What is the right reaction to an economic crisis?

What is the right reaction to an economic crisis?

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I am asking since I just learned that Keynesianism has been refuted, since it has caused rapid inflation and government debts.

Austerity seems to be a wrong measure as well, as the misery of Spain and Greece following their debt crises demonstrates well.

what kind of economic crisis?

Lets use the Financial Crisis 2008 as an example.

The countries that applied Keynesian stimulus packages seemingly got out with the least trouble.

Blame all Jewish people.

Sell everything, then buy again.

That has actually been done in Germany some decades ago.

BUY BUY BUY

Proper laws that allow for a structural crisis to be confined, in other words no chain reactions from failing banks. This would allow you to let greedy banks fail and will prevent corporate welfare.
Under no circumstances should you even think about the more-of-the-same approach that was implemented in the US. They might have recovered more quickly but they also inflated more financial bubbles with the QE.
Austerity principles are a good thing to implement if you want to avoid soaring public debt. Increasing public spending to compensate for private spending slacking will be devastating for a free market economy.
Temporary keinsian solutions like infrastructure projects make sense as long as its done with moderation.
Basic GDP equation is c+i+g+(x-m).
If you decide to compensate the lower C(private consumer spending) with higher G(ovt) spending and go all out New Deal you may end up as China today, compensating for lackluster growth in other sectors with unsustainable malinvestment in infrastructure and housing paid by massive private and local govt debt.

Guillotine the people responsible.

Isn't this more suited for /biz/?

You really just need to let it all ride out. The financial crisis in '08 was just a simple market correction from years of government interference and mandates that caused a really painful bubble.

Sadly most big government folks will just (and did just) use it as an excuse and justification for why they're needs to be more government and then the cycle will continue.

It's why we've had such a slow and long "recovery".

Thank you for the proper response.
Whilst you refuted long-term Keynesian policies, you advocated austerity: but going by the same equation you mentioned, decreasing government spending will lower the GDP, as well as consumer spending b/o of lower certainity, welfare and public workers wages.
Politics nowadays are, like, 60% economic management.

While it is true that government inference may cause severe crises, the market by itself is just able to go full retard as well - and then government interference is needed.

You need to let the markets correct themselves. There will be downs and losses for a while, but it will recover if just left alone for a while.

Learn how to hunt, farm, and trade

I cannot think of an example where the crisis simply "went away". Can you?

Kek

You'll get a better discussion on /biz/

Sup Forums has become nothing but memes

Such as? Markets occasionally go through corrections that take care of bad investments and general market retardedness, it's part of the cycle.

Just let it ride out. Just because done crops don't grow in winter doesn't mean we need to panic and try to legislate and regulate winter away, it's part of the cycle.

Well, unless it's caused by a supply shock the correct response is to do nothing and wait for the market to correct itself.

If the crisis is caused by a lack of demand you have to reverse the government action that caused it in the first place.

In 2008 they should have let the banks fail, let the market set the interest rate, get rid of Fannie Mae and Freddie Mac, deregulate, and allow deflation to happen.

Keynesians are obsessed with deflation and avoid it at all costs, except in a recession you want to let prices fall so entrepreneurs can purchase all of the devalued capital. Wages must be allowed to fall so that unemployment does not dramatically increase.

Yeah pretty much.

I also believe that the people here tend to spout nonsense, as long as it fits their far-right worldview - but many of the answers so far satisfy me.

SELL SELL SELL SELL SELL SELL
IT'S THE KIKES

Do nothing, let the market self correct.

What crisis? The housing market exploded because it had a foundation of years of bad investments. How was that a crisis?

"A BAD THING HAPPEN!" Well duh, you've all been retarded for years now, so yeah a bad thing happened.

THROW THE REPUBLICANS OUT OF OFFICE

If you are trying to hint at the financial crisis, it has been the only right thing to do, since the fact of the deregulation itself proved to be a mistake.

I guess you ought to let the market correct itself wherever it can. In some cases, it fails to do so. For example, real estate is always difficult to evaluate exactly; and in cases like critical health care or basic food you cannot afford to wait until corrections happen.

lel

In America we've never had a food or healthcare crisis lol. Financial things tend to crash, commodities are really up and down but are usually okay for the populace.

le free market people are ideologues. Their ideas are not based on reality.

right, somebody will get hit by the cleaver. If you can easily determine the source of the disruption he should be targeted with the biggest cuts.
For example if the govt taxed the hell out of people which caused a demand drop you should reverse that.
If you have greedy banks using voodoo economics and financial manipulations to bump up their numbers, well... They need to fail.
If you have an industrial capacity to build 100 million cars per year and the market can take up to 75 mil per year the right thing to do is let 1/4 of the industry fail and live with the mess. Big GDP should not be the main goal of an economic policy because you can create a lot of GDP withotu creating wealth and benefits for people. Stacking stones by hand and paying huge wages to the workers and high prices for the stones gives big GDP but the benefits dont exist at all. This is exactly what you have in the financial sector when a single event like a car crash can trigger multiple instances of GDP increases in the insurance sector.
this

>In America we've never had a food or healthcare crisis lol.
Because you never had a war on your soil( except the civil one), and American has some really fertile lands.

>Financial things tend to crash
>It tends to crash
>But it's totally fine guise!! It's the market just correcting himslef guise!!! forget that it happens regularly, it's no biggie!!

The right reaction is to trust in the LORD and elect Trump. Let the chips fall were they may. Keynes was a brain-dead faggot.

I meant a crisis affecting food and health care.
Every school of economy claims that its ideas are based on reality - from Marxism to Anarcho-Capitalism. What seems to work best is a certain combination of both.

Yeah, markets are cyclical. Bad investments tend to go south and the markets purge them. You can't legislate that away lol.

>making People work two shitty paying Jobs instead of one good paying Job, is Job creation

>Blame the EU
>Hold referendum about leaving the EU
>Lose referendum
>Realize the EU was just a scapegoat
>Watch your country fall into chaos

What about the notion that bank crashes cause chain reactions? There are some really complex and financial formations that fail to function as soon as one piece is missing.

Also, what are you supposed to do about cases like Spain, where a single sector of the economy (housing bubble) causes much healthier sectors to erode, until the whole economy is in a deep depression? There was a single cause initially, but you are left with an overall crisis afterwards if you fail to reduce the damage done to the initial cause.

plant ur food seeds and dont feed any city council members who voted to make gardens illegal.

That is Britain, except that the referendum actually succeeded.

It happens regularly because of the self-perpetuating Business CYCLE created by central banking and Keynesian monetary policy.
If we had a market-based currency we wouldn't experience the dramatic lurching of booms and busts.

Which economic crisis might that be?

The purpose of the narrative of the economy is to serve mankind.
When the narrative intent changes to where mankind serves money, and people suffer, then people will no longer find the narrative useful.

At some point, your delusion will fall victim to the narrative of violence, which is much harder to deny than some numbers on a spreadsheet.

Acknowledging that crises "just happen" means acknowledging the fallibility of markets.
3deep5me

>got out with the least trouble.
He thinks we're out

>no matter what the system will crash and burn every once in a while

Hmmm, sounds like a perfect system

>What seems to work best is a certain combination of both.
what?

>Every school of economy claims that its ideas are based on reality
That is why we never trust the word of ideologues per se. You as a german should know that very well

They are fallible, but they correct and address the mistakes.

Crisis don't "just happen" unless it's a supply shock such as a change in oil prices. However, in that case there is nothing you can do, you have to let the economy work.

Other than that the business cycle is caused by bad monetary and fiscal policy. Governments interfere with price signals and lead people to make malinvestments that fail once conditions have to change.

You are not, but you are looking better. One could argue that this is as well attributed to natural recovery.
>what?
What "what?"? Every OECD nation uses a combination of free market and socialist approaches, with a more or less strong emphazise on the former.

I never said they "just happen", in fact I said the opposite. Can either of you read?
Reserve rates are set by the Fed, fiat currency is created by the Fed, and the debts of domestic, foreign, and corporate entities are purchased by the Fed.
This is not a free market. The distortion of resources which generates the boom-bust cycle is a product of central banking, a primary tenet of socialism.
A free market currency system would have no government planners dictating the supply.

This just in, bad things fail.

Who would have thunked it wh?

Not much of a reason to say the system is broke when it self addresses its own problems.

yeah we are talking about massive contagion in the case of Spain and other countries. The dogma that "la vivienda nunca baja" - housing never goes down - sure rigged the economy against other sectors by crowding out investment from them towards housing.
Say Deutsche bank is about to fail and if you let it fail we will have a world wide recession worse than 2008. What the americans did was bail it the fuck out and protect the private interest. In other words they socialised the losses.
What a free market fundamentalist would suggest is let it fail and let everything go to hell.
What I believe would work best is to punish the mischievous jews that made the mess by letting their equity get wiped out and the govt buying out the key assets and assuming the fuctions that are needed to avoid a chain reaction. Under no circumstance should you let the jooz keep their bucks. AFAIK this is done by splitting up the bank. Create one entity holding all the toxic assets and letting it fail (wiping out whoever was invested in it like greedy pension fund managers, foreign investors) and one healthy entity which should continue working properly
>That is why we never trust the word of ideologues per se
this.
You need realpolitik here, not economic voodoo.
If VW goes bankrupt because of dieselgate you should not let the chinks buy it for nothing and then outsource everything and steal all the intelectual property inside of it. Nationalise, stabilize, reform, privatize is a sensible approach.
Nuking America for starting Dieselgate is another approach. Basically we are talking about sensible, restricted interventionalism.

Elect Trump.

BTW Keynes was a faggot and he and his acolytes are gaylords who are wrong about everything ever.

en.wikipedia.org/wiki/American_School_(economics)
en.wikipedia.org/wiki/Chicago_school_of_economics

You are right, in a non-existing perfect market simulation there would be few shocks.

What I am talking about is that crises are bound to happen as long as there are politics interfering with "everyday" economic life. The Greek debt crisis caused by mismanagement and lies, or said oil price shocks caused by War, or the sanctions against the Russian economy, or or or ...

short everything

youtube.com/watch?v=KIaXVntqlUE

You are certainly knowledgeable enough to answer this question better than many of the people in charge of it:

What should have been done in the cases of Spain, Portugal, Greece and Ireland? Looking particulary at Spain and Greece, I highly doubt austerity was the right measure.

Keynesian policies work, they simply come at a cost. If you borrow a sum in times of need to "stimulate" yourself, you better pay back as soon as you recover - the Keynesian approach is not much more complex than that.

>You are not, but you are looking better. One could argue that this is as well attributed to natural recovery.

Well, we'll see. It looks to me like we're primed for another recession.

Looting shops

Economics elevates the tool above what it is used to accomplish. The attempt to use capital as variable, which is supposed to be a proxy for trade, fails, because the proxy is not a proxy: Capital affects the mechanics of trade.

The only reason there is a correlation between capital and productivity is because for the most part we have been managing and abundance society. The efficiencies of production are lopsided in time, material, and location, making for an abundance of resources that do not force efficiency.
40% of all food goes to waste.
Only 7% of the fuel in your car goes to moving you.
50% of all power generated is unused.

And none of this finds its way to the spreadsheet.

The capital ignores it.

Capital has never modeled trade or production well, but once abundance disappears, Capital will no longer be able to model trade at all.

And that is what is happening.

They need to get off the Euro. The Euro is the main reason these countries are in such trouble. The ECB keeps fiddling with the interest rate in order to keep Germany happy, which messes with the price signals and causes businesses to malinvest. Also, these countries definitely need austerity. The government spending is making less credit available to the market.

It always kinda looks like that. We are living in times of pessimism and perceived - whether justified or not - misery in the middle classes of wealthy nations.

Hence the rise of Trump and consorts.

>of free market
no such thing. It's only a ideology

>and socialist approache
What is this?

>Keynesian policies work
For what? Is there any proof?
Keynesianism is behind the boom-bust cycle. It is not a cure for it.

Spend all your money before it becomes worthless.
I know it's counter-intuitive, but it's the right thing to do.

>Socialist claiming there's no such thing as the free market
>Illuminates the ambiguity of "socialism" in the very next line
How mentally ill must one be to project this hard?

>And that is what is happening.
Or is it? What ressource is becoming less abundant now?

Laughter.

>What is the right reaction to an economic crisis?
Gas the kikes

We had a 100 billion Euro stimulus package following the financial crisis 2008. I doubt our government is economically inept.

yeah the russian crisis we are seeing now is massive BS if you ask me. An oil price drop ruined a lot of public companies but using sensible currency devaluation they socialised the losses and their energy giants didnt go bankrupt. Not even talking about inflation. When everybody lives off high oil prices in an economy they will eat shit when oil prices fall. What should they do? Certainly not let inflation destroy their middle class and plunge the population in poverty while also crippling your already grim demographics. Sanctions are a fraction of the problem, basically their financial sector is cut off and they cant import some key tech for drilling and satellite/weapon building but thats it.
The counter sanctions that Russia imposed (ban of food import from EU) is unbelievable stupidity

Greece : Grexit. Im not kidding mate. EU caused the greek crisis. They always had shit borrowing capability. Suddenly they are in the EZ and their debt is basically guaranteed by Germany. Suddenly the borrowing rates fall and an era of socialist policies begin. They are my neighbours, I love them but lets keep it real. Their economy is shit tier like ours that was inflated by cheap credit. Let them Grexit, introduce their own currency and devalue it into oblivion untill they stabilize. Pumping even more cash into them will never solve a thing. You can try to forgive some of the debt and give them some ECB backed 50 year 0 % interest bonds to stabilize but a keynesian approach will be bad for their overinflated economy.
With Spain, well, their only period of big prosperity was during the massive Eurogib+Housing bubble, they have always been a shit tier economy as well. They need to find a way to develop their shitty areas like Germany did after the reunification. The rich industrial parts may break off though. Spain and the North/South Italy problems are a tough nut to crack. Colonize Africa maybe?

Buy Gold

DELETE THIS RIGHT NOW!!!

They're not out though.

>I doubt our government is economically inept
Am I being trolled, or are you really this stupid?
Expansion of credit and monetary supply leads to resources being misallocated, i.e. malinvestments.
And you'll have me believe that doubling down on that distortion is a good thing?

Keynesian practices were implemented after the Dotcom bubble burst in 2001, people said the same thing. Ultimately, it simply resulted in the bubble you refer to in your post.

If you look at GDP and unemployment figures it's easy to make things look good. They're huge aggregates and don't track anything terribly meaningful.
In other words, it's more about where the resources are being spent, where labor is working, that matters, rather than simply tracking totals.

Keynesian practices "dug us out" if you look at those aggregates in the present. Nonetheless, it's proven to be an unsustainable course of action which will surely lead to another crash, as it has in the past.

Thank you for the long answer.

You probably realize that returning to an obscure Drachma will cause them to be unable to afford European imports. Greece does not produce anything, so electricity, pharmacy products and the likes might become unaffordable.

Seems there is no other way out for them - if they cannot afford to have a Western standard of life, they cannot afford it ...

>if they cannot afford to have a Western standard of life, they cannot afford it
the moment when you take this ultimate redpill as a true yuropoor is the moment when political bullshit stops twisting your perception of reality. Greece literally
>does not produce anything
So why should they live a rich life? Same as the oil countries in the ME where the rich, fat arab sheikh throws his wealth away at the peasants so they dont starve. When the oil becomes useless and cheap they will return to the caves eating sand unless they actually invested in something productive. Which Greece didn't do. They spent it all on wages.

Abundance means overproduced or over available, or readily available.
So what is loosing abundance? Everything. Food, energy, water, shelter, all are at record low actual production (not what ends up on the spreadsheet) per person world wide.

Don't confuse abundance with sufficiency. There are fewer worldwide problems with sufficiency. Poverty and starvation are at record lows.

What I am talking about is the productivity that does not make it into economics, but is necessary for the inconsistent narrative of economics itself to fool mankind.

There has been an historically massive amount of waste over the last 250 years that makes capital markets look like they reflect productivity, simply because it reflects only market productivity - things bought and sold. In any relative system, an equilibrium can be achieved locally: that is thermodynamics - you can violate entropy locally but not systemically.

But thermodynamics also cannot model economics because economics is not a conservative vector field: it has sinks and sources introduced by the addition of currency and the addition of productivity, but also in addition to the fact that the space does not contain the entire population.

Again: Only things that are bought and sold make it to the equation.
But that is the problem. The model simply doesn't include all production, and all cost: it borrows these to make it look like the narrative is consistent.

And as the world produces less of everything per person, the math simply will not work. The inadequacies of the economic model will out, not only in their inconsistencies, but because there world will simply not look like the models.

Of course that hasn't stopped them from pushing their tripe so far...

by the way the only long term govt spending spree I would support is a massive scientific effort to colonize a new planet or this
en.wikipedia.org/wiki/Atlantropa
Or the ITER, CERN and similar projects. Because I love science so im biased as fuck

kys

>dampen it but let it ride out
basically a combination of keynes and hayek

if you dont bail out a failing economy, you create moral hazard. businesses will stop doing proper risk management.

if you don't dampen it, you will suffer damage from overreaction by the markets and its herd mentality.

Succeed or An hero

Buy stocks. I paid off all my student loans and still had enough left over to put a down payment on my first house because I bought in early 2009 when the whole world was screaming about Great Depression 2.0.

Remember the words of the Rothschild's

>The time to buy is when there's blood in the streets

I expect the current business cycle/bull market to end soon. Probably this fall or next spring. You fags will get an opportunity to cash in then. When you start hearing normies talk about the market crashing and no bottom in sight it's time to buy.

addtional thought: there cannot be too much done about it. governments are not omnipotent. the market forces are ultimately stronger. always. you can escape gravity only for a while.

>In 2008 they should have let the banks fail, let the market set the interest rate, get rid of Fannie Mae and Freddie Mac, deregulate, and allow deflation to happen.

Wouldn't the value of the dollar drop dramatically? It seems like bank bailouts were the only logical solution in order to strengthen the value of the dollar.

meme magic about it to make it worse to attack the jews

All drugs becomes legal, prostitution using only your mouth and hands becomes legal. I'm sure we would see some money flowing in.

Austerity isn't the wrong measure. Spain and Greece kept borrowing and kept repaying the debts, freezing themselves right at the point of crisis.

They should have stopped borrowing and defaulted instead.

You stay calm and let the markets recover.

Politicians just like Keynesianism because it allows them to "do something" when the people are afraid.

Yes, the dollar would have weakened in response to a weaker economy meaning we would buy less from overseas, however, that would increase the amount foreigners buy from us. But the recovery would have been much quicker and the value of the dollar would increase. Of course, this wouldn't be a problem if we were on a gold standard or bundle of commodities standard.

Also, you have to look at where the government gets its money. It either has to print it or borrow. Both would decrease the value of the dollar long term.

QE

austerity while going into a recession is not a great idea.

governments can't. market forces are always stronger. the US government and the fed only managed to bottle things up. but now pressures are building and it will erupt stronger than ever before. it will be bad.

This, the plague of our time is inappropriate medicine administered so some idiot could build their resume.

yep but if your productivity has fallen too steeply behind, austerity is not feasible anymore: it's too hard on the populace/electorate. currency depreciation is in order in this case.

Austerity is always a good idea. Government spending crowds out private investment.

It might seem bad to decrease spending, but spending doesn't drive real growth. When the government borrows money it takes credit away from the rest of the economy. That credit should be used on capital investment.

ban assault money

>What is the right reaction to an economic crisis?
bail everything out, lower interest rates and then wait 8 years and do it all again.

Repeat until it works permanently.