BusinessInsider's Joe Weisenthal shares TIME Magazine's newest cover:
You'd think Keynesian Joe would be happy with the big bold letters "How Wall Street Won".
Wall Street did "win" right?
They got their bailouts, and their fat bonuses, at the taxpayer expense. They also got a slew of QE's from The Fed to help artificially pump up the stock market again. And let's not forget that The Fed also "saved the system".
With such a victory, what problem can Weisenthal have?
Well, right underneath the prominent headline, it mentions the 2008 crash, and how "IT COULD HAPPEN ALL OVER AGAIN".
Weisenthal will have none of that dispirited talk!
The not-so-subtle message is that the recovery has been a sham perpetrated by banksters and that we're on the verge of collapse "all over again."Can't everyone just wise up and understand just how powerful The FED is? They can counterfeit $1 TRILLION per year out of thin air? Who else has that kind of power?
This has been the standard line since day 1 one of the recovery, that it's all a fraud and that it will all go busto any day now.
Get really worried if you see the skepticism and anger disappear.
You see, according to Joe, this time is different. This time, the economic laws of supply and demand have been removed from existence. Cause & Effect too...they're gone.
This is typical thinking for those who operate without theory. Keynesians, like Weisenthal, just focus on the latest data (and anyone who reads Joe knows that he's like a kid in a candy store anytime numbers are released).
There's no perception past that data. This is why Keynesians are always "shocked" when the downturn occurs.
Once again, those of us who do see it coming, will have to weather yet another tough economic downturn. And we'll have to do it with our "shocked" antagonists telling the world that "no one saw it coming."
It's getting old.
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Keynesians are not always "shocked" when the downturn occurs. Where are you getting that? The ones who are shocked are the ones who believe the market regulates itself.
ReplyDeleteBill McBride at Calculated Risk blog called the crisis very accurately. He is clearly a Keynesian. Unlike Austrian economists, he predicted low inflation and slow growth during the recovery. Austrian economists predicted another "boom and bust." So far there has been no boom and no bust. Gold is 1322, not 10,000.
Being the idiot that you are, Bill McBride's commentary is irrelevant to what RW discusses here. Most of the mainstream never saw the crises coming.
DeleteOh, and we don't have a free market to regulate itself, dickwad.
Jerry, if it was so clear to Bill, why was it not so clear to so many, including those charged with the task of running ("manipulating") the economy?
ReplyDeleteI'm not sure I would say that Keynesians don't have a "theory". I would say that their "theory" ignores essential empirical phenomena such as
ReplyDeletea) people are ignorant;
b) prices convey essential information;
c) bureaucrats cannot have such information;
d) fiat money creation is always results in Cantillon Effects, a surreptitious transfer of purchasing power and a distortion of prices;
e) most people will unfortunately rely upon those distorted prices and think they are richer than they really are;
f) the Keynesian policy of increasing "aggregate demand" necessary consists of a surreptitious shifting of purchasing power to those who are the recipients of this "increase in aggregate demand" but hardly anyone realizes that that is the theory and/or that that is the result.
g) there is no "trend line" and Keynesians present no empirical evidence that there is such a thing. The "trend line" is nothing more than a collection of distorted prices that were unsustainable;
h) since there is no "trend line", there is no "gap";
i) there is no empirical evidence and no theory that supports the proposition that generic government spending is the equivalent of prior non-government spending (and, of course, there is no "gap" to fill in the first place);
k) those distorted prices will result in an unsustainable price, investment and capital structure; and
l) when the unsustainable price, investment and capital structure invariably collapses, few people will know why and the Keynesians will continue to lie lie lie about the nature of Austrian analysis and concepts.
Not every Austrian predicted high inflation back in 2009. Personally, I didn't predict a lot of inflation back in 2009 but I also did not predict that the American people would sit back like sheep and allow the Fed to subsidize the elite as they have. Since I didn't predict the increase in stock prices or increase in real estate prices, there is actually more inflation than I assumed there would be.
A Keynesian could very well have predicted a very slow recovery with low inflation back in 2009 because government spending was not sufficient to fill the non-existent output "gap". That does not prove that there is a "gap" or that anything else about Keynesianism is correct.
In my list of empirically true factors, I failed to mention that the Keynesians cannot point to a failure of the market that requires the Keynesian "cure".
ReplyDeleteI made some typos above. The following should have read:
d) fiat money creation always results in Cantillon Effects, a surreptitious transfer of purchasing power and a distortion of prices; and
f) the Keynesian policy of increasing "aggregate demand" necessarily consists of a surreptitious shifting of purchasing power.......
Off topic, but FYI
ReplyDeleteRJ Eskow: 11 Questions to Ask Libertarians to See if They Are Hypocrites
Read more at http://www.nakedcapitalism.com/2013/09/rj-eskow-11-questions-to-ask-libertarians-to-see-if-they-are-hypocrites.html#wURIQ7r40OkTTzD6.99
Typical leftist garbage from people who cannot discern the difference between a complete and enforced prohibition upon business bailouts and a regime of ubiquitous bailouts.