Best Thread Keynes Vs. Hayek

Just wait for Attila to find the above gem.

What do I think ? Phew hard to know really. Except that Cameron should shower less money on 3rd world losers and subsidise the poor here in the UK.
 
The socialists just can't 'fess up it was largely their fault the world is in economic meltdown. They ( Clinton/Blair/Brown ) unleashed the reins on bankers and those so-called top people cr*pped all over us, the ordinary Joes, who have to pay for their mistakes. Huge borrowing to cover loans that had little chance of being repaid and weren't checked properly. Huge Govt spending to try and re-susitate the senile economies of the West by Keynesian largesse. There is little point in giving a sick man more viagra or a sick economy more money.

The Western economies have been living well beyond their resources now for decades. Overpaying the upper elite and overtaxing the rest. Politicians just couldn't say no to more hand-outs for political reasons and now "the crunch" has come.

The idiotic socialists will go on spending/wasting ( Keynes )
The Tories are strangling the patient with their stupid remedies. ( Hayek )
 
Last edited:
I think there is a complete lack of original thought going on here !

It's not a question of Hayek v. Keynes.

Let's hope the clever Professors/Doctors of economics can properly earn a big reputation with a viable solution. Not just re-gurgitating the same old H and K stuff. which has mostly been tried and failed.
 
Hayek for sure:

salma-hayek-dusk-til-dawn.jpg
 
I think there is a complete lack of original thought going on here !

It's not a question of Hayek v. Keynes.

Let's hope the clever Professors/Doctors of economics can properly earn a big reputation with a viable solution. Not just re-gurgitating the same old H and K stuff. which has mostly been tried and failed.

I disagree...sort of. It is Governments who adulterate theories to suit their political careers. Just look at the constitution of the USA and it is clear that the Framers knew that Government couldn't be trusted and wanted its powers to be limited. Anyone with an ounce of common sense could see that is why they mentioned that only gold and silver should be made legal tender.

Section 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

The coinage act of 1792 which was an act of congress made a Gold standard explicitly clear.

http://www.constitution.org/uslaw/coinage1792.txt

Modern economists (Keynesians) will try and convince you that the gold standard is a relic of the past which in my opinion proves they are absolutely clueless and naive.

The depression of 1920-21 is a good example of what a President with the right idea can achieve. It was very sharp but short lived and the roaring 20’s followed soon after.

Robert Gordon, a Keynesian, admits, “government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive. … Despite the absence of a stimulative government policy, however, recovery was not long delayed.”

Kenneth Weiher, an economic historian, notes, “despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction.” He then briskly concedes that “the economy rebounded quickly from the 1920-1921 depression and entered a period of quite vigorous growth.”

Warren Harding’s (President of the United States, from 1921-1923) inaugural address is a great read and clearly contrasts the ideas of today's moronic leaders.

http://www.vlib.us/amdocs/texts/34hard1.htm

Contrast this with the Great depression starting in 1929 (The one Ben Bernanke studied carefully) which lasted many, many years.
 
I disagree...sort of. It is Governments who adulterate theories to suit their political careers. Just look at the constitution of the USA and it is clear that the Framers knew that Government couldn't be trusted and wanted its powers to be limited. Anyone with an ounce of common sense could see that is why they mentioned that only gold and silver should be made legal tender.

Section 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

The coinage act of 1792 which was an act of congress made a Gold standard explicitly clear.

http://www.constitution.org/uslaw/coinage1792.txt

Warren Harding’s (President of the United States, from 1921-1923) inaugural address is a great read and clearly contrasts the ideas of today's moronic leaders.

http://www.vlib.us/amdocs/texts/34hard1.htm

Contrast this with the Great depression starting in 1929 (The one Ben Bernanke studied carefully) which lasted many, many years.

This paragraph seems relevent

It has been proved again and again that we cannot, while throwing our markets open to the world, maintain American standards of living and opportunity, and hold our industrial eminence in such unequal competition. There is a luring fallacy in the theory of banished barriers of trade, but preserved American standards require our higher production costs to be reflected in our tariffs on imports. Today, as never before, when peoples are seeking trade restoration and expansion, we must adjust our tariffs to the new order. We seek participation in the world's exchanges, because therein lies our way to widened influence and the triumphs of peace. We know full well we cannot sell where we do not buy, and we cannot sell successfully where we do not carry. Opportunity is calling not alone for the restoration, but for a new era in production, transportation and trade. We shall answer it best by meeting the demand of a surpassing home market, by promoting self- reliance in production, and by bidding enterprise, genius, and efficiency to carry our cargoes in American bottoms to the marts of the world.
 
This paragraph seems relevent

It has been proved again and again that we cannot, while throwing our markets open to the world, maintain American standards of living and opportunity, and hold our industrial eminence in such unequal competition. There is a luring fallacy in the theory of banished barriers of trade, but preserved American standards require our higher production costs to be reflected in our tariffs on imports. Today, as never before, when peoples are seeking trade restoration and expansion, we must adjust our tariffs to the new order. We seek participation in the world's exchanges, because therein lies our way to widened influence and the triumphs of peace. We know full well we cannot sell where we do not buy, and we cannot sell successfully where we do not carry. Opportunity is calling not alone for the restoration, but for a new era in production, transportation and trade. We shall answer it best by meeting the demand of a surpassing home market, by promoting self- reliance in production, and by bidding enterprise, genius, and efficiency to carry our cargoes in American bottoms to the marts of the world.

A few things jumped out at me:

The normal balances have been impaired, the channels of distribution have been clogged, the relations of labor and management have been strained. We must seek the readjustment with care and courage. Our people must give and take. Prices must reflect the receding fever of war activities. Perhaps we never shall know the old levels of wages again, because war invariably readjusts compensations, and the necessaries of life will show their inseparable relationship, but we must strive for normalcy to reach stability. All the penalties will not be light, nor evenly distributed.


"I speak for administrative efficiency, for lightened tax burdens, for sound commercial practices, for adequate credit facilities, for sympathetic concern for all agricultural problems, for the omission of unnecessary interference of Government with business, for an end to Government's experiment in business, and for more efficient business in Government administration. With all of this must attend a mindfulness of the human side of all activities, so that social, industrial, and economic justice will be squared with the purposes of a righteous people."

What do we have today? Governments fighting deflation, increasing taxes and more and more regulation.
 
The socialists just can't 'fess up it was largely their fault the world is in economic meltdown. They ( Clinton/Blair/Brown ) unleashed the reins on bankers and those so-called top people cr*pped all over us, the ordinary Joes, who have to pay for their mistakes. Huge borrowing to cover loans that had little chance of being repaid and weren't checked properly. Huge Govt spending to try and re-susitate the senile economies of the West by Keynesian largesse. There is little point in giving a sick man more viagra or a sick economy more money.

The Western economies have been living well beyond their resources now for decades. Overpaying the upper elite and overtaxing the rest. Politicians just couldn't say no to more hand-outs for political reasons and now "the crunch" has come.

The idiotic socialists will go on spending/wasting ( Keynes )
The Tories are strangling the patient with their stupid remedies. ( Hayek )


Both monetarists and Keynesians have failed. Can't manage economy with one sided controls.

Need supply and demand side control and policies. Pretty obvious but I guess careers are made of one sided studies.

Anybody who cares to note this is precisely the reason why;

1. Raise taxes - demand side management to curb inflation
2. Cut interest rates - supply side to stimulate investment and production

is required to get balanced growth in economy.


When growth gets going and books balance - one can then cut taxes assuming G is earning its way and raise rates to ease off inflationary pressure on excess borrowing. Ensuring one is earning ones way and not borrowing...

Pretty basic economics but such is life...


This is why our current BoE and government policy is pretty spot on imho. However, raising taxes (unless for the rich) may kill of the fragile demand as consumers have lost purchasing power to rise in fuel and commodities like food stuff.


You capiche???

No... bet you are all still clueless... I thought so... but hey that's ok... :cool:

Sincerely from yours trully ;)
 
For anyone who has the ability to comprehend:

1) Inflation is an expansion of the money supply. Zero to do with taxes.

2) Low interest rates are more likely to stimulate consumption, that was the purpose of Q.E.

3) Production is stimulated by lowering barriers for people to produce (supply) goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation.
 
For anyone who has the ability to comprehend: :LOL::LOL::LOL:

1) Inflation is an expansion of the money supply. Zero to do with taxes.
Taxes affect disposable income and thus demand for goods and services. You totally ignoring the transmission mechanism.

2) Low interest rates are more likely to stimulate consumption, that was the purpose of Q.E. Also likely to stimulate investment. But as I said before the elasticity of response to interest rates by the Money supply is not what the monetarists would have you think. It various with the state and expectations in the economy. So what is RoI? You are such a narrow minded one track tunnel vision pony its unreal... You see I accept it also allows cheap loans for people to bring their expenditure forward - WHICH IS WHY TAXATION IS NEEDED TO CHOKE OF THAT DEMAND leading to eventual inflation. Is this not comprehensible to you. It is about balance.

3) Production is stimulated by lowering barriers for people to produce (supply) goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation. If you said corporation tax I might have agreed. But PAYE and Capital Gains is essentially demand side.


Please NT open your mind and consider some of these basic tenets of macro economic practice. Pretty basic stuff. The excesses are often Government / Political base with their desires to do more than viable with revenue obtained.

However, two sided S & D controls and regulation to maintain economic objectives that are often in contradiction to each other is the whole essence of good sound economic policy.


:idea:
 
Both monetarists and Keynesians have failed. Can't manage economy with one sided controls.

Need supply and demand side control and policies. Pretty obvious but I guess careers are made of one sided studies.

Anybody who cares to note this is precisely the reason why;

1. Raise taxes - demand side management to curb inflation
2. Cut interest rates - supply side to stimulate investment and production

is required to get balanced growth in economy.


When growth gets going and books balance - one can then cut taxes assuming G is earning its way and raise rates to ease off inflationary pressure on excess borrowing. Ensuring one is earning ones way and not borrowing...

Pretty basic economics but such is life...

You can't say something has failed unless you've applied it properly, and I doubt that has been done. As pointed out in the radio presentation. Keynes requires government stimulus when things are bad, but also requires government to run a surplus when things are good. Unfortunately, when things are good, you get idiot opposition politicians suggesting that rather than run a surplus or get rid of overall debt, we should cut taxes. It seems reasonable to some folk, and will gain some popular vote, but in my opinion is the exact opposite of what you should do. And raising taxes now is the exact opposite of what should be happening, and the results are clear to see. It's not working.
 
You can't say something has failed unless you've applied it properly, and I doubt that has been done. As pointed out in the radio presentation. Keynes requires government stimulus when things are bad, but also requires government to run a surplus when things are good. Unfortunately, when things are good, you get idiot opposition politicians suggesting that rather than run a surplus or get rid of overall debt, we should cut taxes. It seems reasonable to some folk, and will gain some popular vote, but in my opinion is the exact opposite of what you should do. And raising taxes now is the exact opposite of what should be happening, and the results are clear to see. It's not working.

One of the main problems is that Governments can expand the money supply 'at will' so it is no longer related to true production or real economic growth as opposed to meaningless Government concocted GDP figures. There is nothing to restrain Government spending anymore and this is most likely why they don't care about running a surplus. The days where Asia produces and The West consumes are drawing ever closer to an end. Some people understand the bigger picture while others keep peddling nonsense about a macro-Economic practice that makes ZERO sense.
 
When growth gets going and books balance - one can then cut taxes assuming G is earning its way and raise rates to ease off inflationary pressure on excess borrowing. Ensuring one is earning ones way and not borrowing...

Just so I can make sure I understand what you're saying...

Consider that you have a high level of debt.

Taxation represents government income. So are you saying that if you worked in a job, and your salary was going up, and your income was more than your living costs, so that you didn't need to borrow more money (original debt still exists of course) that you would at that point decide to cut back on your working hours and earn less income?

That would completely ignore two important things. The first is that, you have a huge amount of outstanding debt, and second that you may go through harder times in the future, and it might be wise to at least earn the same amount or gain even more income while you can, and pay off debt or save for that rainy day.

What you're suggesting, if I have understood it correctly, is completely wrong. And obviously so. When things get going, and the books are balanced, it is at this time that you pay off as much of your debt as you can.
 
Anybody who cares to note this is precisely the reason why;

1. Raise taxes - demand side management to curb inflation
2. Cut interest rates - supply side to stimulate investment and production

is required to get balanced growth in economy.


When growth gets going and books balance - one can then cut taxes assuming G is earning its way and raise rates to ease off inflationary pressure on excess borrowing. Ensuring one is earning ones way and not borrowing...

Pretty basic economics but such is life...

Basic economics you say? I will make this simple so that even you can understand. The UK imports twice as much as it exports. The U.K is now a net importer of oil and food. These are commodities that are produced outside of the U.K. When the Central Bank increases the money supply it devalues the currency at the same time, this is called debasement. What this means is that anything the UK imports will be more expensive due to a depreciated currency. If you don’t believe me then perhaps you will believe Andrew Sentance - External Member of the Monetary Policy Committee:

"Why has inflation turned out persistently above target, despite the widespread expectation that it would be pushed down by the financial crisis and the global recession?" The answer, he argues, is that "too much faith is being put on the impact of a large 'output gap' pushing down on inflation and not enough weight has been put on the upward pressure from the global environment and the exchange rate".

Fourth, and most importantly, Andrew Sentance says that in an open economy like the UK the 'output gap' model of inflation pays insufficient attention to the global forces shaping UK inflation. "A key driver behind the upward pressure on prices in global markets has been strong global economic growth, particularly driven by Asia and other emerging markets", he says. Moreover, "Forecasts of future global growth are now being revised up again.". Dr Sentance concludes that "...global inflationary pressures look set to continue and with them above-target UK inflation.


He concludes by saying that, while the exchange rate should clearly not become the centrepiece of UK monetary policy, the value of sterling "...needs to be one of the key areas of focus for the MPC as we seek to steer ourselves out of the current phase of high inflation". A modest appreciation of sterling, he argues, ".would mitigate the impact of global inflationary pressures in the short term and help to steer inflation back to the target over the medium term".


Give up Atilla :rolleyes:
 
Just so I can make sure I understand what you're saying...

Consider that you have a high level of debt.

Taxation represents government income. So are you saying that if you worked in a job, and your salary was going up, and your income was more than your living costs, so that you didn't need to borrow more money (original debt still exists of course) that you would at that point decide to cut back on your working hours and earn less income? Obviously if you have debt you wouldn't substitute leisure for work until debt is paid off. Where did this come from... "at that point you would cut back on your working hours and less income came from" You doing hocus pocus magic stuff.

The point is as people become well off and cash rich by working harder they don't do more hours. They simply work less hard. Someone earning less money works weekends and BHolidays and in some cases two jobs.

I had better expectations from your powers of deduction.

Let's think about someone who earns considerably more than they spend and has no debt. Do you think unlike a poor sod they will work BH long hours doing OT and weekends or do two jobs? THINK it through.

And before some bright spark says many chief execs are on the board of executives working for 2/3 companies - get in touch with reality...


That would completely ignore two important things. The first is that, you have a huge amount of outstanding debt You make it up as you go along. If you have debt you are not well off are you? It's alright my friend plastic has my rear covered I won't work today... You joker or what? , and second that you may go through harder times in the future, and it might be wise to at least earn the same amount or gain even more income while you can, and pay off debt or save for that rainy day.

What you're suggesting, if I have understood it correctly, is completely wrong. And obviously so. When things get going, and the books are balanced, it is at this time that you pay off as much of your debt as you can.

No you understood totally wrong. Your mind is like smash potatoes with a mixture of peas. Keep taking the medicine... ;)
 
I think that the conservatives critique over the period was better to cut taxes and let the private sector allocate resources as opposed to wasteful public spending ..... where the country won't see any future returns

You can't say something has failed unless you've applied it properly, and I doubt that has been done. As pointed out in the radio presentation. Keynes requires government stimulus when things are bad, but also requires government to run a surplus when things are good. Unfortunately, when things are good, you get idiot opposition politicians suggesting that rather than run a surplus or get rid of overall debt, we should cut taxes. It seems reasonable to some folk, and will gain some popular vote, but in my opinion is the exact opposite of what you should do. And raising taxes now is the exact opposite of what should be happening, and the results are clear to see. It's not working.
 
There is nothing to restrain Government spending anymore

Not exactly true .... I believe that the Greek government is kinda constrained at the moment

This is the danger of over spending. There comes a time where the stock of debt becomes so unsustainable that interest payments exceed that of GDP growth, in effect leading to insolvency
 
Top