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Keynesianism and Economic Predictions

twocupcakes
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5/13/2013 8:13:51 PM
Posted: 7 years ago
At 5/13/2013 7:55:14 PM, jimtimmy2 wrote:
At 5/13/2013 2:28:31 PM, twocupcakes wrote:

"A fall in prices will increase the burden of debt and lower output and vice versa."



And this supports the upward sloping AD curve how?

.


You do realize that the whole idea that the central bank can't do anything when they hit the zero bound is entirely bs. The liqudity trap is a myth.

I know you think it is stupid, bs, a false prediction ect.But, I a waiting to hear why you think this.









Well. If I am correct, the LT would imply that the central bank essentially can't do anything and only fiscal policy can, which is obviously wrong as the central bank never really runs out of ammo.

It may be that the LT does not imply this, but it is not my fault for thinking so because folks like Krugman have implied this.

Yes, an LT implies monetary policy is useless. Printing money lowers interest rates. Once interest rates are close to 0, printing does nothing to boost economy.
My initial claim was that the Keynesian model has made bad predictions in the past. The BoP is on me for that claim and I clearly met it.



Literally all he did was just move the aggregate supply curve to the left. It is a nice trick but does not even come close to explaining stagflation. Clearly, the BoP is on Keynesians to show they have adjusted their models accordingly to account for stagflation and this trick doesn't even come close.

As far as I know, a shifting AS is the same way monetarists explain stagflation (Monetarism is lead by Milton Friedman and is pretty conservative). The dispute is between how freely as fast the AS shifts. So, how does this not explain stagflation and what model to you subscribe you?


LOLZ to you thinking I didn't know about Friedman and monetarism.

And, that is probably the stupidest explanation of the differences between monetarism and keynesianism I have EVER heard.

Why is it stupid? How do you describe their differences?



Well, you need to tell that to the keynesian economists of the time who were all wrong in their predictions about what would happen after the war.


So you are comparing current economists with your theory to keynsians in the 1930s and 1940s? Surely it is more fair to compare your theory to current economists?



So, we should just pretend that Keynesians didn't exist before the past few years??


Keynesian theory evolved in the past 80 years. No one now subscribes to the model as it was back then, so why criticize it. Would you criticize newton for not incorporating relativity Ito equations?





I would love to debate you about Europe and austerity.


Too specific of a debate. I'd be open to a more general economic debate.

Europe and Austerity are a pretty broad topic. What would you want to debate then. "In general, implementing austerity in a recession is stupid economic policy"


No. I'm not gonna defend "austerity". All that will happen is that youll want me to defend a bunch of keynesian straw men.

I'll argue a broader economic topic like, perhaps, keynesianism. But, I'm not gonna waste people's time with some strawman debate about the evil austerians.

Yeah sure, what would you want to debate?
jimtimmy2
Posts: 403
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5/13/2013 9:26:52 PM
Posted: 7 years ago
At 5/13/2013 8:13:51 PM, twocupcakes wrote:


Well. If I am correct, the LT would imply that the central bank essentially can't do anything and only fiscal policy can, which is obviously wrong as the central bank never really runs out of ammo.

It may be that the LT does not imply this, but it is not my fault for thinking so because folks like Krugman have implied this.

Yes, an LT implies monetary policy is useless. Printing money lowers interest rates. Once interest rates are close to 0, printing does nothing to boost economy.

This is why the notion of a liquidity trap is so ridiculous. Consider the following facts:

1.) Low interest rates often indicate tight money not easy money. Interest rates were at the zero bound in the early great depression yet very few economists argue that the fed was out of ammo then. Likewise, interest rates were really high in the late 1970s stagflation.

2.) No country has ever made a real effort to debase its currency and failed. It simply has not.

3.) The fed can always raise long term inflation expectations (and long term inflation).

So, liquidity traps don't exist.

My initial claim was that the Keynesian model has made bad predictions in the past. The BoP is on me for that claim and I clearly met it.



Literally all he did was just move the aggregate supply curve to the left. It is a nice trick but does not even come close to explaining stagflation. Clearly, the BoP is on Keynesians to show they have adjusted their models accordingly to account for stagflation and this trick doesn't even come close.

As far as I know, a shifting AS is the same way monetarists explain stagflation (Monetarism is lead by Milton Friedman and is pretty conservative). The dispute is between how freely as fast the AS shifts. So, how does this not explain stagflation and what model to you subscribe you?


LOLZ to you thinking I didn't know about Friedman and monetarism.

And, that is probably the stupidest explanation of the differences between monetarism and keynesianism I have EVER heard.

Why is it stupid? How do you describe their differences?

Well. Friedman basically explained stagflation by pointing out that firms and individuals would eventually make decisions based on future expected inflation. See the lucas critique.

These aren't Keynesian ideas and they do explain stagflation.




Well, you need to tell that to the keynesian economists of the time who were all wrong in their predictions about what would happen after the war.


So you are comparing current economists with your theory to keynsians in the 1930s and 1940s? Surely it is more fair to compare your theory to current economists?



So, we should just pretend that Keynesians didn't exist before the past few years??


Keynesian theory evolved in the past 80 years. No one now subscribes to the model as it was back then, so why criticize it. Would you criticize newton for not incorporating relativity Ito equations?

No economic theory has done more damage than the keynesian theory.

It is a theory that has been thorougly discredited by reality yet policymakers continue to believe in it.






I would love to debate you about Europe and austerity.


Too specific of a debate. I'd be open to a more general economic debate.

Europe and Austerity are a pretty broad topic. What would you want to debate then. "In general, implementing austerity in a recession is stupid economic policy"


No. I'm not gonna defend "austerity". All that will happen is that youll want me to defend a bunch of keynesian straw men.

I'll argue a broader economic topic like, perhaps, keynesianism. But, I'm not gonna waste people's time with some strawman debate about the evil austerians.

Yeah sure, what would you want to debate?

IDK. Just not gonna defend some strawman Krugman made up.
twocupcakes
Posts: 3,441
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5/15/2013 5:15:26 PM
Posted: 7 years ago


This is why the notion of a liquidity trap is so ridiculous. Consider the following facts:

1.) Low interest rates often indicate tight money not easy money. Interest rates were at the zero bound in the early great depression yet very few economists argue that the fed was out of ammo then. Likewise, interest rates were really high in the late 1970s stagflation.

2.) No country has ever made a real effort to debase its currency and failed. It simply has not.

Japan has been experiencing deflation. Japan does not want deflation. They try for inflation and fail.
3.) The fed can always raise long term inflation expectations (and long term inflation).

So, liquidity traps don't exist.


?


LOLZ to you thinking I didn't know about Friedman and monetarism.

And, that is probably the stupidest explanation of the differences between monetarism and keynesianism I have EVER heard.

Why is it stupid? How do you describe their differences?




Well. Friedman basically explained stagflation by pointing out that firms and individuals would eventually make decisions based on future expected inflation. See the lucas critique.

These aren't Keynesian ideas and they do explain stagflation.

Yes, Keynesianism does incorporate rational expectations and the Lucas critique.




Well, you need to tell that to the keynesian economists of the time who were all wrong in their predictions about what would happen after the war.


So you are comparing current economists with your theory to keynsians in the 1930s and 1940s? Surely it is more fair to compare your theory to current economists?



So, we should just pretend that Keynesians didn't exist before the past few years??


Keynesian theory evolved in the past 80 years. No one now subscribes to the model as it was back then, so why criticize it. Would you criticize newton for not incorporating relativity Ito equations?



No economic theory has done more damage than the keynesian theory.

It is a theory that has been thorougly discredited by reality yet policymakers continue to believe in it.

I don't see how? Most mainstream economists, even Mitt Romney's advisors, are Keynsian.





I would love to debate you about Europe and austerity.


Too specific of a debate. I'd be open to a more general economic debate.

Europe and Austerity are a pretty broad topic. What would you want to debate then. "In general, implementing austerity in a recession is stupid economic policy"


No. I'm not gonna defend "austerity". All that will happen is that youll want me to defend a bunch of keynesian straw men.

I'll argue a broader economic topic like, perhaps, keynesianism. But, I'm not gonna waste people's time with some strawman debate about the evil austerians.

Yeah sure, what would you want to debate?

IDK. Just not gonna defend some strawman Krugman made up.

I was asking you to defend the statement you made defending European austerity. If you want to debate anything let me know.
jimtimmy2
Posts: 403
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5/15/2013 6:23:16 PM
Posted: 7 years ago
At 5/15/2013 5:15:26 PM, twocupcakes wrote:


This is why the notion of a liquidity trap is so ridiculous. Consider the following facts:

1.) Low interest rates often indicate tight money not easy money. Interest rates were at the zero bound in the early great depression yet very few economists argue that the fed was out of ammo then. Likewise, interest rates were really high in the late 1970s stagflation.

2.) No country has ever made a real effort to debase its currency and failed. It simply has not.

Japan has been experiencing deflation. Japan does not want deflation. They try for inflation and fail.
3.) The fed can always raise long term inflation expectations (and long term inflation).

So, liquidity traps don't exist.


?

I repeat. Liquidity traps are a myth.



LOLZ to you thinking I didn't know about Friedman and monetarism.

And, that is probably the stupidest explanation of the differences between monetarism and keynesianism I have EVER heard.

Why is it stupid? How do you describe their differences?




Well. Friedman basically explained stagflation by pointing out that firms and individuals would eventually make decisions based on future expected inflation. See the lucas critique.

These aren't Keynesian ideas and they do explain stagflation.

Yes, Keynesianism does incorporate rational expectations and the Lucas critique.

No, they don't. Robert Lucas certainly isn't a Keynesian. Why don't you ask the guy who the LC was named after if keynesian models have incorporated?





Well, you need to tell that to the keynesian economists of the time who were all wrong in their predictions about what would happen after the war.


So you are comparing current economists with your theory to keynsians in the 1930s and 1940s? Surely it is more fair to compare your theory to current economists?



So, we should just pretend that Keynesians didn't exist before the past few years??


Keynesian theory evolved in the past 80 years. No one now subscribes to the model as it was back then, so why criticize it. Would you criticize newton for not incorporating relativity Ito equations?



No economic theory has done more damage than the keynesian theory.

It is a theory that has been thorougly discredited by reality yet policymakers continue to believe in it.

I don't see how? Most mainstream economists, even Mitt Romney's advisors, are Keynsian.

Just like most mainstream scientists used to believe that the sun revolved around the earth.

And, what Mitt Romney and his advisors believed is totally irrelevant.






I would love to debate you about Europe and austerity.


Too specific of a debate. I'd be open to a more general economic debate.

Europe and Austerity are a pretty broad topic. What would you want to debate then. "In general, implementing austerity in a recession is stupid economic policy"


No. I'm not gonna defend "austerity". All that will happen is that youll want me to defend a bunch of keynesian straw men.

I'll argue a broader economic topic like, perhaps, keynesianism. But, I'm not gonna waste people's time with some strawman debate about the evil austerians.

Yeah sure, what would you want to debate?

IDK. Just not gonna defend some strawman Krugman made up.

I was asking you to defend the statement you made defending European austerity. If you want to debate anything let me know.

I didn't make a statement defending European austerity. Instead, I made a statement attacking the Keynesian critique of European austerity.

Again, the whole austerity thing is really just a keynesian strawman.

Indeed, the keynesian school was founded on a strawman of Say's Law
wrichcirw
Posts: 11,196
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5/15/2013 6:52:31 PM
Posted: 7 years ago
At 5/15/2013 6:23:16 PM, jimtimmy2 wrote:
At 5/15/2013 5:15:26 PM, twocupcakes wrote:

I repeat. Liquidity traps are a myth.

Paul Krugman IS a liquidity trap. Just look at his beard. They are not myths.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
twocupcakes
Posts: 3,441
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5/15/2013 7:11:21 PM
Posted: 7 years ago











No, they don't. Robert Lucas certainly isn't a Keynesian. Why don't you ask the guy who the LC was named after if keynesian models have incorporated?

Lucas contributed the idea of rational expectations which Keynesians incorporated into their models. Keynesians also incorporated monetarism ideas into their models. The general model, the Keynesian model, does not change names every time a new idea is incorporated.





Just like most mainstream scientists used to believe that the sun revolved around the earth.

And, what Mitt Romney and his advisors believed is totally irrelevant.

Keynesianism is vastly accepted by people with many viewpoints. To prove it wrong, one would need to prove more than krugman being an idiot.









I would love to debate you about Europe and austerity.




I didn't make a statement defending European austerity. Instead, I made a statement attacking the Keynesian critique of European austerity.

Again, the whole austerity thing is really just a keynesian strawman.

Indeed, the keynesian school was founded on a strawman of Say's Law

If austerity in Europe is a strawman, then who is arguing for austerity in Europe? Keynesians are not. If you are not, than who is and why did it happen?
jimtimmy2
Posts: 403
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5/15/2013 7:45:40 PM
Posted: 7 years ago
At 5/15/2013 7:11:21 PM, twocupcakes wrote:

Lucas contributed the idea of rational expectations which Keynesians incorporated into their models. Keynesians also incorporated monetarism ideas into their models. The general model, the Keynesian model, does not change names every time a new idea is incorporated.

If this were true, Keynesians would not support stupid ideas about fiscal stimulus, yet they do. The very fact that they advocate fiscal stimulus shows that they have not incorporated monetarism or rational expectations.

Keynesianism is vastly accepted by people with many viewpoints. To prove it wrong, one would need to prove more than krugman being an idiot.

Appeal to authority?

I think so. And don't even pretend that all I have done is try to show Krugman as being an idiot. I have given you plenty of reasons to believe keynesianism is bs.

Again, the theory has been thoroughly discredited theoretically and empirically.

Now, I know a lot of people still believe it. The reason, of course, is that it is a justification for a larger state, which is what a lot of people (like Krugman) want.


If austerity in Europe is a strawman, then who is arguing for austerity in Europe? Keynesians are not. If you are not, than who is and why did it happen?

Well, the "austerity" in Europe is taking the form of tax increases. That doesn't sound like the right wing opponents of keynesianism.

And, spending actually hasn't been cut very much at all.

Austerity implies spending cuts, which really haven't taken place.

Let's call it what it is: European tax hikes.

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