the links:
http://consultingbyrpm.com/blog/2011/07/is-keynes-from-heaven-or-hell.html
http://www.economicpolicyjournal.com/2011/07/bob-murphys-move-to-dark-side.html
The usual suspects are celebrating.
Anyone know enough economics and have the communication skills to lay out what the fuss is about, and who is right?
Given how contested interest rate theory is and how difficult of a subject it is, it’s hard to say who’s right. Personally, interest rate theory is one of my main weaknesses. In the comments to Murphy’s blog post Major Freedom and Dan (DD5?) have some good responses.
As I see it, the first thing is to clearly define what Mises meant, and what Keynes meant. The two phrases are “time preference” for Mises, and “liquidity preference” for Keynes.
The various responders over at the two blogs, Murphy’s and Wenzel’s, seem to have different ideas of what each concept is.
F’rinstance, someone seems to be saying that really they both mean the same thing, with the tiny difference that Mises thought the “time preference” for having a tomato now or ten years from now is the same as for money. And that Keynes’ brilliant breakthrough is that money and tomatoes have different time preferences.
Another fellow seems to be saying they are two different things, time preference being how long you are willing to wait before spending your money, liquidity preference being how much “ease of spending” you want to have in those ten years, despite your plans to spend them only after ten years.
So anyone have clarity on one or both of those definitions, time preference and liquidity preference?
A tip of the iceberg intro in my good ole blog: