My friend and I were discussing free market principles vs. Keynsianism and he raised a good question.
Speaking strictly in economic terms, if Keynsianism is as bad as Austrians say and hyperinflation is its result, why haven't we seen hyperinflation in the US or any western European country in the last 50 years?
Another way of stating this is to ask how long before we can expect to see an episode of hyperinflation in any of these countries?
Austroglide:Speaking strictly in economic terms, if Keynsianism is as bad as Austrians say and hyperinflation is its result, why haven't we seen hyperinflation in the US or any western European country in the last 50 years?
Does he understand what elements are required in order to produce an atmosphere of hyper-inflation? Without the default, there is no hyper-inflation. The US is heavily leveraged and in massive debt, but the default has not occurred because (until recently) the rest of the world was willing to underwrite it's military adventurism and endless consumerism. Until that changes, the US will be able to trundle on.
Austroglide:Another way of stating this is to ask how long before we can expect to see an episode of hyperinflation in any of these countries?
You assume that it is a foregone conclusion, that it is inevitable. It is not. Oh, the default is coming but when is not a part of the predictive thrust of Austrian economics.
If you find something evil that wobbles, push it. - Gary North
http://mwhodges.home.att.net/inflation.htm
here is some data. No hyperinflation but what would you call it???
I don't believe Austrians believe keynesianism must lead to hyperinflation.
Mises wrote, however, that all roads of government intervention can only rest in totalitarian socialism. Any intervention of the state must eventually end in crisis.
As far as Keynesianism goes, look at how far we've come from it. True Keynesiansism requires raising surplus government revenue during prosperity to pay down debt undertaken during crisis to pump-prime the economy. Well, do we pay it down? No. We have simply moved into military-keynesianism, ever-expanding debts and imperialism.
Even Clinton, hailed as a peaceful liberal, increased the debt ever year of his presidency, despite claims of surpluses for a few years.
Should our debt stop expanding because foreigners are no longer willing to force it, hyperinflation won't be far away.
Check my blog, if you're a loser
liberty student:Does he understand what elements are required in order to produce an atmosphere of hyper-inflation? Without the default, there is no hyper-inflation.
Neither of us does - we're relative noobs. But your reply is informative. Thanks.
Cesar,
Yea, that data looks like a sure symptom of the disease Austrians speak of.
Unfortunately, I think "folks" (ironic hat tip to Michelle Obama - she uses this word constantly) accept the disease because (a) it spreads incrementally and (b) they don't even recognize inflation as a disease but something that is fundamental to every economy and therefore natural.
A mountain of mainstream ignorance for Austrians to scale.
meambobbo:Mises wrote, however, that all roads of government intervention can only rest in totalitarian socialism. Any intervention of the state must eventually end in crisis.
Does Mises speak of how to combat the interventionist mentality, once it has taken root?
meambobbo:As far as Keynesianism goes, look at how far we've come from it. True Keynesiansism requires raising surplus government revenue during prosperity to pay down debt undertaken during crisis to pump-prime the economy. Well, do we pay it down?
Aren't we paying it down by way of the printing press?
Austroglide:Neither of us does - we're relative noobs. But your reply is informative. Thanks.
No problem. We were all noobs at one time, and some of us persist in our noobishness.
Hyper inflation is a possible outcome, but not an absolute. It's very important to understand the political and philosophical understanding supporting the Austrian monetary and economic theories. There are much worse things than hyperinflation. Like death camps and genocide.
Austroglide:Does Mises speak of how to combat the interventionist mentality, once it has taken root?
Education. Tireless, relentless education. Hans Hoppe has spoken and written about developing a class consciousness, of the intervened vs. the interventionists. Or in other terms, the looted vs. the looters. This is not a Marxian class theory. A rich man can be the looted and a poor man the looter in Hoppe's ideas on class consciousness.
Austroglide:Aren't we paying it down by way of the printing press?
No, because every intervention leads to crisis. lol
Ask youself, can you dilute something into nothing, and still have it as a store of value?
If other countries massively decide to hold their reserves in other currencies (euro, pound, franc, yen, australian dollars, etc) because of a worldwide fear of U.S. economic management, this massive devaluation could well be followed, maybe not by hyper-inflation, but definitely by inflation to levels more like those encountered in many third world countries.
Art transcends ideology.
http://mises.org/Community/blogs/ruben
Rubén: If other countries massively decide to hold their reserves in other currencies (euro, pound, franc, yen, australian dollars, etc) because of a worldwide fear of U.S. economic management, this massive devaluation could well be followed, maybe not by hyper-inflation, but definitely by inflation to levels more like those encountered in many third world countries.
Ironically, because it's a Keynsian world it looks like the US - both despite and perhaps BECAUSE it has also drank the Keynsian Kool-Aid - will remain the relatively most attractive economy for the foreseeable future, no?
liberty student:Hyper inflation is a possible outcome, but not an absolute. It's very important to understand the political and philosophical understanding supporting the Austrian monetary and economic theories. There are much worse things than hyperinflation. Like death camps and genocide.
Yes, indeed, these are far worse than hyperinflation. Do you really think the current and progressing "lurch toward socialism" necessarily leads to these outcomes?
liberty student:Ask youself, can you dilute something into nothing, and still have it as a store of value?
This part of the discussion is above my pay grade. I don't understand the mechanics of paying down debt.
Austroglide:Yes, indeed, these are far worse than hyperinflation. Do you really think the current and progressing "lurch toward socialism" necessarily leads to these outcomes?
That is what history shows us. Like hyper inflation, it can be stopped. But I am beginning to think that the social planners are pretty smart when they can brainwash millions of people.
liberty student:That is what history shows us. Like hyper inflation, it can be stopped. But I am beginning to think that the social planners are pretty smart when they can brainwash millions of people.
How many historical examples do we actually have of this? Too small a sample to be of a high degree of predictive use?
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