Re: Personal wishful thinking vs. Reality - Saab General Bulletin Board - Saabnet.com
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Re: Personal wishful thinking vs. Reality
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Posted by Reality (more from Reality) on Sun, 8 May 2011 20:18:38 Share Post by Email
In Reply to: Re: Personal wishful thinking vs. Reality, James, Sun, 8 May 2011 19:25:47
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How exactly would Keynesian fiscal policy be possible without renouncing sound money? It can't be done. It has never been done. Not a single Keynesian, from Keynes himself down to every single Keynesian today has ever advocated Keyneisan fiscal policy without Keynesian monetary policy (i.e. fiat money printing). They know quite well that it is not possible.

Debating people with blind faith in "correctly using Keynesian cyclical fiscal policy" is like debating apologists for the soviet system ("they were not real socialists/communists"), or explaining Heisenberg Uncertainty Principle to neophytes never heard of quantum physics. Government intervention in the market place changes the shape and duration of the cycles (the very purpose of the intervention), which in turn makes correct identification of the cycles impossible! It's called the "FED Uncertainty Principle." Private traders can front-run those slow-moving government committees much faster than the committees themselves . . . when the Keynesian fantasy is all about those committees front-running the private traders in identifying cycle peaks and bottoms! How is that even possible?! Governments of the world have tried counter-cyclical intervention for thousands of years. Every time where there is objective measure of return, the committees ran out of funds very quickly as they misidentified their timing; so they always had to resort to fiat money . . . and that always led to the cumbersome busybodies bringing down the whole economy with them.

I hope some do realize the term "stimulus" is a bit of an inside joke among early Keynesians: it's an analogy to a drug fix! We know what happens to the addict's body after repeated "stimulus." Cutting tax is not a stimulus. When a horse is sick, removing some of its burden is not at all a "stimulus." It's just removing burden. The idea that taking less money from you at gun point is the same as giving your neighbor more money is one of the pitifully counter-factual conclusions from Keynesian aggregation. In reality, who gets paid when/how-much/for-what-reason is of critical importance to purposeful human behavior. Human action is not Brownian Motion.

Raising taxes in boom times runs the same problem as deficit spending in lean times: how do you identify the peak and bottom? sufficiently ahead of time so as to give sufficient lead time for bureaucratic paper pushing? Like I said before, if such wizards existed in real life, their talent would be much better utilized if we just turn them loose and let them be private traders. Their own profit-driven trades to short sell at the peak and buy long at the bottom will generate far more timely counter-cyclical influence than decisions winding through government committees ever will. So once again, the reason for having a government coercive office carrying out Keynesian market intervention disappears. Would you also advocate a government committee to chew food for people before swallowing food for people? Just because chewing food before swallowing is a good idea, just because trading counter-cyclically is a good idea, doesn't mean there has to be government monopoly to do either, or that such a monopoly if ever established would be effective at all instead of making things worse.

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