in ideology while being entertaining at the same time
The Austrian business cycle theory attempts to explain business cycles through a set of ideas held by the heterodox Austrian School of economics. The theory views business cycles as the inevitable consequence of excessive growth in bank credit, exacerbated by inherently damaging and ineffective central policies, which cause interest to remain too low for too long, resulting in excessive credit creation, speculative economic and lowered savings. The main proponents of the Austrian business cycle theory historically were Austrian School economists Ludwig Von Mises and nobel laureate Friedrich Hayek.
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"No one may threaten or commit violence ('aggress') against another man's person or property. Violence may be employed only against the man who commits such violence; that is, only defensively against the aggressive violence of another. In short, no violence may be employed against a nonaggressor. Here is the fundamental rule from which can be deduced the entire corpus of libertarian theory." - Murray Rothbard, Cited from "War, Peace, and the State"
The videos have an obvious Bias to them - Keynesians are wrong but the rich love them anyway and Austrians are right but nobody wants to listen.
In recent history, I can say this, we cannot say that Keynesian Economics have failed in that during 7 years of the Bush Presidency, in which we weren't in a recession, we should have been paying down the national debt so that when a recession did come, we would have been better prepared to handle it.
I think the outlook of the United States would be very different right now were we 2 trillion in debt less.
Timothy-So as to this nonsense about 2 trillion dollars in debt less. Imagine that there is a cookie jar and we ALL take cookies out of it until they are all gone. Then one group of cookie eaters becomes furious and rants about how the lack of cookies is all the other groups fault and how if they hadn't eaten cookies as well they would have the cookies they need now. Why is all the money the Democrats pissed away less a part of our debt then the money the Republicans pissed away?
...basic keynesian economics says you spend more during a recession and you pay that off when you aren't in a recession. The goal is to have steady growth, not sporadic.
The videos have an obvious Bias to them - Keynesians are wrong but the rich love them anyway and Austrians are right but nobody wants to listen.
In recent history, I can say this, we cannot say that Keynesian Economics have failed in that during 7 years of the Bush Presidency, in which we weren't in a recession, we should have been paying down the national debt so that when a recession did come, we would have been better prepared to handle it.
I think the outlook of the United States would be very different right now were we 2 trillion in debt less.
We were in a recession during the Bush Presidency. That whole dotcom bust happened in 2000, and the then the bubble was simply pushed into the housing market to keep it growing. In reality it was nothing more than trying to Inflate away the problem, hence the ZIRP policy that was going during this entire time.
...basic keynesian economics says you spend more during a recession and you pay that off when you aren't in a recession. The goal is to have steady growth, not sporadic.
Growth in what exactly?
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Modern
~~~~~~~~~
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The video does have a bias yes, but Overall I am much more inclined to agree with Hayek then Keynes. I'm not quite as extreme as Hayek, but I do think that alot of the economic problems we do have comes from to much corporatism wich in turn comes from too much government interference. Government interference into buisniss should be limited to climate taxes, making it easy for small/new corporations and taking care of consumer rights (preventing monopolies and such). Theese are important areas and doesn't open up to as much corporatism as alot of the other types of regulations do.
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Quote from Einstein »
Heroism on command, senseless violence, and all the loathsome nonsense that goes by the name of patriotism -how passionately I hate them!
Quote from Nietzsche »
The surest way to corrupt a youth is to instruct him to hold in higher esteem those who think alike than those who think differently.
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Timothy-So as to this nonsense about 2 trillion dollars in debt less. Imagine that there is a cookie jar and we ALL take cookies out of it until they are all gone. Then one group of cookie eaters becomes furious and rants about how the lack of cookies is all the other groups fault and how if they hadn't eaten cookies as well they would have the cookies they need now. Why is all the money the Democrats pissed away less a part of our debt then the money the Republicans pissed away?
sounds like you do not understand what happened. Your example assumes there was a set amount of money that both parties spent. The key difference was that the Republicans spent money and cut taxes during a time when the economy was doing well, which is when Keynes says you should be raising taxes and cutting spending to pay off debt and save up reserves, and that Democrats are spending during a recession, when Keynes says you should lower taxes and raise spending to encourage private spending and to pick up the slack in demand. Sticking to your example, Republicans were in charge during a time when we should have been baking cookies (before a christmas party), but instead they ate the cookies that we had and didn't make anymore, while the Democrats are in charge during the time when we were supposed to eat the cookies (the christmas party), but now there aren't enough cookies left because the Republicans didn't do their jobs, but the Republicans are blaming the Democrats for the lack of cookies, and saying that we should start baking now during the actual party. Yes, now we have to bake, even though it is a crappy time to bake, but only because the Republicans screwed up and didn't bake when they were supposed to. If the Republican actually baked the cookies when they had time too, instead of eating the ones that were left over from when Clinton baked while playing Call of Duty in Iraq, we'd all have enough cookies for the party.
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The Meaning of Life: "M-hmm. Well, it's nothing very special. Uh, try and be nice to people, avoid eating fat, read a good book every now and then, get some walking in, and try and live together in peace and harmony with people of all creeds and nations"
Onering's 4 simple steps that let you solve any problem with Magic's gameplay
Whether its blue players countering your spells, red players burning you out, or combo, if you have a problem with an aspect of Magic's gameplay, you can fix it!
Step 1: Identify the problem. What aspect of Magic don't you like? Step 2: Find out how others deal with the problem. How do players deal with this aspect of the game when they run into it? Step 3: Do what those players do. Step 4: No more problem. Bonus: You are now better at Magic. Enjoy those extra wins!
sounds like you do not understand what happened. Your example assumes there was a set amount of money that both parties spent. The key difference was that the Republicans spent money and cut taxes during a time when the economy was doing well, which is when Keynes says you should be raising taxes and cutting spending to pay off debt and save up reserves, and that Democrats are spending during a recession, when Keynes says you should lower taxes and raise spending to encourage private spending and to pick up the slack in demand. Sticking to your example, Republicans were in charge during a time when we should have been baking cookies (before a christmas party), but instead they ate the cookies that we had and didn't make anymore, while the Democrats are in charge during the time when we were supposed to eat the cookies (the christmas party), but now there aren't enough cookies left because the Republicans didn't do their jobs, but the Republicans are blaming the Democrats for the lack of cookies, and saying that we should start baking now during the actual party. Yes, now we have to bake, even though it is a crappy time to bake, but only because the Republicans screwed up and didn't bake when they were supposed to. If the Republican actually baked the cookies when they had time too, instead of eating the ones that were left over from when Clinton baked while playing Call of Duty in Iraq, we'd all have enough cookies for the party.
So if a Republican is in the White House, it means "The Republicans are in charge" and if a Democrat is in the White House, it means "The Democrats are in charge"?
No, I don't think it's that easy. There are 3 branches to the U.S. federal government.
Both of them were wrong. Or rather, incomplete. Austrian economics is overly fixated on monetary policy and government action as being intrinsically wrong, and Keynesian theory deals poorly with the "Kill the weak" aspects of capitalism and its prescriptions for dealing with recessions were inadequate.
Ultimately Keynes was reacting to the Great Depression, and the Austrians were reacting to Keynes. They were born from the impulses of "We should do something!" for Keynes and "What is that moron Keynes doing!" for Hayek. Neither of them have anything particularly useful to say unless you're of a predilection for coming at problems with preconceived answers. Practically speaking Canada came out as the major success story of this recession. When you have bad debt, the Austrians are right - you need to purge it because it's not going to become good again if you prop it up and act like you're filming the next Weekend at Bernie's flick. Government policy CAN prevent speculative financial investments from wrecking your entire economy as Canada proved.
It wouldn't make a lick of difference if Keynesian policy to pay down debt during good times was followed or not. The fact remains that government intervention (monetary policy and government loans) led to the housing bubble, with the malinevestment eventually turning so toxic that it brought Wall Street down. 2 trillion in less debt would not have solved the root causes of our economic ills.
It wouldn't make a lick of difference if Keynesian policy to pay down debt during good times was followed or not. The fact remains that government intervention (monetary policy and government loans) led to the housing bubble, with the malinevestment eventually turning so toxic that it brought Wall Street down. 2 trillion in less debt would not have solved the root causes of our economic ills.
If taxes were higher, there would have been less free money in the private sector to cause those bubbles to grow.
The bubble existed due to the artificial inflation of the value of houses due to banks willing to give out bad loans because a person was expected to be able to sell their house before the loan caught up to them and make a tidy profit while at it. The problem is, that people started defaulting on their mortgages and banks ended up holding houses that weren't worth what they financed them at.
This could have been slowed by taxing banks at a higher percentage giving them less money to mortgage out.
The videos have an obvious Bias to them - Keynesians are wrong but the rich love them anyway and Austrians are right but nobody wants to listen.
In recent history, I can say this, we cannot say that Keynesian Economics have failed in that during 7 years of the Bush Presidency, in which we weren't in a recession, we should have been paying down the national debt so that when a recession did come, we would have been better prepared to handle it.
I think the outlook of the United States would be very different right now were we 2 trillion in debt less.
If the national debt was two trillion lower how would that increase our ability to handle the recession?
Keynesian theory is correct, capping the highs leads to relatively stable economic conditions long term. The problem is Keynes never accounted for the rampant social spending that started during the Great Depression. Imagine two trillion dollars in extra revenue that could be banked if Medicare, Medicaid, and Social Security didn't exist. Five years of good economic conditions means ten trillion dollars in the bank that could be released during a recession. Obama's one trillion stimulus package stopped the bleeding, imagine ten trillion being pumped in over the course of a recession.
Other things that neither Keynes or Hayak accounted for include the strange hold that unions have over businesses, the rise of corporations that can lobby politicians and hamper the velocity of money principle that both theories rely on, and simple globalization. The early 1900's was a vastly different time period.
If the national debt was two trillion lower how would that increase our ability to handle the recession?
Keynesian theory is correct, capping the highs leads to relatively stable economic conditions long term. The problem is Keynes never accounted for the rampant social spending that started during the Great Depression. Imagine two trillion dollars in extra revenue that could be banked if Medicare, Medicaid, and Social Security didn't exist. Five years of good economic conditions means ten trillion dollars in the bank that could be released during a recession. Obama's one trillion stimulus package stopped the bleeding, imagine ten trillion being pumped in over the course of a recession.
Well, you would have to be able to tell the American people to pay an extra 12% in tax without any benefit from it since Payroll Taxes have to go towards things like Social Security.
...basic keynesian economics says you spend more during a recession and you pay that off when you aren't in a recession. The goal is to have steady growth, not sporadic.
Right. Of course, the problem is that the USA doesn't repay the deficit spending in "boom" times. We seem to prefer to argue about how to spend additional capital gained during boom periods. We do, however, seem to agree the additional money shouldn't go towards repayment of loans.
So Kaynesian economics aren't a definitive failure, if only because we utterly fail to live up to the back-end of the system - repayment of "bust" period deficit spending.
Right. Of course, the problem is that the USA doesn't repay the deficit spending in "boom" times. We seem to prefer to argue about how to spend additional capital gained during boom periods. We do, however, seem to agree the additional money shouldn't go towards repayment of loans.
So Kaynesian economics aren't a definitive failure, if only because we utterly fail to live up to the back-end of the system - repayment of "bust" period deficit spending.
The problem is that the boom is not real growth. It's just resources being redirected from one place to another. We are heading to a situation where another boom might not even happen because there is not much left.
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"No one may threaten or commit violence ('aggress') against another man's person or property. Violence may be employed only against the man who commits such violence; that is, only defensively against the aggressive violence of another. In short, no violence may be employed against a nonaggressor. Here is the fundamental rule from which can be deduced the entire corpus of libertarian theory." - Murray Rothbard, Cited from "War, Peace, and the State"
The problem is that the boom is not real growth. It's just resources being redirected from one place to another. We are heading to a situation where another boom might not even happen because there is not much left.
Sure it's real growth. The problem is that everyone is wanting more growth than we have. You don't get 5% growth like clockwork.
The whole point of th keynesian system is to redirect resources to smooth the business cycle. Again, we fail to live up to the part of the system where we pay back deficit spending during bad times. So we are borrowing money to smooth the curve and then only paying interest. We also run deficits during periods of growth. In short we are not following the keynesian system. We are just reckless spenders.
We're also not going to see massive growth soon; the united states is not a developing nation and has not been for some time. Think of countries as companies during a stereotypical s-curve analysis for businesses. The US is on the top of the s-curve. China and Brasil are on the sharp incline of the curve.
Sure it's real growth. The problem is that everyone is wanting more growth than we have. You don't get 5% growth like clockwork.
You're right, it's growth in the Money Supply. Not real growth as in actual productive economy growth.
The whole point of th keynesian system is to redirect resources to smooth the business cycle. Again, we fail to live up to the part of the system where we pay back deficit spending during bad times. So we are borrowing money to smooth the curve and then only paying interest. We also run deficits during periods of growth. In short we are not following the keynesian system. We are just reckless spenders.
Keynesian style economics are Mercantilist. It can not be possible to smooth out something such as the Business cycle, when it's the Keynesian system creating them.
We're also not going to see massive growth soon; the united states is not a developing nation and has not been for some time. Think of countries as companies during a stereotypical s-curve analysis for businesses. The US is on the top of the s-curve. China and Brasil are on the sharp incline of the curve.
Developing nations are not the only nations capable of seeing growth. New industry and innovation also lead to growth. Neither of which are really possible at this point in time.
Both of them were wrong. Or rather, incomplete. Austrian economics is overly fixated on monetary policy and government action as being intrinsically wrong, and Keynesian theory deals poorly with the "Kill the weak" aspects of capitalism and its prescriptions for dealing with recessions were inadequate.
Ultimately Keynes was reacting to the Great Depression, and the Austrians were reacting to Keynes. They were born from the impulses of "We should do something!" for Keynes and "What is that moron Keynes doing!" for Hayek. Neither of them have anything particularly useful to say unless you're of a predilection for coming at problems with preconceived answers. Practically speaking Canada came out as the major success story of this recession. When you have bad debt, the Austrians are right - you need to purge it because it's not going to become good again if you prop it up and act like you're filming the next Weekend at Bernie's flick. Government policy CAN prevent speculative financial investments from wrecking your entire economy as Canada proved.
Austrian School was around before Keynes was even born, much less made a name for himself. Keynes was renaming Mercantilism as Neo-Liberalism that's all he was doing. He did not create anything new, and even Hayek went through and wrote about this, as did Mises.
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Legacy Decks
~~~~~~~~~
Too many to list efficiently. Find me online with the same SN if you want to play, or message me here to set up a time to play.
Modern
~~~~~~~~~
Whatever pile of 75 I throw together the night before without testing. Usually: :symb::symu::symg:
You're right, it's growth in the Money Supply. Not real growth as in actual productive economy growth.
How are we defining growth? The way I see it, if we have a 2% increase in GDP (Gross Domestic Product) that's real, actual, productive economic growth. My other points were directed at how many think this is "not real growth" or "not enough growth."
Keynesian style economics are Mercantilist. It can not be possible to smooth out something such as the Business cycle, when it's the Keynesian system creating them.
It's not possible to entirely smooth the cycle, but the idea is that you're going to be making the peak periods less bubbly and you'll be deficit spending in weak periods to make the dip less shallow.
The ideal result is steadier, equivalent, growth. So you'll end up with the same net growth, but with less risks of boom-bust periods that cause real damage. Of course, this is all in theory.
Developing nations are not the only nations capable of seeing growth. New industry and innovation also lead to growth. Neither of which are really possible at this point in time.
Of course. My point, however, is that the developing nations are the nations that see 6-10% growth, not established post-industrial nations like the United States or the European Union.
The problem with new industry and new innovation is that, for the most part, it removes human capital from the equation through automation.
Austrian School was around before Keynes was even born, much less made a name for himself. Keynes was renaming Mercantilism as Neo-Liberalism that's all he was doing. He did not create anything new, and even Hayek went through and wrote about this, as did Mises.
Keynes ended up getting the credit because he aggregated known concepts, expanded upon those concept and also managed to popularize the concepts.
How are we defining growth? The way I see it, if we have a 2% increase in GDP (Gross Domestic Product) that's real, actual, productive economic growth. My other points were directed at how many think this is "not real growth" or "not enough growth."
It's not possible to entirely smooth the cycle, but the idea is that you're going to be making the peak periods less bubbly and you'll be deficit spending in weak periods to make the dip less shallow.
The ideal result is steadier, equivalent, growth. So you'll end up with the same net growth, but with less risks of boom-bust periods that cause real damage. Of course, this is all in theory.
Of course. My point, however, is that the developing nations are the nations that see 6-10% growth, not established post-industrial nations like the United States or the European Union.
The problem with new industry and new innovation is that, for the most part, it removes human capital from the equation through automation.
Keynes ended up getting the credit because he aggregated known concepts, expanded upon those concept and also managed to popularize the concepts.
That and there's a few different "business cycle theories" and about how to deal with it. Expanding the historical framework outside of American economic history, and looking at the world. The pure austerity measures that go hand and glove with Hayek have had mixed results.
The best results typically are to :
1. High savings rate
2. When debt is cheap, expand into areas such as infrastructure
That was a popular tactic of Andrew Carnegie in particular and typically practiced by young companies that keep their dividends to expand. Where Japan has failed for example in it's lost decade are looking at long term population decline and underusibility of the infrastructure that they built during the "Lost Decade." If the Japanese all of a sudden would shift away from "parasitic kids" to making babies or increase immigration, they would see an economic uptick. But arguably long term, the Japanese are probably correcting a longer population trend that needed to come down.
If you do not take into account demographics, you're basically pissing in the wind when it comes to economics. Austrian economics in particular is probably one of the least robust of the current schools because of it's reliance on intellectual history in the past. If you don't read beyond one school of economics, you're short changing yourself.
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Ambition must be made to counteract ambition.
Individualities may form communities, but it is institutions alone that can create a nation.
Nothing succeeds like the appearance of success.
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
That and there's a few different "business cycle theories" and about how to deal with it. Expanding the historical framework outside of American economic history, and looking at the world. The pure austerity measures that go hand and glove with Hayek have had mixed results.
The best results typically are to :
1. High savings rate
2. When debt is cheap, expand into areas such as infrastructure
That was a popular tactic of Andrew Carnegie in particular and typically practiced by young companies that keep their dividends to expand. Where Japan has failed for example in it's lost decade are looking at long term population decline and underusibility of the infrastructure that they built during the "Lost Decade." If the Japanese all of a sudden would shift away from "parasitic kids" to making babies or increase immigration, they would see an economic uptick. But arguably long term, the Japanese are probably correcting a longer population trend that needed to come down.
If you do not take into account demographics, you're basically pissing in the wind when it comes to economics. Austrian economics in particular is probably one of the least robust of the current schools because of it's reliance on intellectual history in the past. If you don't read beyond one school of economics, you're short changing yourself.
No one is exposed to the austrian school anymore. The only reason I found out about it was because I was constantly getting in arguments with economic professors because what they were teaching didn't make any sense. Keynsian economics is force fed in both high school and college I'd be willing to bet that most people don't even know another point of view even exists! Which is rediculous because austrian business cycle theory has been spot on for the past 100 years.
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"No one may threaten or commit violence ('aggress') against another man's person or property. Violence may be employed only against the man who commits such violence; that is, only defensively against the aggressive violence of another. In short, no violence may be employed against a nonaggressor. Here is the fundamental rule from which can be deduced the entire corpus of libertarian theory." - Murray Rothbard, Cited from "War, Peace, and the State"
If you do not take into account demographics, you're basically pissing in the wind when it comes to economics. Austrian economics in particular is probably one of the least robust of the current schools because of it's reliance on intellectual history in the past. If you don't read beyond one school of economics, you're short changing yourself.
Right. The primary point I'm trying to drive home is that recent events don't "disprove" Keynesian-based theories because the United States (and others) didn't really follow that theory.
We can also look at the boom in the stock markets in the U.S. as almost directly tied to baby boom retirement savings (as retirement was largely shifted from company pensions to private/self-managed 401k/403b type accounts). What will happen when retiring boomers start selling stocks/funds to pay for retirement? We certainly don't have the demographics to support buying all of the stuff at this time.
Some of the most interesting economic research includes all kinds of interesting demographics. A long time back, I was helping with a project analyzing the Toledo voucher system. It was really nice...you had a pseudo control because you had to apply for the voucher and win based on a lottery - then you have to do all sorts of other tests for success beyond grades. Behavioral evaluations (generosity, kindness, etc) are but one example. It was really neat stuff.
No one is exposed to the austrian school anymore. The only reason I found out about it was because I was constantly getting in arguments with economic professors because what they were teaching didn't make any sense. Keynsian economics is force fed in both high school and college I'd be willing to bet that most people don't even know another point of view even exists! Which is [ridiculous] because austrian business cycle theory has been spot on for the past 100 years.
Eh, if you want exposure you get it. It's a matter of taking interest in your own education. Many low-level economics courses are so dumbed-down it's rather mind-numbing. I still remember that advance micro class I had way back in the day where we were using the relatively straight-froward concept of Lagrange multipliers (well, straight-forward for 3rd-4th year engineering students where I went to college)...the numbers really let you see what's so "wrong" with economic assumptions at times. As but one example - people might view "long term" as 3 years (and, accordingly, will not make "optimal" long-term choices; another example being failure of self-regulation).
"Fear the Boom and Bust" a Hayek vs Keynes Rap Anthem
Fight of the Century: Keynes vs Hayek Round Two
Was just wondering what people thought of them!
The Austrian business cycle theory attempts to explain business cycles through a set of ideas held by the heterodox Austrian School of economics. The theory views business cycles as the inevitable consequence of excessive growth in bank credit, exacerbated by inherently damaging and ineffective central policies, which cause interest to remain too low for too long, resulting in excessive credit creation, speculative economic and lowered savings. The main proponents of the Austrian business cycle theory historically were Austrian School economists Ludwig Von Mises and nobel laureate Friedrich Hayek.
In recent history, I can say this, we cannot say that Keynesian Economics have failed in that during 7 years of the Bush Presidency, in which we weren't in a recession, we should have been paying down the national debt so that when a recession did come, we would have been better prepared to handle it.
I think the outlook of the United States would be very different right now were we 2 trillion in debt less.
We were in a recession during the Bush Presidency. That whole dotcom bust happened in 2000, and the then the bubble was simply pushed into the housing market to keep it growing. In reality it was nothing more than trying to Inflate away the problem, hence the ZIRP policy that was going during this entire time.
Growth in what exactly?
~~~~~~~~~
Too many to list efficiently. Find me online with the same SN if you want to play, or message me here to set up a time to play.
Modern
~~~~~~~~~
Whatever pile of 75 I throw together the night before without testing. Usually: :symb::symu::symg:
[thread=41221][my extendo sig][/thread] [thread=56664][moderator helpdesk][/thread] [Pen and Paper Inn]
Just add me on msn if you have any questions or just want to talk
sounds like you do not understand what happened. Your example assumes there was a set amount of money that both parties spent. The key difference was that the Republicans spent money and cut taxes during a time when the economy was doing well, which is when Keynes says you should be raising taxes and cutting spending to pay off debt and save up reserves, and that Democrats are spending during a recession, when Keynes says you should lower taxes and raise spending to encourage private spending and to pick up the slack in demand. Sticking to your example, Republicans were in charge during a time when we should have been baking cookies (before a christmas party), but instead they ate the cookies that we had and didn't make anymore, while the Democrats are in charge during the time when we were supposed to eat the cookies (the christmas party), but now there aren't enough cookies left because the Republicans didn't do their jobs, but the Republicans are blaming the Democrats for the lack of cookies, and saying that we should start baking now during the actual party. Yes, now we have to bake, even though it is a crappy time to bake, but only because the Republicans screwed up and didn't bake when they were supposed to. If the Republican actually baked the cookies when they had time too, instead of eating the ones that were left over from when Clinton baked while playing Call of Duty in Iraq, we'd all have enough cookies for the party.
Onering's 4 simple steps that let you solve any problem with Magic's gameplay
Step 1: Identify the problem. What aspect of Magic don't you like? Step 2: Find out how others deal with the problem. How do players deal with this aspect of the game when they run into it? Step 3: Do what those players do. Step 4: No more problem. Bonus: You are now better at Magic. Enjoy those extra wins!
So if a Republican is in the White House, it means "The Republicans are in charge" and if a Democrat is in the White House, it means "The Democrats are in charge"?
No, I don't think it's that easy. There are 3 branches to the U.S. federal government.
Ultimately Keynes was reacting to the Great Depression, and the Austrians were reacting to Keynes. They were born from the impulses of "We should do something!" for Keynes and "What is that moron Keynes doing!" for Hayek. Neither of them have anything particularly useful to say unless you're of a predilection for coming at problems with preconceived answers. Practically speaking Canada came out as the major success story of this recession. When you have bad debt, the Austrians are right - you need to purge it because it's not going to become good again if you prop it up and act like you're filming the next Weekend at Bernie's flick. Government policy CAN prevent speculative financial investments from wrecking your entire economy as Canada proved.
If taxes were higher, there would have been less free money in the private sector to cause those bubbles to grow.
I thought the bubble by definition existed because that money WASN'T there?
This could have been slowed by taxing banks at a higher percentage giving them less money to mortgage out.
If the national debt was two trillion lower how would that increase our ability to handle the recession?
Keynesian theory is correct, capping the highs leads to relatively stable economic conditions long term. The problem is Keynes never accounted for the rampant social spending that started during the Great Depression. Imagine two trillion dollars in extra revenue that could be banked if Medicare, Medicaid, and Social Security didn't exist. Five years of good economic conditions means ten trillion dollars in the bank that could be released during a recession. Obama's one trillion stimulus package stopped the bleeding, imagine ten trillion being pumped in over the course of a recession.
Other things that neither Keynes or Hayak accounted for include the strange hold that unions have over businesses, the rise of corporations that can lobby politicians and hamper the velocity of money principle that both theories rely on, and simple globalization. The early 1900's was a vastly different time period.
:EDH:
WR Gisela, Blade of Goldnight (HOLD/100) WR
WB Teysa, Orzhov Scion (HOLD/100) WB
Well, you would have to be able to tell the American people to pay an extra 12% in tax without any benefit from it since Payroll Taxes have to go towards things like Social Security.
Right. Of course, the problem is that the USA doesn't repay the deficit spending in "boom" times. We seem to prefer to argue about how to spend additional capital gained during boom periods. We do, however, seem to agree the additional money shouldn't go towards repayment of loans.
So Kaynesian economics aren't a definitive failure, if only because we utterly fail to live up to the back-end of the system - repayment of "bust" period deficit spending.
Trade/Sell me your Demonic Attorney!
The problem is that the boom is not real growth. It's just resources being redirected from one place to another. We are heading to a situation where another boom might not even happen because there is not much left.
Sure it's real growth. The problem is that everyone is wanting more growth than we have. You don't get 5% growth like clockwork.
The whole point of th keynesian system is to redirect resources to smooth the business cycle. Again, we fail to live up to the part of the system where we pay back deficit spending during bad times. So we are borrowing money to smooth the curve and then only paying interest. We also run deficits during periods of growth. In short we are not following the keynesian system. We are just reckless spenders.
We're also not going to see massive growth soon; the united states is not a developing nation and has not been for some time. Think of countries as companies during a stereotypical s-curve analysis for businesses. The US is on the top of the s-curve. China and Brasil are on the sharp incline of the curve.
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You're right, it's growth in the Money Supply. Not real growth as in actual productive economy growth.
Keynesian style economics are Mercantilist. It can not be possible to smooth out something such as the Business cycle, when it's the Keynesian system creating them.
Developing nations are not the only nations capable of seeing growth. New industry and innovation also lead to growth. Neither of which are really possible at this point in time.
Austrian School was around before Keynes was even born, much less made a name for himself. Keynes was renaming Mercantilism as Neo-Liberalism that's all he was doing. He did not create anything new, and even Hayek went through and wrote about this, as did Mises.
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How are we defining growth? The way I see it, if we have a 2% increase in GDP (Gross Domestic Product) that's real, actual, productive economic growth. My other points were directed at how many think this is "not real growth" or "not enough growth."
If people feel like playing around with GDP growth/decline information this site has some interesting charts to play with: http://www.tradingeconomics.com/united-states/gdp-growth
It's not possible to entirely smooth the cycle, but the idea is that you're going to be making the peak periods less bubbly and you'll be deficit spending in weak periods to make the dip less shallow.
The ideal result is steadier, equivalent, growth. So you'll end up with the same net growth, but with less risks of boom-bust periods that cause real damage. Of course, this is all in theory.
Of course. My point, however, is that the developing nations are the nations that see 6-10% growth, not established post-industrial nations like the United States or the European Union.
The problem with new industry and new innovation is that, for the most part, it removes human capital from the equation through automation.
Keynes ended up getting the credit because he aggregated known concepts, expanded upon those concept and also managed to popularize the concepts.
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That and there's a few different "business cycle theories" and about how to deal with it. Expanding the historical framework outside of American economic history, and looking at the world. The pure austerity measures that go hand and glove with Hayek have had mixed results.
The best results typically are to :
1. High savings rate
2. When debt is cheap, expand into areas such as infrastructure
That was a popular tactic of Andrew Carnegie in particular and typically practiced by young companies that keep their dividends to expand. Where Japan has failed for example in it's lost decade are looking at long term population decline and underusibility of the infrastructure that they built during the "Lost Decade." If the Japanese all of a sudden would shift away from "parasitic kids" to making babies or increase immigration, they would see an economic uptick. But arguably long term, the Japanese are probably correcting a longer population trend that needed to come down.
If you do not take into account demographics, you're basically pissing in the wind when it comes to economics. Austrian economics in particular is probably one of the least robust of the current schools because of it's reliance on intellectual history in the past. If you don't read beyond one school of economics, you're short changing yourself.
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No one is exposed to the austrian school anymore. The only reason I found out about it was because I was constantly getting in arguments with economic professors because what they were teaching didn't make any sense. Keynsian economics is force fed in both high school and college I'd be willing to bet that most people don't even know another point of view even exists! Which is rediculous because austrian business cycle theory has been spot on for the past 100 years.
Right. The primary point I'm trying to drive home is that recent events don't "disprove" Keynesian-based theories because the United States (and others) didn't really follow that theory.
We can also look at the boom in the stock markets in the U.S. as almost directly tied to baby boom retirement savings (as retirement was largely shifted from company pensions to private/self-managed 401k/403b type accounts). What will happen when retiring boomers start selling stocks/funds to pay for retirement? We certainly don't have the demographics to support buying all of the stuff at this time.
Some of the most interesting economic research includes all kinds of interesting demographics. A long time back, I was helping with a project analyzing the Toledo voucher system. It was really nice...you had a pseudo control because you had to apply for the voucher and win based on a lottery - then you have to do all sorts of other tests for success beyond grades. Behavioral evaluations (generosity, kindness, etc) are but one example. It was really neat stuff.
Eh, if you want exposure you get it. It's a matter of taking interest in your own education. Many low-level economics courses are so dumbed-down it's rather mind-numbing. I still remember that advance micro class I had way back in the day where we were using the relatively straight-froward concept of Lagrange multipliers (well, straight-forward for 3rd-4th year engineering students where I went to college)...the numbers really let you see what's so "wrong" with economic assumptions at times. As but one example - people might view "long term" as 3 years (and, accordingly, will not make "optimal" long-term choices; another example being failure of self-regulation).
Nice
If only people really understood the business cycle (and that growth isn't $#@^ing constant).
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