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Old 12-20-2011, 09:36 PM
 
Location: Chicago
865 posts, read 572,547 times
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Quote:
Originally Posted by Randomstudent View Post
Don't believe everything you see on you tube. Keynesian economics is not perfect, no economic system is, but to suggest that we go back to a system that lead to deep depressions every 20 years, depressions worse then anything seen since 1945, is not a solution. classical economics (which is basically what Austrians economics is) had a run from 1870-1929 and the problem with it is that business ultimately gets too powerful and greedy and starts to take advantage of both government and the economic system to cheat, and in so doing causes crashes. That is what Roosevelt fought against in the 1930s. To suggest that "gee the government just should get out of the way of the private sector" fails to acknowledge the fundamental fact that eventually certain groups in the private sector will accumulate enough power to ruin the economy through speculation if not kept in check by government regulation.

There is a clear pattern to show Austrian economics and deregulation of the economy does not work if you value economic stability. From 1933-1986 under Roosevelt era banking regulation we had no banking crisis. Then in 1986 Reagan said gee all this new deal regulation of small banks we don't need it, what is the worst that can happen and what happened...the savings and loan crisis of the late 1980s and early 1990s. Again in 1999 Clinton and the GOP said we don't need Glass-Steagall and all this new deal regulation to separate commercial banks and brokerage houses and what happened...the 2007-8 financial crisis. Like clockwork they implement a piece of Austrian deregulation and a sector of the economy booms and collapses within a matter of years.

The reason there is this co-relation between deregulation and economic failure is because almost every economic regulation comes as the result of hindsight from an economic problem. Why do you think banks need to be insured as per the FDIC? The answer is because before that with some banks you might as well have been giving your life savings to a day trader. Also do you ever ask yourself why the government requires public companies must file expansive reports as per the securities act of 1933? The reason is because before that companies routinely lied about how much money and debt they had to attract investors. Without the threat of federal prison the incentive to lie to get as much money as possible is huge. If you don't believe me look no further then Mitt Romney. He flip flops more then a fish on a dry dock. Where do you think he learned that? The answer is Bain Capital of course telling employees and board members of target companies that their company would be safe if they let him in while at the same time telling his investors how he would milk those saps for everything they had.

The fact is Austrian economics simply doesn't work because it is the economic equivalent of closing a hospital because some patients cannot be saved. The Austrians argue that some regulation may not work all of the time so we should just throw in the towel. I think the most telling thing about this argument is that Austrians use the very failure of deregulation, and weakening of regulation to try and claim we need more deregulation and weaker government protections.
Wow, it sounds like you have a poor understanding of Keynesian and Austrian economics, and on top of that, economic history. Nothing you said here is factual, therefore I have no idea if you are trying to make a point, or exemplify poor perceptions and theory of how economics work.
Depressions every 20 years doing what? Certainly not an Austrian model that was designed and developed over time, and is a living school of market economics that updates methodology over time. Maybe you are confusing the old Smith model for Austrian school, or maybe you are confusing the old Chicago school with Austrian economics, but you certainly make no comparison to how the market works, and what is in play right now.
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Old 12-20-2011, 09:40 PM
 
Location: NC
10,005 posts, read 9,003,542 times
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Originally Posted by moving_pains View Post
I have studied both Keynesian and Austrian, and I am convinced that Austrian is right and Keynesian is wrong. Not just wrong, but terribly wrong. The only reason why people like you are believers, is because Keynesianism is what they teach in school.

May I suggest you this reading list to acquaint yourself with what's exactly wrong with our system:

Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse: Thomas E. Woods Jr.

The Case Against the Fed: Murray N. Rothbard (online link)

From Bretton Woods to World Inflation: A Study of the Causes and Consequences: Henry Hazlitt (online link)

The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2): F. A. Hayek, Bruce Caldwell (online link)

I noticed how you gave a vague reply of "Don't believe everything you see on you tube" instead of explaining why your Keynesian maestros were clueless and ridiculing the Austrians when the Austrians were warning about the crisis. Or are you saying that videos are doctored? If you wish to take you and your advocacy of Keynesianism seriously, explain that.
I studied economics in College and was assigned about half of those including road to serfdom and from Bretton Woods. I have also read other excepts from those authors and others and I am totally convinced that neither Keynesianism, mercantilism, communism, nor the Austrian school has all the answers. If any did then we would not be having this discussion since all those systems have been tried for decades and yielded both benefits and problems depending on what the issue was.

As to the Crisis my deeply Keynesian professor predicted it along with our entire freshman economics class back in 2005, in fact the subject of my freshman year exam was on the impending collapse of the housing bubble. It wasn't that hard to see and almost every real Keynesian was complaining about how president Bush's supply side economics were leading to disaster, or don't you remember that.

Last edited by Randomstudent; 12-20-2011 at 09:57 PM..
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Old 12-20-2011, 09:44 PM
 
Location: NC
10,005 posts, read 9,003,542 times
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Quote:
Originally Posted by MadeInAmerica View Post
Wow, it sounds like you have a poor understanding of Keynesian and Austrian economics, and on top of that, economic history. Nothing you said here is factual, therefore I have no idea if you are trying to make a point, or exemplify poor perceptions and theory of how economics work.
Depressions every 20 years doing what? Certainly not an Austrian model that was designed and developed over time, and is a living school of market economics that updates methodology over time. Maybe you are confusing the old Smith model for Austrian school, or maybe you are confusing the old Chicago school with Austrian economics, but you certainly make no comparison to how the market works, and what is in play right now.
Yes, everything I have said is in fact factual. Under classical economics there were depressions every 20 years. E.g. the panic of 1873, and the panic of 1893. Austrian economics is just a re-labeling of the classical ideas promoted by Jean Baptiste Say (famous for Say's law) in the late 18th and early 19th centuries updated to deal with centralized banking. Hayak and Menger were both laissez faire thinkers who were terrified at the prospect of central banking and the impact that would have the economy. To say they or the Austrian school are not proponents for classical economic liberalism is simply dishonest.

Furthermore I don't even know what the "Old Chicago School" is. I know there is a Chicago school, but that is from the 1970s and is a fairly recent reaction to Keynesian theory. I don't know how one could describe it as "old"

Last edited by Randomstudent; 12-20-2011 at 09:54 PM..
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Old 12-20-2011, 09:55 PM
 
Location: Chicago
865 posts, read 572,547 times
Reputation: 270
Quote:
Originally Posted by Randomstudent View Post
Yes under classical economics there were depressions every 20 years. E.g. the panic of 1837, the panic of 1873, the panic of 1893. Austrian economics is just a re-labeling of the ideas promoted by Jean Baptiste Say (famous for Say's law) in the late 18th and early 19th centuries updated to deal with centralized banking.
Let me talk to your teacher, they have taught you poorly. Austrian economics deal with the markets, trends and behavior. Austrian economics support free markets, but it is not the model for a free market. I can not stress that enough, it is NOT a model of economics. Right now, modern Austrian economics have been absolutely accurate with all of it's predictions to how markets react and how to effect changes when needed. The neo-keynsean saltwater model does not know how to predict or determine the movement in a market, only how to get the supply moving temporarily. Despite the sentiment to get rid of a central bank, both systems do not require or desire a central bank, however a central bank provides a solution for a stale economy where no funds are available to stimulate a movement. Heck, if you knew the real, in depth, positions of some of the better credited freshwater economic schools, you would know that central banks are neither good or bad. It is a non-competitive central bank that yields too much control and manipulates the market negatively with artificial movements.
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Old 12-20-2011, 10:01 PM
 
Location: Chicago
865 posts, read 572,547 times
Reputation: 270
Quote:
Originally Posted by Randomstudent View Post
Furthermore I don't even know what the "Old Chicago School" is. I know there is a Chicago school, but that is from the 1970s and is a fairly recent reaction to Keynesian theory. I don't know how one could describe it as "old"
I wont get that far ahead. Walk before you run.
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Old 12-20-2011, 10:08 PM
 
Location: NC
10,005 posts, read 9,003,542 times
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Quote:
Originally Posted by MadeInAmerica View Post
Let me talk to your teacher, they have taught you poorly. Austrian economics deal with the markets, trends and behavior. Austrian economics support free markets, but it is not the model for a free market. I can not stress that enough, it is NOT a model of economics. Right now, modern Austrian economics have been absolutely accurate with all of it's predictions to how markets react and how to effect changes when needed. The neo-keynsean saltwater model does not know how to predict or determine the movement in a market, only how to get the supply moving temporarily. Despite the sentiment to get rid of a central bank, both systems do not require or desire a central bank, however a central bank provides a solution for a stale economy where no funds are available to stimulate a movement. Heck, if you knew the real, in depth, positions of some of the better credited freshwater economic schools, you would know that central banks are neither good or bad. It is a non-competitive central bank that yields too much control and manipulates the market negatively with artificial movements.
First off your 3rd sentence is a contradiction in terms. Purely free markets are a model just like a mixed system is a model, feudalism is a model, and the barter system is a model. Austrian Economics are absolutely built around a model of economics that centers on laissez faire principles to suggest otherwise seems to indicate you slept through the first week of economics 101 where they taught about the different historical economic models. Austrian economics also has not been accurate with all its predictions otherwise we would have had inflation rather then deflation in 2009 and inflation in previous years would have been much higher then the super low rates that exist today. Sure you can cherry pick, but as I said there is no economic model that is 100% correct.

As to Keynesianism as I said no system is 100% correct, but the Keynesian focus on demand and the wall seems to work pretty well at explaining how to mitigate the boom bust cycle. As to central banking Keynesianism absolutely relies on central banking as one of the two prongs for pump priming...monetary policy. The other being fiscal policy.

As to central banks by their nature they are non-competitive. There is no such thing as a competitive central bank, because if they were competitive they would just be called banks rather then central banks. This entire discussion is boarder line ridiculous.

Last edited by Randomstudent; 12-20-2011 at 10:19 PM..
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Old 12-20-2011, 10:10 PM
 
Location: NC
10,005 posts, read 9,003,542 times
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Quote:
Originally Posted by MadeInAmerica View Post
I wont get that far ahead. Walk before you run.
That is not an answer and my guess is you do not have one.
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Old 12-20-2011, 10:20 PM
 
Location: Chicago
865 posts, read 572,547 times
Reputation: 270
Quote:
Originally Posted by Randomstudent View Post
First off your 3rd sentence is a contradiction in terms. Purely free markets are am model just like a mixed system is a model, feudalism is a model, and the barter system is a model. Austrian Economics are absolute a model of economics that is build around laissez faire principles. to suggest otherwise seems to indicate you slept through the first week of economics 101 where they taught about the different historical economic models. Austrian economics also has not been accurate with its predictions otherwise we would have had inflation rather then deflation in 2009 and inflation in previous years would have been much higher then the super low rates that exist today. Sure you can cherry pick, but as I said there is no economic model that is 100% correct.

As to Keynesianism as I said no system is 100% correct, but the Keynesian focus on demand and the wall seems to work pretty well at explaining how to mitigate the boom bust cycle. As to central banking Keynesianism absolutely relies on central banking as one of the two prongs for pump priming...monetary policy and fiscal policy.

As to central banks by their nature they are non-competitive. There is no such thing as a non-competitive central bank, because if they were competitive they would just be called banks rather then central banks. This entire discussion is boarder line ridiculous.
An organic economy is not a model. It is ever changing, ever challenged. Heck, economies are ever changing and challenged. There is no way to deem a living system as a model. That is your fallacy argument. Thus why Keynseian economics fail, they can only be right, after a failure but never prevent a failure. Keynesian economics also destroy the organic marketplace in the sectors that it "stimulates" due to the aggregation going into the hands of the wealthy that do not need to supply as much as the poorest and middle class.

Also, a central bank can have a competitor within the market. You can have multiple central banks as well. There is no requirement for one central bank, unless you are advocating that we have a one-world bank? States can each have their own central bank, the treasury is it's own form of a central bank that manages the currency, the Federal Reserve is another form of a central bank. They are not simply banks, that is a total distortion.

Again, walk before you run. You probably believe all free market systems are the same and all controlled market systems are the same. At least, you lead me to believe such a measure by laissez-faire somehow being equal to Austrian economics. You are confusing concepts and methodology with advocacy and optimization.

Quote:
Originally Posted by Randomstudent View Post
That is not an answer and my guess is you do not have one.
Guess all that you want. That's all you have been doing thus far. The Old Chicago school is based on free market principles derived from some of Strauss, the more regarded Chicago school is more-so derived from Friedman's modern free market positions, which have been advanced upon greatly since his influence.
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Old 12-20-2011, 10:25 PM
 
Location: NC
10,005 posts, read 9,003,542 times
Reputation: 3073
Quote:
Originally Posted by MadeInAmerica View Post
An organic economy is not a model. It is ever changing, ever challenged. Heck, economies are ever changing and challenged. There is no way to deem a living system as a model. That is your fallacy argument.

Also, a central bank can have a competitor within the market. You can have multiple central banks as well. There is no requirement for one central bank, unless you are advocating that we have a one-world bank? States can each have their own central bank, the treasury is it's own form of a central bank that manages the currency, the Federal Reserve is another form of a central bank. They are not simply banks, that is a total distortion.

Again, walk before you run. You probably believe all free market systems are the same and all controlled market systems are the same. At least, you lead me to believe such a measure by laissez-faire somehow being equal to Austrian economics. You are confusing concepts and methodology with advocacy and optimization.
There is no such think as an organic economy that is a myth. If anything the only thing that can be called an organic economy is the clan structure and possibly feudalism, but that is a stretch. Do you think they had free markets back in the stone age, or when manoralism was in place? Of course not it was for all practical purposes an autarky. (Again I have the sneaking suspicion you missed that segment of economics 101 where they deal with historical economic models.) They only time you can have a free market is if there is a central government that allows for the requisite safety and infrustructure for trade and commerce between decent sized groups of people and that can hardly be called "organic."

As to central banks you can have multiple central banks, but they do not compete with each other, the Fed, the People's Bank of China, and the European Central bank are not in competition with each other or anyone else for that manner.
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Old 12-20-2011, 10:35 PM
 
Location: NC
10,005 posts, read 9,003,542 times
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Originally Posted by MadeInAmerica View Post

Guess all that you want. That's all you have been doing thus far. The Old Chicago school is based on free market principles derived from some of Strauss, the more regarded Chicago school is more-so derived from Friedman's modern free market positions, which have been advanced upon greatly since his influence.
Leo Strauss the Classicist? That is hardly an economic school.
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