[Youtube] Austrian vs. Keynesian Economists

[ababba]

Maybe I don't, maybe I do. It is difficult to determine exactly how laissez-faire free-market capitalism works because there is always somebody screwing with it wanting to control others and steal their production without working for it while claiming a higher road. This regulation problem is as old as time itself.

Nonetheless, it is my best guess that "deflation and surprise deflation" are virtual non existent terms in truly free markets just like "zero nominal lower bound." Otherwise known as bullshit.

Think about it in terms of the laissez-faire free-market of ideas - The Internet.

When you go onto someone's website and they tell you something that isn't true, do you keep going back? I don't. When you get good information from someone's website, or simply enjoy the website, "get value", do you keep going back? I do.

It's the free market in action. It's the way life's interactions are supposed to be from natural laws.

The economy can work exactly the same way. Get government clear out of the money printing business and let people interact in whatever way they choose.

So, No. Unless you can demonstrate differently, the best I can surmise is that "zero nominal lower bound" makes no sense in a laissez-faire free-market capitalism economy.

Austrians analyze value - Keynesians analyze bullshit. In laissez-faire free-market capitalism Keynesianism central planning controls over people's lives - dies a wonderful death.

Just assume the problem away. Is that really your solution? You are guessing?

 

[Travlyr]

Just assume the problem away. Is that really your solution? You are guessing?

No not at all. I surmised. Again word definitions are important. Definition of SURMISE : a thought or idea based on scanty evidence

Where is the evidence? I challenged you to demonstrate how "zero nominal lower bound" would have any effect whatsoever in laissez-faire free-market capitalism.

Here is your chance! Can you show this?

 

[ababba]

No not at all. I surmised. Again word definitions are important. Definition of SURMISE : a thought or idea based on scanty evidence

Where is the evidence? I challenged you to demonstrate how "zero nominal lower bound" would have any effect whatsoever in laissez-faire free-market capitalism.

Here is your chance! Can you show this?

I already did, if there is expected deflation, the real interest is bounded below by the rate of expected deflation. This can reduce investment below the optimal level. Thats what I've been saying the whole time.

 

[Travlyr]

I already did, if there is expected deflation, the real interest is bounded below by the rate of expected deflation. This can reduce investment below the optimal level. Thats what I've been saying the whole time.

Explain how deflation is possible? Sinking ship with tons of gold? How is deflation possible in an asset based monetary system?

Additionally, interest from whom to whom? There is no central bank.

Optimal level of investment would be decided by market producers.

 

[ababba]

Explain how deflation is possible? Sinking ship with tons of gold? How is deflation possible in an asset based monetary system?

Additionally, interest from whom to whom? There is no central bank.

Optimal level of investment would be decided by market producers.

Next year gold is expected to buy 5% more goods than it does today. How can the real interest rate be less than 5%?

 

[Travlyr]

Next year gold is expected to buy 5% more goods than it does today. How can the real interest rate be less than 5%?

That is more Keynesian bullshit. Anybody can expect/predict whatever they want it is meaningless to the laissez-faire free-market.

In a laissez-faire free-market capitalist economy using commodity money, farmer Joe/manufacturer Sally/industrialist J.P. would negotiate with his/her bank for a loan and the interest rate would be determined between the borrower and the lender. It could be variable if they agreed to it.

There is no such thing as a "real interest rate" because interest rates are determined by competition in the market... not some Ben Schmoe.

Now, next year's gold price would be important to farmer Joe/manufacturer Sally and industrialist J.P. but that is their business and is meaningless to the market in general.

 

[Travlyr]

It would be helpful if you would answer these questions:

Explain how deflation is possible. Sinking ship with tons of gold? How is deflation possible in an asset based monetary system?

Interest from whom to whom?

 

[ababba]

It would be helpful if you would answer these questions:

Explain how deflation is possible. Sinking ship with tons of gold? How is deflation possible in an asset based monetary system?

Interest from whom to whom?

A real interest rate is paid to compensate someone for capital in terms of goods. Price deflation is the relevant consideration. We have had many years of price deflation under the gold standard.

The value of gold relative to other goods can fluctuate around all the time. How is that impossible?

 

[ababba]

That is more Keynesian bullshit. Anybody can expect/predict whatever they want it is meaningless to the laissez-faire free-market.

In a laissez-faire free-market capitalist economy using commodity money, farmer Joe/manufacturer Sally/industrialist J.P. would negotiate with his/her bank for a loan and the interest rate would be determined between the borrower and the lender. It could be variable if they agreed to it.

There is no such thing as a "real interest rate" because interest rates are determined by competition in the market... not some Ben Schmoe.

Now, next year's gold price would be important to farmer Joe/manufacturer Sally and industrialist J.P. but that is their business and is meaningless to the market in general.

So then if there are multiple interest rates, the real interest rate on any given project is bounded below by the rate of deflation.

 

[ababba]

That is more Keynesian bullshit. .

Stop using this phrase to refer to anything about economics you don't understand. We aren't even talking about Keynesian economics here. This is just classical economics.

 

[Travlyr]

Stop using this phrase to refer to anything about economics you don't understand. We aren't even talking about Keynesian economics here. This is just classical economics.

It's not that I don't understand. Austrians are real world economists vs. Keynesians are fake world economists. Commodities are real. Fiat is not real it is "something" out-of-nothing.

• Keynes economic philosophy describes fiat monetary policy - Forcibly controlled manipulated markets.
• Austrian economic philosophy describes sound monetary policy - Free markets.

Laissez-faire free-market capitalism is sound monetary economics. Keynesianism is totally irrelevant. None, absolutely none, of your Keynesian education has any value in laissez-faire free-market capitalism. The projections, the supply/demand, interest rates, inflation/deflation everything is determined by market exchanges between producers and consumers. None of it is controlled by central planners.

 

[Travlyr]

I'm not really following, I think the Fed prints a lot of money through open market operations. The benefit here goes to the government. How does the money go to Ben's friends first at all?

I don't know, maybe like this...

"Wink" - "Wink" - "Nudge" - "Nudge"​

YouTube - MSNBC w/ Cenk: Matt Taibi - Magic Money Printing Machine at The Fed

 

[ababba]

[*]Keynes economic philosophy describes fiat monetary policy - Forcibly controlled manipulated markets.
.

NO. Keynesian economic philosophy is a model which describes the fact that prices are not perfectly flexible. This implies monetary policy has an effect on output in the short run.

Again, the label "Keynesian" is to you everything that is bad about the world. My label Keynesian is someone that believes prices are not perfectly flexible because thats what Keynesians actually are.

 

[ababba]

I don't know, maybe like this...

"Wink" - "Wink" - "Nudge" - "Nudge"​

YouTube - MSNBC w/ Cenk: Matt Taibi - Magic Money Printing Machine at The Fed

This is only a transfer to the owners of the bonds if they buy them at above market prices. Even if that's true, the markup on the bonds over market prices is probably very small. Its like 98 cents of the printed money goes to the government and 2 cents to the bond owners through higher prices. Relative to other forms of taxation, this is a relatively efficient way to raise revenue for the government.

There is a greater deadweight loss from income taxation and especially taxation of capital.

 

[Travlyr]

Keynesian is someone that believes prices are not perfectly flexible.

Elaborate on this concept.

 

[Travlyr]

This is only a transfer to the owners of the bonds if they buy them at above market prices. Even if that's true, the markup on the bonds over market prices is probably very small. Its like 98 cents of the printed money goes to the government and 2 cents to the bond owners through higher prices.

2% eh? How do I go about getting a piece of that pie?

Relative to other forms of taxation, this is a relatively efficient way to raise revenue for the government.

Why would I want the government to have more revenue?

 

[Travlyr]

This is only a transfer to the owners of the bonds if they buy them at above market prices. Even if that's true, the markup on the bonds over market prices is probably very small. Its like 98 cents of the printed money goes to the government and 2 cents to the bond owners through higher prices. Relative to other forms of taxation, this is a relatively efficient way to raise revenue for the government.

There is a greater deadweight loss from income taxation and especially taxation of capital.

2% of $600 billion = $12 billion.

If ababba is correct and the Fed follows through on QE2, bond owners will gross $12 billion. Again, how do I get my slice of that pie? That would buy a nice home in The Hamptons.

 

[ababba]

Elaborate on this concept.

Money creation does not affect output if prices are perfectly flexible, that is if firms adjust their price immediately in response to the printing of money. Empirically, monetary policy does have some affect on output, so Keynesian economists model this as the result of "sticky prices".

Sticky prices do not mean the firm is behaving irrationally. The most common reason for sticky prices is called "menu costs", that is firms have a fixed cost they have to pay whenever they change their prices. There is another strand of the literature which argues that its not sticky prices but sticky information. A firm sees higher demand at the current price, and they don't know fully whether this is an idiosyncratic demand shock for their firm or an increase in the money supply. A surprisingly high increase in money creation implies that prices of firms don't go up as much as they would need to to make the money creation neutral. You can model the sticky information by appealing to the idea that firms have to pay a cost analyze the economy and readjust their prices.

 

[ababba]

2% of $600 billion = $12 billion.

If ababba is correct and the Fed follows through on QE2, bond owners will gross $12 billion. Again, how do I get my slice of that pie? That would buy a nice home in The Hamptons.

I think all the companies are publicly traded, you could buy a share.

 

[Tal]

NO. Keynesian economic philosophy is a model which describes the fact that prices are not perfectly flexible. This implies monetary policy has an effect on output in the short run.

Again, the label "Keynesian" is to you everything that is bad about the world. My label Keynesian is someone that believes prices are not perfectly flexible because thats what Keynesians actually are.

Who actually believes that markets instantly adjust their prices if someone prints money? that strikes me as something most people would agree with that it takes time for newly printed money to move through the price structure and change prices.

There is a bit more to Keynesianism than you say here also, the main point of it is the idea that government has the skill and information needed to correct and fix the economy when it experiences a slump by creating money and controlling investment patterns.