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Indeed. The stockholm syndrome of Keynesianism is pervasive and unnoticed by many. The correct response to erosion of value is hoarding.

api 8y ago
The correct response to erosion of value is investing as long as there are good investments to be found. This is the idea behind inflationary money (which is a broader concept than Keynesianism). The important ideas of Keynes in a nutshell: * Monetary velocity: wealth is a verb, not a noun. The wealth of nations is measured in their rate of transactions, not how much cash or idle assets they are hoarding. * Idle vs. productive investment: if currency is deflationary people will store currency, a non-productive investment. If currency is inflationary people will invest it in productive activities. I don't agree absolutely 100% with these, but I think Keynes was at least onto something especially with the first. The problem with the first is that velocity also includes transactions that don't actually do anything or that even "create" negative value. Gambling increases monetary velocity but doesn't accomplish anything and may actually destroy value. A real value-centric velocity statistic is impossible because value is a biological/humanistic concept and is non-computable. The main problem with the second is that if people are pessimistic about investments they will still hoard, but using things like real estate and gold. Another problem with the second point is that over-using this strategy to drive investment creates bubbles, as we have seen. Finally I must point out that Keynes gets a ton of flak for stuff he did not advocate, like insane levels of public and private debt. Keynes would have been shocked and horrified at the levels of debt in our current system, and in fact his whole counter-cyclic government spending strategy was designed to prevent this. Blame politicians and banks for the debt problem, not Keynes. Politicians invoke Keynes when they want to ratchet up spending during downturns but then they conveniently forget the other part-- namely that Keynes also advocated reducing government spending and repaying debt proportionally during times of abundance. Keynes basically argued that government could be used as ballast against economic oscillation.
- buckthundaz 8y ago
  I said nothing about Keynes -- I said Keynesianism. You understood this meaning well. Would you concede that the economic policies rooted in Keynes's ideas created an environment that allowed for the snowballing issues we have? The issue that isn't present in your comment is top-down imposed order vs. bottom-up emergent order. To me, the former is degenerative, while the latter is sustainable.

api 8y ago

The correct response to erosion of value is investing as long as there are good investments to be found. This is the idea behind inflationary money (which is a broader concept than Keynesianism). The important ideas of Keynes in a nutshell: * Monetary velocity: wealth is a verb, not a noun. The wealth of nations is measured in their rate of transactions, not how much cash or idle assets they are hoarding. * Idle vs. productive investment: if currency is deflationary people will store currency, a non-productive investment. If currency is inflationary people will invest it in productive activities. I don't agree absolutely 100% with these, but I think Keynes was at least onto something especially with the first. The problem with the first is that velocity also includes transactions that don't actually do anything or that even "create" negative value. Gambling increases monetary velocity but doesn't accomplish anything and may actually destroy value. A real value-centric velocity statistic is impossible because value is a biological/humanistic concept and is non-computable. The main problem with the second is that if people are pessimistic about investments they will still hoard, but using things like real estate and gold. Another problem with the second point is that over-using this strategy to drive investment creates bubbles, as we have seen. Finally I must point out that Keynes gets a ton of flak for stuff he did not advocate, like insane levels of public and private debt. Keynes would have been shocked and horrified at the levels of debt in our current system, and in fact his whole counter-cyclic government spending strategy was designed to prevent this. Blame politicians and banks for the debt problem, not Keynes. Politicians invoke Keynes when they want to ratchet up spending during downturns but then they conveniently forget the other part-- namely that Keynes also advocated reducing government spending and repaying debt proportionally during times of abundance. Keynes basically argued that government could be used as ballast against economic oscillation.

buckthundaz 8y ago
I said nothing about Keynes -- I said Keynesianism. You understood this meaning well. Would you concede that the economic policies rooted in Keynes's ideas created an environment that allowed for the snowballing issues we have? The issue that isn't present in your comment is top-down imposed order vs. bottom-up emergent order. To me, the former is degenerative, while the latter is sustainable.