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I read your link. It was interesting but I generally don't agree with the Austrians. I think they correctly assessed why we're in a liquidity trap but their ideas on how to get out of it are in my opinion based on a false premise which is "if only banks would lend surplus cash to wealth generators in order to modernize, everything would be hunky-dory." I know I simplified the article a great deal but that's what I took out of it. Let's say that happened, would that boost the economy? I don't think so because most people don't have the money to buy much right now, especially big-ticket items, and they don't have confidence that if they did spend money that they will receive more money later. How much room is there really for the economy to grow? We're under 8% unemployment right now which may sound high to some people but bust cycles in the past yielded much higher unemployment rates, 5% is considered statistically negligible so job creation can only do so much for us. From the article it's obvious the von Mises Institute doesn't think much of the Keynesians, which wasn't a surprise to me, but given the situation we're in right now I think the notion that Demand creates its own Supply is something we should be discussing. I don't think that would always work but given our current circumstances I think it would. Our government stimulated the wrong people and busting up $2.8 trillion in surplus cash and giving it directly to everyday working Americans, with the promise there will be more later, would do far more for us than hoping that making things which people are uncomfortable spending money on right now will do. Of course, if the government continues overspending when things do turn around we're all screwed anyway.
I read your link. It was interesting but I generally don't agree with the Austrians. I think they correctly assessed why we're in a liquidity trap but their ideas on how to get out of it are in my opinion based on a false premise which is "if only banks would lend surplus cash to wealth generators in order to modernize, everything would be hunky-dory." I know I simplified the article a great deal but that's what I took out of it. Let's say that happened, would that boost the economy? I don't think so because most people don't have the money to buy much right now, especially big-ticket items, and they don't have confidence that if they did spend money that they will receive more money later.
How much room is there really for the economy to grow? We're under 8% unemployment right now which may sound high to some people but bust cycles in the past yielded much higher unemployment rates, 5% is considered statistically negligible so job creation can only do so much for us.
From the article it's obvious the von Mises Institute doesn't think much of the Keynesians, which wasn't a surprise to me, but given the situation we're in right now I think the notion that Demand creates its own Supply is something we should be discussing. I don't think that would always work but given our current circumstances I think it would. Our government stimulated the wrong people and busting up $2.8 trillion in surplus cash and giving it directly to everyday working Americans, with the promise there will be more later, would do far more for us than hoping that making things which people are uncomfortable spending money on right now will do.
Of course, if the government continues overspending when things do turn around we're all screwed anyway.
