Posted on 11/05/2010 8:53:14 PM PDT by blam
I don’t know all that much about Geithner.
I think Bernanke is trying to do what he thinks is best for the country- whether what he is doing is actually good for the country is a separate matter. He’s motivated by a fear of the US entering a deflationary spiral like the 1930s. He’s combating the credit collapse of mortgage defaults by flooding the banking system with new money.
Do they actually know what they are doing? I think they are guessing as best they can. It’s somewhat uncharted water.
Keynes system justified inflationary spending, as was just seen by the Fed putting 600 Billion into the economy, creating money from out of thin air.
Fractional banking represents a major aspect in inflating.
Trying to apply his name to each and every economic issue you run across isn’t an especially wise idea
Didn't apply his name 'to each and every economic issue' we were speaking about one particular issue, the muliplier effect and that it was a Kenysian fallacy.
At this point, I just hope to survive the slog. I have only a vague idea of what the country will look like at whatever point we can finally begin to repair and rebuild.
The one thing I keep remembering is how, in the 70s, the left kept repeating that the Trans-Alaska Pipeline would take 15 years to complete and so, could not help reboot the economy. I remember when every young, strong guy I knew took off for Alaska and the darned thing was finished in a little more than 2 years. I had been ignorant and had accepted the 15-year timeline.
It was an epiphany. Americans can be amazing.
Well, you're giving them the benefit of the doubt. They are obviously working under extreme conditions; conditions I submit were primarily created by our very own libtards in congress. I'd guess at best a 50/50 chance of the fed pulling it off; probably less. Sortof a rhetorical question but, where would we be today without the subprime meltdown and the collapse of the accompanying financial instruments created to "spread the wealth"?
Yes indeed and you raise a good point. Just why is it Americans have always risen to meet our challenges? A higher calling maybe???
There is a conviction we must hold on to at all costs; that is, we somehow must maintain and even strengthen our resolve in the face of relentless attacks on the very fiber of our culture and society. We may become discouraged at times and suffer setbacks but we have to keep our eyes on the prize. We may feel at times it's hopeless to fight the evil that comes at us from every quarter but we must summon the courage to stand our ground. We may become tired from constantly fending off the encroachments of our would-be masters but we must summon the strength to fight on.
Our children and grandchildren deserve nothing less. May God help us.
Where is the constitutional authority for 90% of what these idiots do?
“Didn’t apply his name ‘to each and every economic issue’ we were speaking about one particular issue, the muliplier effect and that it was a Kenysian fallacy.”
You have managed to confuse two different multipliers. The Keynes multiplier effect deals with fiscal policy, deficit spending, aggregate demand, and shifting of the IS curve. It isn’t the monetary multiplier involved in fractional reserve banking.
In fact it might be hard to find a subject less applicable to Keynes than one involving monetary policy. Keynes considered monetary policy to be a weak and ineffective tool. He was interested in taxes and spending.
Now if you wanted to dismiss the deposit multiplier as a ‘Monetarist fallacy’ you might have a point, since some monetarists were actually interested in the subject. But Keynes? Not gonna happen. The only ones buying that idea are people who think he’s an all purpose boogeyman for any idea that sounds remotely economic.
http://homepage.newschool.edu/het/essays/monetarism/mpolicy.htm
http://www.j-bradford-delong.net/Econ_Articles/monetarism.html
When I spake of 'Keynes', I was speaking of Keynesian economics in general, which advocates inflationalry policies.
Keynes himself may not have addressed the issue of fractional banking and the multipler effect that comes from it, but the economic school of thought that developed from his teachings (Keynesian economics)defends it and holds that credit inflation is as valid a means of 'stimulating the economy' as deficit spending.
http://www.freerepublic.com/focus/f-news/2622560/posts
Is the Fed inflating Fiscal or Monetary policy?
Austrian School
This interpretation of inflation implies that, within a centralized banking system, inflation is always a distinct action taken by the central government or its central bank,[89] which permits or allows an increase in the money supply.[90] Mises includes bank credit as a significant contributor to inflation; the value of bank credit generated by private financial institutions and held within checking accounts greatly exceeds the value of physical paper bills and metallic coins issued by the Federal government (see Figure 1). In addition to state-induced monetary expansion via printing of paper money, the Austrian School also maintains that the effects of increasing the money supply are exacerbated by the credit expansion performed by private financial institutions practising fractional-reserve banking system, legally permitted in most economic and financial systems in the world.[91]
According to the Austrian School business cycle theory, the business cycle unfolds in the following way. Low interest rates tend to stimulate borrowing from the banking system. This expansion of credit causes an expansion of the supply of money, through the money creation process in a fractional reserve banking system. This in turn leads to an unsustainable “credit-fuelled boom” during which the “artificially stimulated” borrowing seeks out diminishing investment opportunities. This boom results in widespread malinvestments, causing capital resources to be misallocated into areas which would not attract investment if the money supply remained stable.
http://en.wikipedia.org/wiki/Austrian_school#Business_cycles
“Is the Fed inflating Fiscal or Monetary policy?”
To aid himself in remembering the difference between the two, John Kennedy linked ‘Monetary’ with ‘William McChesney Martin’, the name of the Fed chairman. The Fed has no power to impose taxes. It can only influence monetary policy. Fiscal policy is tax policy and it’s the sole province of Congress.
I’m well aware of the Austrian School. Personally my preference is with Schumpeter, who while Austrian and a critic of Keynes probably isn’t Austrian School.
But this has little to do with what Keynes and the Keynesians think. Keynesians don’t “defend” fractional reserve banking, they ignore it. Keynes and his followers focus on macroeconomic aggregates. Their favored tools are deficit spending and tax policy. There’s plenty to debate about Keynes and his followers but it has to be something they actually write about. Conflating the Keynes multiplier with the deposit multiplier is not valid. The Keynes multiplier is about government spending not about banking.
Amazing how you make the assumption that I was referring to the Keynes multiplier.
I am very well aware that that 'the Keynes multiplier' was based on fiscal spending.
The 'bank multiplier' is from fractional banking, which is monetary.
However, in PRINCIPLE they are both the same, since they come from the same basic fallacy, that spending and consumption can create wealth, which it does not, savings and investment do.
So, in PRINCIPLE, while the 'Keynes multiplier' and 'bank multiplier' are from different areas in the economy, they both represent the same Keynesian view, that inflation is a positive in an economy, and creates real wealth, which it doesn't.
Keynesian's prefer fiscal deficits, but their ultimate goal is inflation by any means,since they believe under-consumption is the major problem in a recessive economy.
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