Keynes or Hayek

[Bill Peckham]

http://www.youtube.com/watch?v=d0nERTFo-Sk

Discuss

I say 9/05 you're suppose to be Hayek; 9/08 Keynes. And in 1/09 it's still Keynes. Hopefully Obama will still be in office when it is time to swing back to Hayek. He'd be perfect for the job.

[Wallyz]

Keyenes and Hayek agree about what to do in good years- save and build up capital to be  used in bad years.  Keyenes just allows for deficit spending if necessary, whereas Hayek  thinks its impossible to stop deficit spending. In America's case, Hayek appears to be more correct.

[Rerun]

 

[jbeany]

You know, Bill, most of your posts make me feel tragically under-educated.

[librarygirl007]

What are you guys talking about? Politicians?

[Stoday]

They are talking about economists.

Britain, in 1979, was "the sick man of Europe". Margaret Thatcher changed it all, based on Hayek economics. Some 150 (if I remember correctly) Keynesian economists in Britain wrote a letter to The Times saying that she was wrong and would ruin the country (as if it could get any worse). She ignored them and Britain went on to become the leading economy in Europe.

[Bill Peckham]

Jbeany I'm not the one to explain it all but I think the rap not only has flow, it is technically correct and informative. The video's closing point of agreement is a good one to take to heart. The political decisions based on one point of view or the other impacts us all profoundly. Right now I would say the question is inflation - how much inflation should there be in the economy? If the Congress was more sophisticated in how it talked about these issues we'd catch up to the level of the discussion. Hearing the House and Senate debate makes me feel tragically underrepresented. I wish political commentators would stop talking as if we're all ten years old.

For Thatcher (and Reagan's Fed under Paul Volker) inflation was the enemy. Wringing inflation out of the economy was hugely painful, as the Keynesians no doubt wrote, but well worth it in the long run as Hayek predicted.

What about today? Is inflation still the number one enemy? I don't see it. Plenty of excess capacity in the system. Depressed asset prices. And we all owe a lot of money. Lenders don't like inflation but these days we owe a lot of this money to China. I don't really care what China wants, I don't think our Fed does either, so why is our Federal Reserve Chair Bernanke continuing to fight inflation?

It might be because he sees himself as in the Hayek camp and is thinking of Volker.

[willowtreewren]

Bill,
Thanks for starting this thread. I have to admit that it is an area in which I am sorely under educated. This has sparked my interest! I'll be taking time to learn more about this in order to feel qualified to take the poll!

Aleta

[Sunny]

Thanks for the link to the video.
My husband is a High School Econ teacher and plans to use the video in his class as he says it's very accurate in explaining the two economic philosophies. He votes for Hayek. I have to do more studying before I decide.

[jbeany]

Yeah, what I got was save your money and pray everyone else spends all of theirs. . .

[tyefly]

   I am going to Canada.......

[Bill Peckham]

the link I first posted wasn't as good on a second look - instead this is a good explanation of a liquidity trap. It's 12 years old but it is still relevant. http://www.slate.com/id/1937/