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October 04, 2008 – Comments (4)

When I look at what's been happening, maybe it is good that I didn't take that many economic courses because some of the stuff I read I can't fathom how people come to those conclusions, except of course through what they are taught in business and economic courses. 

Having been very young and impressionable when I worked in banking when Vancouver had a massive down turn, well, my life experience has simply told me that the school of thought that supports all this rubbish that debt is, well, the foundation of the economy is not just rubbish, it is nuclear toxic waste.

In the short term this nonsense looks true, but in the end Austrian economic prevails and from what I understand it isn't the model that is being used for how to evaluate what's happening.  I don't know a lot about either, but the Austrian model makes sense over the true long term to me.

4 Comments – Post Your Own

#1) On October 04, 2008 at 11:13 AM, TMFLomax (48.36) wrote:

I've been looking into my nagging suspicion that a heck of a lot of what has been going on -- and is still going on -- is actually Keynesian thought/policy, but conveniently packaged as "free market" (i.e., let that theory take the blame for all the problems). I've seen that Keynesian "in the long run we're all dead" quote get trotted out a lot.

I'm still working on my thesis though. ;) I've never taken an economics course, just try to read and question things, and I've definitely read more about the Austrian model (but also acknowledge my reading has giant gaps) and while I think knowing a little about some things is better than knowing nothing about anything, I also recognize that there's that saying about how a little knowledge can be dangerous. But, from what little I know of Keynes, it's all starting to point in that direction.  

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#2) On October 04, 2008 at 10:54 PM, dwot (43.46) wrote:

I don't think it is Kenynesian at all because you are supposed to pay off debt in the good times and this administration tripled debt...

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#3) On October 05, 2008 at 4:08 AM, kaskoosek (59.72) wrote:

The 1930s depression was blamed on the hike in interest rates.

Basically the government in order to curb another speculative bubble from happening underwent this strategy. 

That is why the US now has some sort of a fetish with interest rates. Playing with it like it some kind of lever and or toy.

In my opinion the economy does not work like that, because we are at risk of shocks which can destabilize the economy.

 

 

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#4) On October 05, 2008 at 6:56 PM, TMFLomax (48.36) wrote:

Fair enough. I did see that Keynes advocated government deficit spending during downturns (and apparently thought you could avoid recession through government intervention, although I know there's the argument that the Fed Reserve's tinkering causes boom and bust cycles anyway) but yeah, I'm not exactly sure what school of thought, if any, believes in deficit spending through good times and bad, which has apparently happened.

Of course, I don't feel good about the "good times" following the last recession (which I've long said was a softer landing due to the housing bubble/easy credit debt orgy). I'd argue that economic "growth" was artificial. Speaking of deficit spending, nearly our whole society was deficit spending. I don't see how you don't pay the piper one way or another eventually for heaven's sake, but it currently seems that the powers that be are trying to figure out a way to keep the party rolling. (My opinion: good luck with that, we're already all way over leveraged.)

Anyway, I'll put Keynes on my reading list so I don't go off half cocked again on other people's blogs. ;) I'm currently reading Hayek though, so Keynes will have to wait...  

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