that's cool, just eliminate those spending projects and we can eliminate all differences between the two parties I'll give up my defense spending and war, if you'll give up your medical care, entitlements, and education.
Thank you, Oldtime. I think that rather nicely sums things up for us. I'm still laughing. In the deep South, we have a way of describing someone like you who has such a knack for getting to the heart of the matter, cutting right to the chase, if you will. We would say your "special", as in "Oh, that Oldtime! He's real special, bless his heart."
Only in rhetoric. Obama has tabled and passed the largest Defense budgets in recorded history. And started 3 new wars (Libya, Pakistan and Syria). We're still in Afghanistan. As for Medical Care and Entitlements, Bush passed the Medicare Prescription Drug Modernization Act and nearly doubled the size of the Department of Education! Both parties vote for the welfare/warfare State. When did Republicans eliminate or strip major funding for any education or healthcare initiative? When did Democrats ever end a war (and not begin a new one), in recent memory? It's all bullshit man. All rhetoric.
Btw, earlier in thread I said the market could determine rates, but impossible with a fractional reserve money system. That's incorrect. Shows my youth, I guess. So long as the FED is prohibited from purchasing treasuries, market participants determine riskless rate of return (treasuries), which the broader commercial market lends off of.
Quote from achilles28: Keynesian economics works in theory, not practice. In practice, it's machinations are corrupted by Politicians and Central Bankers who abdicate the pain to keep themselves, and their friends, in a job. This is true. Seems to be an example of Soros Reflexivity. This does not necessarily mean, however, that Keynes ideas can't work as intended, or that they are wrong. But they probably won't be implemented correctly because of what you mention. Then it is quite likely that the perceived reality will be that his ideas are wrong, when the true reality is that they have not been implemented correctly. let the economy find it's natural equilibrium. Let the Free Market WORK. This is a very bad idea. Modern economic theory is wrong. Markets, if left alone, do not necessarily move spontaneously toward equilibrium. They can move spontaneously in the opposite direction. The idea that markets will naturally move toward equilibrium, though they may, is a fallacy of modern economic theory. Alan Greenspan's belief in this false, but prevailing, economic theory resulted in a bad ending for the U.S. economy.
Greenspan distorted the natural price of risk way below the actual cost, resulting in the gigantic moral hazard of the dotcom boom and Housing Bubble? You don't suppose economic activity is tied to the price of interest?
Christine LaGarde (IMF) said it right. I'm not subscribing to her politics -- achilles has it right here -- just to her description of the central problem. She said (approximately) -- "Everyone knows what needs to be done but the politicians can't figure out how to do it and keep their jobs." We may not want their priority list to have keeping the job at the top but, for most, it is not only at the top it is the whole damn list.
Yes, of course. I was referring to his belief in market equilibrium theory as the underlying reason why he failed to act when he could have. You have correctly pointed out the result of both his inappropriate actions and inappropriate neglect caused by his steadfast adherence to incorrect economic theory. I haven't read Greenspan's book. I want to. I have heard him testify before Congress many times and am well acquainted with the "school" of economics to which he adhered.
Market Equilibrium Theory (which I have not studied, but is obviously incorrect, as per Greenspans failed application (which is an academic bullshit excuse to save his ass)), does not repudiate the truism markets find equilibrium naturally, when not manipulated by a Central Bank. Remember, Central Banking is a relatively new invention (~400 years). Civilizations have grown and thrived for thousands of years under market determined rates, and no central bank!
I don't know if agree with you fully. I guess it depends on what you mean by work. It does not solve all the problems. It solves some problems but creates others. Market correction, which is the action that market equilibrium creates, just means that the price of goods in an economy reflects their true value without artificial demand. There are pros and cons to that. The best example at the moment is house prices. The price of houses is propped up by low interest rates. If the central bank let the interest rate float the price would fall. The current owners and artificial demand would fall. This would have an impact on the economy as a whole. The advantage being housing becomes more affordable to the people who are in work. The problem is the impact interest rate rises, which would occur with a floating rate of interest, would have huge consequences on employment. I don't think there is necessarily a right or wrong answer just one that favours one group of people over another.