"Fear the Boom & Bust"!!!
This is the video that sparked the most intelligent debate *evah* held on YouTube.
I fully confess that I totally don't get this debate, but it does seem like the US government has lowered interest rates in order to make money cheap in order to encourage spending/investment -- but this has also had the effect of making savings' account interest-rates plunge, which discourages saving money, which is ironic because a key cause of the current US economic crisis is that people didn't save money; instead they borrowed and spent, borrowed and spent.
Help me out here, commenters: am I even close to getting at the source of the underlying tension that is driving this debate?
I mean, we've gotta solve this thang b4 Keynes pops a cap into Hayek's bald skull...
Very educational. I need time to digest.
ReplyDeleteI dunno Gid. I think it's all due to the bizarre fetish of growth; simple profit is not enough. It's not whether people save money or spend. It's about dividends that must be bigger and bigger.
ReplyDeleteMeanwhile, in pursuit of this aim, the dollar is worth squat. Serious global economic mayhem ensues.
Anyway, this post had the benefit of making me Google Hayek and come across pics of Salma, leading to prolonged ogling of righteous boobs (and comely beard).
Zowie!
ReplyDeleteYou've tackled a more difficult question than I asked, Daurade -- and you're the better man for it.
I only wondered if I were correctly summarizing the debate between these two gangsta economists.
Meanwhile, you tried to diagnose the cause of the current economic crisis!
My bad, certainly, for not being clearer in my question -- but I dig your answer and do want to respond.
Your comment does, I think, disagree with something that I actually don't believe, but I'm not confident in my thoughts on this topic.
Here's what I think, but again, I'm not sure about any of this.
All crises have multiple causes. I think that a cheap dollar was a cause of this crisis--not an effect. The dollar was actually dirt cheap before the crisis, and I think that this gave businesses excess cash which encouraged predatory lending practices, which led to a housing boom which was necessarily followed by a housing bust.
You could, I think, rewrite that previous sentence by saying that money became cheap, so people bought too much and spent too little. I think that those two statements mean the same thing -- but they do imply a different set of responsibilities. Specifically, the second statement could be misinterpreted as blaming the victims of the first statement. But if you take the second statement at face value--I think that it is a partial truth. It tells something that happened, but it fails to explain why.
That may be right or wrong. I'm not sure.
Anyhow, now the feds are reacting to the bust. How? By encouraging a weak dollar in order to limit US imports from China and to encourage people to buy more, and bigger, houses. And cars, too.
Problem is, keeping the dollar cheap will encourage inflation.
So, conviently, Greece runs into trouble.
In other word, Daurade, I'm pretty sure that women don't really have beards.
Breaking and related news!
ReplyDeleteA copy of the first Superhero comic book, which cost 10 cents in 1938, just sold for ...
ONE MILLION DOLLARS!!!
FOR A COMIC BOOK!!!
I mean, I like really dig comix. (Seriously!) But I've never considered the brightness of the white tones in my particular copies.
Well ... nuthin' like a simple profit.