periods of hyperinflation show that the money illusion has certain limits. and just because people, i.e. consumers, have a bias towards estimating their worth by judging nominal indicators, does not tell us that goods are not paid for with goods or that consumption is possible even without prior production. if anything the money illusion effect is good reason to adopt sound monetary policy, and such a policy is to not have a monetary policy. having a keynesian policy is destructive.
You must also demonstrate not only that money illusion works, which I think everyone here admits that it works within bounds, but that it is sound economic policy.
For example, inflation may stimulate an economy in the short run, and has historically. However most people forget about the goal of economic growth, which is an increase in the standard of living and an efficiant allocation of resources and goods to consumers. Money Illusion may spur Aggregate Demand and all the effects that go along with that, but you must prove that the resulting economic growth is beneficial to the consumer. Allocative efficiency is at least as important as productive efficiency. Temporal preferences with regards to savings and investment are equally important as well.
Basically, defecit spending, inflation, etc works in the very short term, most of the time. Economic activity is stimulated, before dropping off a cliff. Examine France from 1790 to 1795 for a perfect example. The biggest problem with Keynesian economists is a misstatement or misunderstanding of their ends.
Translation: I think deluding myself works. Lies work. Theft works. BTW your posts contianed no “a priori” reasoning, no evidence, just garbled assertions and copy/pasting. Now, stop wasting our time with this discredited garbage.
I arrived to this conclusion for much more mundane reasons.
Sound money and the free market require two fundamental conditions to work properly: honesty and taking a lot of personal responsability. The sad reality is that nobody wants to take responsabilities nowaday and honesty is in very short supply. No, I am not talking about politicians: I am talking about ordinary people. In case you haven’t noticed they do not want to be educated: they both lack the intelligence and the moral integrity to do so. Whatever they are pathologically stupid or were lobotomized by that horror called compulsory schooling you decide, it doesn’t matter anyway. And also remember your childhood: at every opportunity adults told you “you need to be responsible and honest”. But how many led by example? Surely my father didn’t and I still wonder why I didn’t end up like him.
Yes, people love big government and need Socialism and Keynesianism. Not because they are inherently superior to other philosophies (rationally speaking they amount to little more than crackpot ideas mixed by lots of pompous rhetoric) but because they are designed to allow cretins to prosper. End of story.
Lack of property and ownership. All incentives in a free market encourage responsibiltiy as it is the path to prosperity.
This is a very american/Western problem. Asians don’t have a lot of these problems. They still have a concept of hard work, saving, sacrifice and family.
The good news is that it doesn’t lead to prosperity, and in extreme forms is downright unsustainable. I wish people had learned the proper lesson from the French revolution.. “progressive” monetary policy leads to the guillotine!
I say forget the “we”. Fortunately, it is not necessary for “we” to do anything - only for you, the individual, to act alone to save the fruits of your labor etc.
It’s an American problem really (that includes the American state of Great Britain), come to Western Europe and see how people could not care less about the state.
So they give up their money and follow rules, and join unions, and protest for welfare increases just because?
I’ve travelled a bit, but not to Europe, so I really don’t know. The French certainly don’t have (or seem to want) liberty.
Oh, and Canada it much more a client state of the US than Britain. They actually have authorization to use American troops to police our streets now.
Obvious ad hom is obvious.
Okay, we’re in a recession, lets define the term recession before going forward. I’ll use the definitions offered by investorwords.com just to keep this simple.
Recession: A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.
Now, we have a problem here, they’re using a concept built on top of another set of concepts. Lets look at GDP in particular are the other concepts don’t need much unpacking.
GDP: Gross Domestic Product. The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus value of imports.
This is quite interesting, because it seems interesting that they’re dividing up the world into small sections. In this case, GDP refers to a geopolitical’s capacity to generate wealth in excess of its consumption (in theory). But wealth in this case seems to be mixed in with the concept of spending (as the only wealth is goods and services which are produced/available at any given time). Meaning the definition of GDP is knackered up.
Okay, you got a logical fallacy running through this part of your argument. You assume it must be broken because of the money, notably you assume the post hoc fallacy. What deep measures have you taken in respect to the economy?
What I mean by deep measures is what actions are being done afterward with respect to investment? Are there more investors (and producers) in particular spheres which generate more wealth (a good or service that is sustainable per ‘environmental’ conditions)? If not, then the spending is illusionary as much as the money thrown down from helicopters. It seems the assumption that spending equals wealth generation is what is at stake, not the fact of the cognitive illusion that folks see the money as valuable (there’s many cognitive illusions, this one isn’t surprising to me…). In essence, all you’re doing is using a trick to coax a natural operation (wealth creation) to be selected at random (spending can lead to dead ends in economic systems as it often does, being swallowed up by costs (Law of conservation is universal, and not just applicable to atoms)). The trick is neat, but it’s not reliable. What such a trick has done empirically, from the tax rebates of Ford and G. W. Bush to the massive spending of Hoover and F. Roosevelt has done is ramp up secondary spending, but no productive capacity is measurably regained to previous bust levels respectively (meaning you dig a hole, but it keeps getting deeper as you keep digging…).
As you can tell I’m not one of those economic students, but I’m not strictly an Austrian, rather I’ve studied systems theory as a Computer Science major, so my take on this whole debate is biased toward emergence and philosophical holism.
Because it’s in their own self interest, most of them don’t follow the rules when it comes to it anyway. The fact of the matter is that when it comes down to it most Europeans don’t care about the state. It’s there for them to avoid when necessary, or if they need it they’ll use it. More often than not though they’ll simply see it as an annoyance. You don’t get anything like the state worship you do in American though.