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Nouriel Roubini also predicted the housing bubble and he certainly isn't an Austrian.Austrians also predict that large fiscal deficits lead to high interest rates. Well during massive contractions like we're in now that isn't the case as the all time low interest rates are showing.
The high interest rate is due to the eventual need to pay it off and the limited ability to raise taxes -- therefore leaving inflation as the only way out. That is the cause of higher interest rates. When the govt is making no attempt to pay off the debt, it doesn't affect the rate then.
Austrians also say that Austerity is the answer to everything. A large part of the reason for the double dip that is happening in for example the UK is the government austerity. The US government sector has actually been contracting for the last 2 years when you factor in local and State governments.
We are in a double dip and we are the exact opposite of austerity.
The Austrian school of thought helped to make the Great Depression far worse with the government austerity that happened in 1930 and 31.
Since it wasn't followed back then, that would be quite a feat for it to have impacted the economy.
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We are in a double dip and we are the exact opposite of austerity.
Well when fiscal policy is a drag on the growth of the economy because of cuts that is austerity.http://www.economist.com/blogs/freeexchang...alpolicyfailureIn the initial months of the stimulus, the net government contribution to GDP growth was positive. As the severe recession impacted government budgets, however, state and local cuts mounted, ultimately offsetting stimulus at the national level. State and local cuts have very nearly run their course at this point, but the economy now faces the run-off of stimulus programmes, as well as the expiration of emergency unemployment benefits and, potentially, the expiration of lots of other tax proposals. The President's latest plan aims to move the total government impact on growth from a drag of about 1.5 percentage points of GDP to approximately even. When the economy is growing at between 1% and 2% per year, a 1.5 percentage point drag on output is a very big deal indeed.fiscalstimulus.jpg
Since it wasn't followed back then, that would be quite a feat for it to have impacted the economy.
When do you think Hayek had influence. During the 20's and 30's. His policies were considered orthodox at the time.Read this paper on the Liquidation school that Hayek was part of and the Great Depression.http://www.j-bradford-delong.net/pdf_files...tion_Cycles.pdf
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Well when fiscal policy is a drag on the growth of the economy because of cuts that is austerity.http://www.economist.com/blogs/freeexchang...alpolicyfailureIn the initial months of the stimulus, the net government contribution to GDP growth was positive. As the severe recession impacted government budgets, however, state and local cuts mounted, ultimately offsetting stimulus at the national level. State and local cuts have very nearly run their course at this point, but the economy now faces the run-off of stimulus programmes, as well as the expiration of emergency unemployment benefits and, potentially, the expiration of lots of other tax proposals. The President's latest plan aims to move the total government impact on growth from a drag of about 1.5 percentage points of GDP to approximately even. When the economy is growing at between 1% and 2% per year, a 1.5 percentage point drag on output is a very big deal indeed.fiscalstimulus.jpgWhen do you think Hayek had influence. During the 20's and 30's. His policies were considered orthodox at the time.Read this paper on the Liquidation school that Hayek was part of and the Great Depression.http://www.j-bradford-delong.net/pdf_files...tion_Cycles.pdf
For the first part, govt continues to spend extremely large amounts as a percentage of GDP, and that's a more important measure than actual dollars.For the second part, the depression was caused by a massive contraction of the money supply by the Fed. I'm not sure Austrian economics makes any definitive statements on how to handle the cleanup from a catastrophically bad previous policy. Certainly repeating the previous mistakes would not be good; you could try to undo it as much as possible, I guess. But acting like the Great Depression had anything to do with a laissez faire govt is laughable.
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For the first part, govt continues to spend extremely large amounts as a percentage of GDP, and that's a more important measure than actual dollars.For the second part, the depression was caused by a massive contraction of the money supply by the Fed. I'm not sure Austrian economics makes any definitive statements on how to handle the cleanup from a catastrophically bad previous policy. Certainly repeating the previous mistakes would not be good; you could try to undo it as much as possible, I guess. But acting like the Great Depression had anything to do with a laissez faire govt is laughable.
If thing were only so simple as the Libertarian version of history would like to make them out to be.From the about quoted paper.The Federal Reserve took almost no steps to halt the slide into the GreatDepression over 1929–33. Instead, the Federal Reserve acted as if appropriatepolicy was not to try to avoid the oncoming Great Depression, but to allow it torun its course and “liquidate” the unprofitable portions of the private economy.In adopting such “liquidationist” policies, the Federal Reserve was merelyfollowing the recommendations provided by an economic theory of depressionsthat was in fact common before the Keynesian Revolution and was held byeconomists like Friedrich Hayek, Lionel Robbins, and Joseph Schumpeter.The Fed and other countries' Central Banks took a laissez faire approach and let the money supply contract as a result of the economic contraction. Monetary policy didn't cause the downswing but did make it worse.At the same time every government in the World cut spending drastically to balance their budgets since their tax flows were dropping like a rock. This also made things worse.The Fed didn't cause the Great Depression, but they certainly didn't help mitigate it.
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krugman: way off base
Nobody would care about the size of the monetary base except for the belief that increasing the base leads to a rise in prices. That’s not a question of definitions, it’s a question of your model of the economy. The underlying belief of all the people accusing Ben Bernanke of doing something dastardly is that “printing money” has caused or will cause high inflation in the ordinary sense.The thing is, of course, that the past three years — the post-Lehman era during which the Fed presided over a tripling of the monetary base — have been an excellent test of that model, which has failed with flying colors.
people like taleb argue that the fed's not going to be able to do anything if banks suddenly start lending and inflation starts going exponential. looking at the number of tools the fed has at its disposal, I don't buy that story. whether that will mean they stifle the recovery is another question, but a valid one nonetheless.
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For the first part, govt continues to spend extremely large amounts as a percentage of GDP, and that's a more important measure than actual dollars.For the second part, the depression was caused by a massive contraction of the money supply by the Fed. I'm not sure Austrian economics makes any definitive statements on how to handle the cleanup from a catastrophically bad previous policy. Certainly repeating the previous mistakes would not be good; you could try to undo it as much as possible, I guess. But acting like the Great Depression had anything to do with a laissez faire govt is laughable.
pam pam pam pam pam...you are never going to get anywhere trying to argue economic or historical bullshit that no one can ever really prove cause there are too many details and vagaries to satisfy anyone. this is why libertarians are such failures despite being mostly right.if you want any chance of getting through to liberal tools like strategy and his professors who told him so, you need to focus on the immorality of an organization forcing a certain currency on 300 million people born into some area and then paying themselves to manipulate it. there are no historical interpretations or statistics to cloud moral questions.
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haha, people here think I'm a liberal? I'm probably like 60-40 conservative. I just talk a lot about krugman because he gets so much play (+ and -) on the aggregator I frequent.

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