Alright lolbertarianfags. Give me one good reason why keynesian economics don't work
>interest rates go down
>spending goes up
>economy heals
>increase interest rates when inflation rises
>economy remains steady and reliable for very long periods of time (since the system started being used)
Government SHOULD have an active role in the economy.
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Interest rates are a price, and like any other price, if you set price controls there will be unintended consequences vis-a-vis supply and demand
Most businesses use fixed prices though.
Keynesian economics with production can work. Without production, it is just debt.
Keynesianism is bullshit. None of it works.
Consumers don't decide price in the free market. It is just take it or leave it. Therefore, businesses do no know what price the customer wants.
>leaf is pro big government
Surprise surprise
To understand capitalism, you must understand how business,works. Most businesses don't use complex economic theory.
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The natural moneys emerging as such on the world free market are useful commodities, generally gold and silver. If money were confined simply to these commodities, then the economy would work in the aggregate as it does in particular markets: A smooth adjustment of supply and demand, and therefore no cycles of boom and bust. But the injection of bank credit adds another crucial and disruptive element. For the banks expand credit and therefore bank money in the form of notes or deposits which are theoretically redeemable on demand in gold, but in practice clearly are not. For example, if a bank has 1000 ounces of gold in its vaults, and it issues instantly redeemable warehouse receipts for 2500 ounces of gold, then it clearly has issued 1500 ounces more than it can possibly redeem. But so long as there is no concerted "run" on the bank to cash in these receipts, its warehouse-receipts function on the market as equivalent to gold, and therefore the bank has been able to expand the money supply of the country by 1500 gold ounces.
The banks, then, happily begin to expand credit, for the more they expand credit the greater will be their profits. This results in the expansion of the money supply within a country, say England. As the supply of paper and bank money in England increases, the money incomes and expenditures of Englishmen rise, and the increased money bids up prices of English goods. The result is inflation and a boom within the country. But this inflationary boom, while it proceeds on its merry way, sows the seeds of its own demise. For as English money supply and incomes increase, Englishmen proceed to purchase more goods from abroad. Furthermore, as English prices go up, English goods begin to lose their competitiveness with the products of other countries which have not inflated, or have been inflating to a lesser degree. Englishmen begin to buy less at home and more abroad, while foreigners buy less in England and more at home; the result is a deficit in the English balance of payments, with English exports falling sharply behind imports. But if imports exceed exports, this means that money must flow out of England to foreign countries. And what money will this be? Surely not English bank notes or deposits, for Frenchmen or Germans or Italians have little or no interest in keeping their funds locked up in English banks. These foreigners will therefore take their bank notes and deposits and present them to the English banks for redemption in gold--and gold will be the type of money that will tend to flow persistently out of the country as the English inflation proceeds on its way. But this means that English bank credit money will be, more and more, pyramiding on top of a dwindling gold base in the English bank vaults. As the boom proceeds, our hypothetical bank will expand its warehouse receipts issued from, say 2500 ounces to 4000 ounces, while its gold base dwindles to, say, 800.
>None of it works
>Has been working since 1930s
try harder.
"In general, they found, an economy’s output and employment were not usually limited by the supply of productive factors (as believed in neoclassical theory). More often, the economy is demand-constrained, limited by the amount of aggregate purchasing power. If purchasing power is weak for some reason (due to financial or banking problems, pessimism among consumers or investors, or other factors), then unemployment will exist.
Worse yet, there is no natural tendency for that unemployment to resolve itself. To deal with this problem, Keynes advocated proactive government policies to adjust taxes, government spending, and interest rates in order to attain full employment.
Kalecki went further than Keynes, and showed that effective demand conditions also depend on the distribution of income (and the distribution of power) between classes; he advocated socialism as the ultimate solution to the problem of unemployment."
>t. Stanford, Politics of Economics
As this process intensifies, the banks will eventually become frightened. For the banks, after all, are obligated to redeem their liabilities in cash, and their cash is flowing out rapidly as their liabilities pile up. Hence, the banks will eventually lose their nerve, stop their credit expansion, and in order to save themselves, contract their bank loans outstanding. Often, this retreat is precipitated by bankrupting runs on the banks touched off by the public, who had also been getting increasingly nervous about the ever more shaky condition of the nation's banks.
The bank contraction reverses the economic picture; contraction and bust follow boom. The banks pull in their horns, and businesses suffer as the pressure mounts for debt repayment and contraction. The fall in the supply of bank money, in turn, leads to a general fall in English prices. As money supply and incomes fall, and English prices collapse, English goods become relatively more attractive in terms of foreign products, and the balance of payments reverses itself, with exports exceeding imports. As gold flows into the country, and as bank money contracts on top of an expanding gold base, the condition of the banks becomes much sounder.
>"lolbertarianfags"
>Posts ancap meme
Read a book retard. Libertarians don't want to completely dismantle the government, we just a less intrusive government.
This is untrue. Prices change quite often, usually depending on the thing being bought
Customers decide prices just as much as producers decide prices. They decide if they value the widget more than the $5 they are to pay for it. Admittedly, their side of the equation is harder to see because customers don't walk around with signs listing all the prices they'd be willing to pay for all the things they might want to buy. I'd recommend you read Hazlitt's Economics in One Lesson for more on The Seen and The Unseen.
what is this from
...
thanks i'll look into it
What's going on here?
>But if banking is the cause of the business cycle, aren't the banks also a part of the private market economy, and can't we therefore say that the free market is still the culprit, if only in the banking segment of that free market? The answer is No, for the banks, for one thing, would never be able to expand credit in concert were it not for the intervention and encouragement of government. For if banks were truly competitive, any expansion of credit by one bank would quickly pile up the debts of that bank in its competitors, and its competitors would quickly call upon the expanding bank for redemption in cash. In short, a bank's rivals will call upon it for redemption in gold or cash in the same way as do foreigners, except that the process is much faster and would nip any incipient inflation in the bud before it got started. Banks can only expand comfortably in unison when a Central Bank exists, essentially a governmental bank, enjoying a monopoly of government business, and a privileged position imposed by government over the entire banking system. It is only when central banking got established that the banks were able to expand for any length of time and the familiar business cycle got underway in the modern world.
Business cycles are caused by government intervention.
