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AceCrAAckers
AceCrAAckers
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November 21st, 2012 at 9:51:33 PM permalink
Quote: Mission146

With all due respect, nothing that you just said has anything at all to do with my argument.



The heart of Keynesian arguement is that the government must do "something" to stimulate, steer, guide the economy. Austrian economy says to leave the free market alone and things will take care of itself.

Like I said, I have not read your arguement but this Keynesian view.

Another thing to look at. http://www.youtube.com/watch?v=d0nERTFo-Sk&feature=relmfu

I owe Mission a reply to his question about savings.

A baker has his window broken. He spends money to get his window replaced. The window maker now has money and he now spends money to go out for a dinner. The restaurant owner now has money to go spend it at the theater. The theater owner now has money to go buy bread from the baker.

From the Keynesian point of view, the broken glass is a good thing because it stimulated the economy. Without the broken glass, no one would have had the extra money to do everything. This is ridiculous. What has happened is the town is poorer one window for the broken glass.

The world has finite resources but infinite fiat money. Savings represent future claims on goods and services. When Keynesians tells the government to spend money now, they are robbing the savers. The result is inflation.

As for the tomato farmers selling his product now rather than saving it because it will rot. Austrian economist will tell the farmer to grow only as much as he can use and he can sell. The free market will determine how much he should grow, not a plan policy or a quota by the government. The plan policy is the Keynesian view.
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bigfoot66
bigfoot66
Joined: Feb 5, 2010
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November 22nd, 2012 at 10:28:39 PM permalink
Quote: AceCrAAckers

The heart of Keynesian arguement is that the government must do "something" to stimulate, steer, guide the economy. Austrian economy says to leave the free market alone and things will take care of itself.

Like I said, I have not read your arguement but this Keynesian view.

Another thing to look at. http://www.youtube.com/watch?v=d0nERTFo-Sk&feature=relmfu

I owe Mission a reply to his question about savings.

A baker has his window broken. He spends money to get his window replaced. The window maker now has money and he now spends money to go out for a dinner. The restaurant owner now has money to go spend it at the theater. The theater owner now has money to go buy bread from the baker.

From the Keynesian point of view, the broken glass is a good thing because it stimulated the economy. Without the broken glass, no one would have had the extra money to do everything. This is ridiculous. What has happened is the town is poorer one window for the broken glass.

The world has finite resources but infinite fiat money. Savings represent future claims on goods and services. When Keynesians tells the government to spend money now, they are robbing the savers. The result is inflation.

As for the tomato farmers selling his product now rather than saving it because it will rot. Austrian economist will tell the farmer to grow only as much as he can use and he can sell. The free market will determine how much he should grow, not a plan policy or a quota by the government. The plan policy is the Keynesian view.



I appreciate the post, I almost linked to the Hayek rap myself but I did not think it was appropriate in the context of the debate. I addressed most of these arguments in my 2nd argument, I discussed Animal Spirits, the way that artifiicially low interest rates confuse the economy in terms of savings, etc. I also appreciate your reference to Bastiat's broken window. Do you listen to Econtalk, is that how you found the Hayek Rap?

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." F A Hayek
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Mission146
Mission146
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November 23rd, 2012 at 4:17:15 AM permalink
Bastiat's broken window is a strawman, the example makes the Keynesian position seem ridiculous on its face for ever, "Suggesting," that a broken window is a positive thing. Bastiat states in the parable himself, "It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another," but of course the Keynesian sees that and that is the point of the Keynesian position. It's not about whether or not the shopkeeper spends the money on a broken window, going out to dinner, going to the casino, or whatever he spends it on...the point is that he is spending the money, that's the good thing, not the broken window.
https://wizardofvegas.com/forum/off-topic/gripes/11182-pet-peeves/120/#post815219
AceCrAAckers
AceCrAAckers
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November 23rd, 2012 at 10:08:10 AM permalink
Quote: Mission146

the point is that he is spending the money, that's the good thing, not the broken window.



This is the fallacy of Keynesian view. Spending for spending sake will solve all problems. For the Keynesian, let the government create and give everyone a million dollars. Then everyone will be millionaire. These people will spend money and it will stimulate the economy. What is wrong with this?

Money only has value because it represent claim on labor and products. By artificially creating a stimulus, you are robbing the savers. You are also creating a bubble.
Money has to be backed by something. Although the dollar is fiat, it is backed by labor for most of us. We are converting labor into products and services. It must be productive, not like the broken window or spending on war or even on wages for most people in government.
Edward Snowden is not the criminal, the government is for violating the constitution!
bigfoot66
bigfoot66
Joined: Feb 5, 2010
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November 23rd, 2012 at 11:43:21 AM permalink
Quote: Mission146

Bastiat's broken window is a strawman, the example makes the Keynesian position seem ridiculous on its face for ever, "Suggesting," that a broken window is a positive thing. Bastiat states in the parable himself, "It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another," but of course the Keynesian sees that and that is the point of the Keynesian position. It's not about whether or not the shopkeeper spends the money on a broken window, going out to dinner, going to the casino, or whatever he spends it on...the point is that he is spending the money, that's the good thing, not the broken window.



I am glad that you believe this more sane version of the story, but every time some major disaster hits an area there are all kinds of economists and articles saying something like "It sure is a terrible disaster, but it may be a blessing in disgusie!" I just found this article by searing Yahoo news for "Sandy Economic Boost"

http://www.cnbc.com/id/49617715?__source=yahoonews&par=yahoonews

Quote: CNBC ARTICLE

The positive multiplier effect of reconstruction after Sandy could be as much as five times, according to Frank Holmes, CEO and CIO of money manager U.S. Global Investors. If the cost of the damages comes up to $20 billion, the economic boost in terms of spending and activity could be $100 billion, he said.

“America is great at rebounding and it will reinvigorate the economy. When you have committed infrastructure projects by governments, you get this automatic multiplying effect …every dollar is worth $4 to $6, so I think the positive part is going into 2013,” Holmes told CNBC Asia’s “Squawk Box” on Wednesday. “We’re going to get a lot of infrastructure spending.”

A boost from reconstruction spending in the months ahead would help the U.S. economy, where a recovery has been slow



This is the first article that I clicked on, and they are saying the exact narrative I laid out! $20 billion in storm damage will boost the economy by $100 billion. Again, you say that you do not believe this stuff, but the article is pretty clear that the storm has lead to a stronger economy in affected areas.
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bigfoot66
bigfoot66
Joined: Feb 5, 2010
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November 23rd, 2012 at 11:45:37 AM permalink
Quote: AceCrAAckers

This is the fallacy of Keynesian view. Spending for spending sake will solve all problems. For the Keynesian, let the government create and give everyone a million dollars. Then everyone will be millionaire. These people will spend money and it will stimulate the economy. What is wrong with this?



In fairness, they claim that, when the economy is at full output, stimulus spending is inflationary.
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bigfoot66
bigfoot66
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November 30th, 2012 at 6:17:06 PM permalink
Still working on a response here. I apologize that this is taking so long, but I spent about 12 hours on each of the first two posts and still wish I had done more editing.
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Buzzard
Buzzard
Joined: Oct 28, 2012
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November 30th, 2012 at 7:54:14 PM permalink
" This is the first article that I clicked on, and they are saying the exact narrative I laid out! $20 billion in storm damage will boost the economy by $100 billion. Again, you say that you do not believe this stuff, but the article is pretty clear that the storm has lead to a stronger economy in affected areas. "

Then Hatti's economy should be booming after their disasters. WTF !
Shed not for her the bitter tear Nor give the heart to vain regret Tis but the casket that lies here, The gem that filled it Sparkles yet
bigfoot66
bigfoot66
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December 7th, 2012 at 4:42:55 PM permalink
Sorry again for the delay here guys and thanks for your patience. I will be working on this over the next few nights after work and I hope to have my final post up no later than Tuesday.
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Scotty71
Scotty71
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December 15th, 2012 at 8:08:44 AM permalink
Big foot- are you US Senator or Rep... I only ask because you are taking your sweet ass time with this!
Just busting balls. Will you or Mission PM me when the next arguments start. I havent been logging in much and dont want to slack as a judge and keep anyone waiting. Hope you are just busy making grips of ca$h!
when man determined to destroy himself he picked the was of shall and finding only why smashed it into because." — E.E. Cummings

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