patrick.net

Required reading for all of you Keynesians

indigenous says

In a nut shell Keynesians believe government can and should control the economy.

lol-I love it when posters completely bastardize Keynes. Perhaps you wouldn't be so dismissive if you actually understand his theories

tatupu70 says

indigenous says

In a nut shell Keynesians believe government can and should control the economy.

lol-I love it when posters completely bastardize Keynes. Perhaps you wouldn't be so dismissive if you actually understand his theories

I'm sure you understand the nuisances better than I.

Just look at the results that is all anyone needs to know.

indigenous says

I'm sure you understand the nuisances better than I.

Just look at the results that is all anyone needs to know.

Good idea--please share how you view the results. What problems do you attribute to Keynesian economics? Specifically--which actions, which laws, etc.

tatupu70 says

Good idea--please share how you view the results. What problems do you attribute to Keynesian economics? Specifically--which actions, which laws, etc.

You first

indigenous says

You first

I'm not the one who said the results is all anyone needs to know. Please elaborate on that statement. To which results do you refer?

Lets go with everything to the right of the graph is Keynesian and everything to the left is Free Market

One hundred years after its creation, consumer prices are about 30 times higher than what they were in 1913.

http://www.businessinsider.com/chart-inflation-since-1775-2013-1

Average per capita income was around $7k in 1933 Per capita income is around 43k in 2012 by the above it should be around 210k

http://www.demographia.com/db-pc1929.pdf

1933 was when FDR confiscated the gold

indigenous says

Just look at the results that is all anyone needs to know.

The results of what? No one has implemented Keynes theories. They only implemented the part where government spends. Perhaps you should actually read and understand Keynes before you comment.

indigenous says

One hundred years after its creation, consumer prices are about 30 times higher than what they were in 1913.

And the wages are how much higher?

bob2356 says

The results of what? No one has implemented Keynes theories. They only implemented the part where government spends. Perhaps you should actually read and understand Keynes before you comment.

That is a fair and unfair argument at the same time. When you have a "theory" where you start with money printing, then - if you have any hands-on experience of how things work in practice - you would immediately realize that the rest of the theory will never be implemented. Drop a helicopter full of money onto NYC but tell the people they have to equally share it and "pay it back" eventually and see how far they will listen. Same goes for controlled money printing and special interests. Hence that "theory" is worthless in practice.

bob2356 says

The results of what? No one has implemented Keynes theories. They only implemented the part where government spends. Perhaps you should actually read and understand Keynes before you comment.

I understand plenty. Actions are what I look at, the hell with the theory.

Besides it must be hard to get one's head that far up his ass.

Statue of John Maynard Keynes

indigenous says

Actions are what I look at, the hell with the theory.

Well then why the hell would you call it Keynesian if you know it's not? Call it politicians spending too much on defense because that's what it is.

mell says

When you have a "theory" where you start with money printing, then

If that was the start of his theory, you might have a point.

tatupu70 says

Well then why the hell would you call it Keynesian if you know it's not? Call it politicians spending too much on defense because that's what it is.

That is non sequitur WW 2 was about 10 year after Keynes started his perversion of the U.S.

Keynes argued against a return to the gold standard after the war.

How come I can't see David's comment here?

tatupu70 says

Well then why the hell would you call it Keynesian if you know it's not? Call it politicians spending too much on defense because that's what it is.

Because Keynesianism provides the intellectual cover for the politicians doing the looting in western democracies, just like Marxism provided the intellectual cover for the politicians doing the looting in the former eastern bloc countries in the 20th century. Before that, before even the western enlightened societies emerged, it was the Divine Right of King theory that provided the intellectual cover for the looting.

See, while wealth and power is never equally distributed in any society just like people are born with different degrees of beauty and talent . . . the systemic use of force to loot the vast cross section of the society by a tiny minority of elite always requires an intellectual fog cover (lest there be immediate revolt). Keynsianism provides that cover and mind fog to keep the masses down.

Reality says

See, while wealth and power is never equally distributed in any society just like people are born with different degrees of beauty and talent . . . the systemic use of force to loot the vast cross section of the society by a tiny minority of elite always requires an intellectual fog cover (lest there be immediate revolt). Keynsianism provides that cover and mind fog to keep the masses down.

Yep. Well said.

mell says

Reality says

See, while wealth and power is never equally distributed in any society just like people are born with different degrees of beauty and talent . . . the systemic use of force to loot the vast cross section of the society by a tiny minority of elite always requires an intellectual fog cover (lest there be immediate revolt). Keynsianism provides that cover and mind fog to keep the masses down.

Yep. Well said.

Ditto the Yep

Reality says

Because Keynesianism provides the intellectual cover for the politicians doing
the looting in western democracies,

What in the world are you talking about? Keynes definitely didn't advocate spending 50% of the budget on defense. And which politicians are actually claiming that Keynes is guiding their decisions anyway?

Reality says

See, while wealth and power is never equally distributed in any society just
like people are born with different degrees of beauty and talent . . . the
systemic use of force to loot the vast cross section of the society by a tiny
minority of elite always requires an intellectual fog cover (lest there be
immediate revolt). Keynsianism provides that cover and mind fog to keep the
masses down.

Of course wealth isn't equally distributed, but you must understand that the tendency is for it to become more unequal over time unless there is intervention to redistribute the wealth. That's what government's role should be.

But I still don't know what you are talking about regarding the cover or mind fog--that's just a BS talking point.

tatupu70 says

What in the world are you talking about? Keynes definitely didn't advocate spending 50% of the budget on defense.

Keynes advocated the theory that government spending on anything and everything has equal stimulative effect on the economy. When such a policy perspective is adopted, the natural result is out-sized military spending: simply because government waste on military spending is not as obvious as government waste on everyday goods and services that the consumers/voters are familiar with.

And which politicians are actually claiming that Keynes is guiding their decisions anyway?

Every single politician who has advocated government spending as a "stimulus" to the economy. That's the essence of Keynesian prescription.

tatupu70 says

Of course wealth isn't equally distributed, but you must understand that the tendency is for it to become more unequal over time unless there is intervention to redistribute the wealth. That's what government's role should be.

You have it exactly backwards! A free market place where individuals make economic decisions for him/herself tend to enable rapid capital obsolescence and replacement by new forms of capital favored by the individual consumers. Government intervention tend to entrench existing big players. Personal computers would not have emerged if the government had been in control of the computer industry . . . and indeed both Japan and Soviet Union spent almost all their computer engineering talent on mainframes. Bureaucrats tend to think along the lines "nobody gets fired for buying IBM." Government is a monopoly entrenching force. That's why the big family names of the late 19th and early 20th century turned to politics and central banking, in order to preserve their status.

tatupu70 says

But I still don't know what you are talking about regarding the cover or mind fog--that's just a BS talking point.

Keynesianism is pseudo-religious myth that serves to keep down the exploited masses. The primary beneficiaries of Keynesian redistribution schemes (government spending and borrowing) are the well connected cronies who get the money first, at the expense of the masses who get the newly printed money later.

Mell, Reality and Vaticanus oh Hell yes , you guys are a breath of fresh air.

Reality says

A free market place where individuals make economic decisions for him/herself tend to enable rapid capital obsolescence and replacement by new forms of capital favored by the individual consumers.

That sounds brilliant and all. It sounded brilliant in 1776 when Adam Smith first said it.

Now please give an example. Or some mathematical theory behind it.

Its a funny thing when Carnegie's legacy still sit in boardrooms across the nation, and still hold seats in Congress. Considering steel and the railroad were both nearly obsolete by his death in 1919, and Keynes "General Theory" wasn't published until 17 years later.

I see a great deal of garbage written on this thread, but this one - takes the cake:

Reality says

Because Keynesianism provides the intellectual cover for the politicians doing the looting in western democracies, just like Marxism provided the intellectual cover for the politicians doing the looting in the former eastern bloc countries in the 20th century. Before that, before even the western enlightened societies emerged, it was the Divine Right of King theory that provided the intellectual cover for the looting.

C'mon - attributing all of the ills of the US economy to Keynes is doing precisely what you accuse "politicians" of doing under the cover of Keynesianism. You know as well as I that US policy hardly follows Keynes - I see an alignment of the Federal Reserve and Keynes, as if the Federal Reserve was established because of Keynes suggestion - meanwhile the Federal Reserve was created 20 years before Keynes' "General Theory."

It is widely accepted that US policy strayed greatly from Keynes in the 1970s and we are all aware of the supply-side revolution in the 1980s. The only government actions since the mid-1980s that could be attributed to "Keynesianism" are within the past 5 years since the meltdown of Lehman and Bear.

Don't lay the meltdown at the feet of Keynes. We had the lowest taxes and lowest government spending (as a % of GDP) since the 1920s in the 25 years prior to the meltdown. The Federal Reserve was consistently contracting the money supply through the mid-2000s.

So lets talk specifics. I am unafraid of math so lets get into the numbers. I know whose side the numbers are on, however. And so do you - so then we will get into the 1.) The government is lying and all government numbers are lies 2.) All members of government are secretly conspiring with rich capitalists - the "crony" argument. and most importantly 3.) Everyone involved is keeping their mouth shut about it.

david1 says

1.) The government is lying and all government numbers are lies 2.) All members of government are secretly conspiring with rich capitalists - the "crony" argument. and most importantly 3.) Everyone involved is keeping their mouth shut about it.

1) They are not flat out lies, but doctored.
2) Why yes, if your career and your family's future depends on it - not everybody was born to rage against the machine,
3) No, why? They are doing it openly, no need to deny involvement as there are no consequences. They might not shout from the rooftops, but I'd say it's pretty open.

mell says

3) No, why? They are doing it openly, no need to deny involvement as there are no consequences. They might not shout from the rooftops, but I'd say it's pretty open.

Should be pretty easy enough to make your case then. Please proceed.

david1 says

mell says

3) No, why? They are doing it openly, no need to deny involvement as there are no consequences. They might not shout from the rooftops, but I'd say it's pretty open.

Should be pretty easy enough to make your case then. Please proceed.

http://market-ticker.org/akcs-www?post=220451

david1 says

Reality says

A free market place where individuals make economic decisions for him/herself tend to enable rapid capital obsolescence and replacement by new forms of capital favored by the individual consumers.

That sounds brilliant and all. It sounded brilliant in 1776 when Adam Smith first said it.

Now please give an example. Or some mathematical theory behind it.

Its a funny thing when Carnegie's legacy still sit in boardrooms across the nation, and still hold seats in Congress. Considering steel and the railroad were both nearly obsolete by his death in 1919, and Keynes "General Theory" wasn't published until 17 years late

The investor looking out for his interests decides what investment to make. Investment capital goes where it is treated the best. As does the borrower. david1 says

Its a funny thing when Carnegie's legacy still sit in boardrooms across the nation, and still hold seats in Congress. Considering steel and the railroad were both nearly obsolete by his death in 1919, and Keynes "General Theory" wasn't published until 17 years later.

Railroads are obsolete? No they are not and neither is steel. You are waxing esoteric regarding the board rooms so I don't know what you are talking about.

david1 says

It is widely accepted that US policy strayed greatly from Keynes in the 1970s and we are all aware of the supply-side revolution in the 1980s.

You mean as with the dollar going off of the gold standard? Yup
Which is the beginning of the hockey stick graph for debt.

david1 says

The Federal Reserve was consistently contracting the money supply through the mid-2000s.

Say what?

It is called co-opting and it is done tacitly, for sure it is a lie.

The main deal is about the gold standard. I don't care what cockamamie bullshit anyone comes up with as long as we don't have to pay for it.

Look at this graph again the trouble started in 2 places 1933 and 1971 and the graph indicates it.

Because at this point the buying power of Americans went down.
That is the main point which the Keynesians have gone silent on.

I'm not sure why "crony capitalism" is considered an unnatural outcome.

Seems to me the endgame of capitalism, is what you'd call "crony capitalism". Every corporation for itself, and the devil take the hindmost. Whether the hirelings who help enforce their dominance are Pinkertons or government agencies hardly matters.

The US was strong economically when we had a diversity of Manufacturing and R&D. Now the US has cut R&D while Asia and Europe has increased R&D and the results are as one would expect.

Really Lobbying has been the moral loss mechanism. Whether Clinton and the CRA, Unions and their chosen candidate, or Gramm an the repeal of Glass Stegall, lobbying buys representatives.

Lobby has short circuited the role of checks and balances, and this was an excellent idea that should be reinstated.

Vicente says

I'm not sure why "crony capitalism" is considered an unnatural outcome.

Seems to me the endgame of capitalism, is what you'd call "crony capitalism". Every corporation for itself, and the devil take the hindmost. Whether the hirelings who help enforce their dominance are Pinkertons or government agencies hardly matters.

The unnatural occurrence is when capitalists form an incestuous relationship with government

Reality says

Because Keynesianism provides the intellectual cover for the politicians doing the looting in western democracies, just like Marxism provided the intellectual cover for the politicians doing the looting in the former eastern bloc countries in the 20th century.

So wrong it isn't even right. If politicians were doing the looting why aren't they ultra-rich? With the exception of Dick Cheney 99.99999999999% of government employees don't have enough wealth to be admitted to a really good country club.

Where's the loot? Oh right, we don't want to talk about that. You'd have to accept the idea of the thieves being brilliant, but neglectfully leaving the bag of money in the cab or something. Otherwise you might have to admit your fingers point in the wrong direction.

Entitlemented says

The US was strong economically when we had a diversity of Manufacturing and R&D. Now the US has cut R&D while Asia and Europe has increased R&D and the results are as one would expect.

Really Lobbying has been the moral loss mechanism. Whether Clinton and the CRA, Unions and their chosen candidate, or Gramm an the repeal of Glass Stegall, lobbying buys representatives.

Lobby has short circuited the role of checks and balances, and this was an excellent idea that should be reinstated.

The problem is the cost of the government.

I think if enough people were educated on the value of the gold standard that would fix almost all of it.

indigenous says

indigenous says

The unnatural occurrence is when capitalists form an incestuous relationship with government

Like was the norm in the 19th century until Teddy Roosevelt. The gold standard made it extremely easy for capitalists to control the money supply.

If anything accomplishes this it is the Keynesian s. Read the article that start this thread.

indigenous says

The unnatural occurrence is when capitalists form an incestuous relationship with government

You leave unclear what is unnatural about that. Capitalists would say it's good business to own politicians. They have no compunction about sending out Senator Disney to do their bidding. I believe you are confused about who is the boss and who is the hired gun. Wait, not confused, deliberately disingenuous.

Vicente says

indigenous says

The unnatural occurrence is when capitalists form an incestuous relationship with government

You leave unclear what is unnatural about that. Capitalists would say it's good business to own politicians. They have no compunction about sending out Senator Disney to do their bidding. I believe you are confused about who is the boss and who is the hired gun. Wait, not confused, deliberately disingenuous.

What is unnatural is American being enslaved by the U.S. government

indigenous says

What is unnatural is American being enslaved by the U.S. government

Enslaved?

Wait, this argument style is very familiar.

You've been here before under about a dozen identities haven't you?

Vicente says

indigenous says

What is unnatural is American being enslaved by the U.S. government

Enslaved?

Wait, this argument style is very familiar.

You've been here before under about a dozen identities haven't you?

No doubt some one who knows what he is talking about would sound very similar to me.

But it were not me.

Enslaved, YOU BET

indigenous says

Enslaved, YOU BET

Indigenous hoodwinked by his corporate masters, YOU BET!

You'll never engage in meaningful dialog will you?

Plonk!

Reality says

Keynes advocated the theory that government spending on anything and
everything has equal stimulative effect on the economy. When such a policy
perspective is adopted, the natural result is out-sized military spending:
simply because government waste on military spending is not as obvious as
government waste on everyday goods and services that the consumers/voters are
familiar with.

You are partially correct. He also advocated that such spending should be used during down periods to stimulate the economy. During good times, he advocated reduced spending. The bottom line is the current military spending does not follow Keynesian theories.

Reality says

Every single politician who has advocated government spending as a "stimulus"
to the economy. That's the essence of Keynesian prescription.

Very good. I was looking for some examples. I'm assuming it must happen a lot since politicians are using Keynes for cover... Like David said, other than recently, when else have politicians called for it?

Reality says

You have it exactly backwards! A free market place where individuals make
economic decisions for him/herself tend to enable rapid capital obsolescence and
replacement by new forms of capital favored by the individual consumers.

No, I really don't. History is pretty clear on this front. Just look at the measures of wealth disparity--absent government intervention, wealth will tend to accumulate at the top. Not sure why you are talking about government getting into computers--I'm certainly not arguing for government owned businesses.

Reality says

Keynesianism is pseudo-religious myth that serves to keep down the exploited
masses. The primary beneficiaries of Keynesian redistribution schemes
(government spending and borrowing) are the well connected cronies who get the
money first, at the expense of the masses who get the newly printed money
later.

Pseudo-religious myth?? WTF are you talking about. Like others have said--you are confusing Keynes with monetarists.

mell says

http://market-ticker.org/akcs-www?post=220451

So the author of this article is claiming purchasing power has been eroded by the increase in the ratio of average non-supervisory earnings to total systemic debt.

That is, average n-s earnings have fallen about 3x relative to total systemic debt. Isn't he forgetting about what the debt is used for? To actually purchase things? How can you add debt to the "denominator" and leave it out of the "numerator?" when talking about earnings power? Debt is used to buy things...

Earnings power has been enhanced by the addition of credit. He says himself the S&P 500 has increased MORE than total systemic debt. This implies a positive feedback loop, does it not? (.inx 1385 vs. ~1600)

If you borrow $1 to buy something, then it increases in value, can you then not sell it and pay back the borrowed dollar to make profit?

indigenous says

Say what?

It is called co-opting and it is done tacitly, for sure it is a lie.

First, let me say you are correct here. I mispoke - only recalled the Fed increasing the Fed Funds rate in that time period and made a poor assumption. I should have verified before speaking.

indigenous says

Railroads are obsolete? No they are not and neither is steel. You are waxing
esoteric regarding the board rooms so I don't know what you are talking
about.

So you are telling me rail transport for both travel and freight are anywhere near the peak in this country? Also, you are saying that US steel production, which was roughly 1/3 to 1/2 of total world production at pre-1940, and is now roughly 5% of world production, is not obsolete in the manner in which Reality used the word? Rail and steel was obviously a significantly higher percentage of US economic output in Carnegie's time than it is today.