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Personal wishful thinking vs. Reality
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Posted by Reality (more from Reality) on Sun, 8 May 2011 12:36:19 Share Post by Email
In Reply to: semantics?, James, Sun, 8 May 2011 09:46:50
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Then tell me which modern Keynesian heavy weight is against fiat money power? Krugman? Samuelson? Stiglitz? Bernanke? Anyone? Which of them is for sound money? Not a single one! The essence of Keynesianism is printing money.

All the talks about having wisemen engaging in timely counter-cyclical intervention is nonsense, because if such a bunch of wisemen actually existed, they'd be able to pay their own bills without having to rely on fiat money power. Since every single Keynesian believes in fiat money power (i.e. printing money), they are really not expecting wisemen, just more government coercion to loot from the middle-class and give to the pretend-wisemen and their friends.

The premise of your writing is actually classic Keynesian fallacy. The real economic problem in a recession is not the recession itself but the bubble preceding it. The repricing of debts is the market participants'(people's) way of eliminating / writing down old mal-investments. Keynesian intervention only serves to slow down the repricing and perpetuate old mal-investments and make the economic conditions worse, as we are witnessing now.

For example, the problem with a housing bubble is not that houses as assets are worth too much but that people are paying too much to service mortgage loans. Rapid repricing would not make people homeless, but would allow a new owner to occupy the same house with smaller mortgage expense, and previous owner moving into a new comparable house at lower monthly payment cost. Keynesian schemes to prop up old bubble house prices only serve to keep people paying too much to have a roof over their heads. What's really happening is that the general population changed their valuation of housing in terms of loaves of bread! Whereas they may have considered a house worth 250,000 loaves of bread due to speculative benefit thanks to delayed-action consequence of previous Keynesian interventions, now they consider the same house as worth only 150,000 loaves. Keynesian proposals to keep housing price up would only serve to jack up bread prices! Some Keynsian proposals can be as silly as bulldozing houses to reduce housing supply, which would be literally making people homeless! That's the real face of Keynesianism, even today: ripping off the middle class and the poor to keep the old bad debts serviced in order to enrich the banking elite.

There is nothing wrong with balancing government budget in hard economic times if that balancing is through spending cuts. Raising taxes during hard times would of course exacerbate economic problems. Keynesian deficit spending is just another form of tax raising: through inflation. The result is almost exactly the same as raising taxes: the monopolistic sector gets bigger at the expense of the rest of the society.

The "Darwin" slur is silly. I presume the enlightened Canadian education system is still good enough to convey the idea that Darwinian processes are always at work because Darwinism is simply statistics applied to a large sampling size with feedback mechanism. Government intervention does not stop Darwinian process but turns what would be a relatively open and fair process in pursuit of consumer desires into medieval cut-throat competition for raw political/violent power. That's the natural result of displacing bottom-up individual choice with top-down government coercion. There is not a single Keynesian, from Keynes to all modern day advocates, who is not for the coercive fiat money power. Your very blase talks about "monetary policy manipulation" is in effect coercive, and has to be coercive to be relevant at all.

posted by 76.118.39...

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