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Like I said, Keynesian Macro Econ 101 is seriously bad brain washing. It takes a while to de-program. It took me more than three years to undo the damage Macro Econ 101 did to me.
1. Inflation is a monetary phenomenon. Money/credit creation inflates money supply; price increase (in some sectors of the economy) is only the consequence of inflation. So praising "not printing money beyond that demanded by the rate of inflation" is very muddled thinking: demand for more paper money to pay for the same goods is not demand for the money but a sign of market rejection of that money; even in hyperinflating Weimar and Zimbabwe, the physical printing of money was still behind the rate at which the market was rejecting the same paper money; hence the need for wheel barrels of money to buy a loaf of bread. Keynesian idea about "money demanded by the rate of inflation" is quite non-sensical.
2. In the context of economic discussion, "printing money" means fiat money/credit creation through government command, not the physical making of paper money. Do not conflate the two concepts. The physical making of paper money is referred to as "minting," which is not all that relevant when >99% of the money/credit in circulation is not paper "cash," but credit/debit entries and checks of various kinds.
3. "In the Keynesian case, printing money is used to address the increased demand for money associated with the outward shift in the curve (due to the expansionary fiscal policy)." Let's try a translation of that sentence: "expansionary fiscal policy" means deficit spending. How exactly can a government spend beyond its means? By borrowing (which does not require Keynesianism) and by creating money out of thin air after running out of willing private lenders (that fiat money creation does require Keynesianism to justify). As the money supply increases, the demand / price for money actually declines vis real goods and services . . . hence the price increase, and the "outward shift in the curve."
4. "when the cycle swings back . . ." Like that will ever happen. It's like the old joke prayer: "Oh Lord, make me chaste -- but not yet!" Keynesian talks of "cycle" of unspecified length is essentially an excuse for passing the buck, and sticking the bill to the next generation, who obviously then pass onto the next next after adding the cost of their own indulgences.
5. "the importance of the cyclically balanced fiscal policy as the modern consequence of Keynes" Where is this alleged balanced fiscal policy anywhere in the 70+ years of US experiment with Keynesianism? Other countries' currencies under strict peg or dirty-peg to the US dollar do not have full Keynesian "freedom of action"; they give up their "monetary policy freedom" by those pegs.
6. You are quite correct in recognizing South American countries of years gone-by with their massive money/credit expansion (aka "printing money"); they were often advised by Keynesian advisors. Even the US came quite close to that after Nixon announced "now we are all Keynesians." Thank goodness some "pre-Keynesian dinosaur" like Paul Volcker still remembered what life was like before Keynesian take-over of government sponsored economics departments, and had some idea about how the real economy works. Now we have the post-WWII generation of Keynesians in charge, who have never witnessed first-hand what life was like prior to the Keynesian take-over in the 1930's. I'm not at all convinced that we can avoid the fate of those South American countries of years gone-by: just look at that nonsense talk about "printing enough money to meet the demand of inflation"; that's literally the positive-feedback amplifier modus operandi for Weimar and Zimbabwe.
7. If you are really fond of idea of government monopolistic intervention being necessary to counter economic cycles and smooth out economic growth, then why don't you apply the same central-planning idea to food production? After all, having a steady level of food production instead of price and output fluctuations is of even more immediate and fundamental benefit to the population. Yet, every single country in human history that ever tried centralized planned production and distriubtion of food has led to mass starvation. Why? Because the central planners are incapable of discerning minute changes on the ground that can have "butterfly effect" until it's way too late; and whatever decision it makes, it is delayed by the bureaucracy in implementation and front-run by the private "profiteers." The result of central planning is not order but chaos.
8. On top of the economic chaos that it inevitably creates, Keynesianism conveys an even greater danger to humanity: its aggregation approach paves the road for war and totalitarianism. Keynes himself admitted that his policy recommendations are more feasible in a totalitarian regime than in a Western Democracy (in the preface to the German edition of his "General Theory," when you-know-who was in power in Germany). Keynesian GDP counts all the war making as GDP. After students have Keynesian aggregation drilled into their heads, it's only an easy step to consider all "resources" as aggregate supply and all human beings as aggregate demand . . . hence manifest itself as Malthusian war rhetoric. A detailed non-Keynesian approach would easily show that it's all nonsense: one person's input needs is another person's output products in a modern sophisticated economy; there is no real economic phenomenon corresponding to "aggregate demand" or "aggregate supply" or even "GDP" for that matter. (e.g. why is an industrial accident or sabotage resulting in an explosion a minus to GDP, whereas two countries blowing each other's factories to bits a plus to GDP to both countries?). Keynesian aggregation is essentially a very feudalistic agrarian approach to economy: assuming all peons essentially doing the same thing and the economic structure doesn't change, an endless replication of one known method of farming all the way to the horizon. In a world like that, war over "living space" would indeed be constant, instead of our much more pleasant world where division of labor through mutually willing exchanges make co-existence and prosperity possible.
posted by 76.118.39...
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