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Err... Keynes « center piece » is not manipulation of money supply. This extreme monetarism you describe is... Friedman’s!!! And boy do I agree it does not work

• pdonis 6y ago
  > Keynes « center piece » is not manipulation of money supply. Yes, it is. Keynes said at one point that the government printing dollar bills and burying them for people to dig up would be a valid form of economic stimulus. > This extreme monetarism you describe is... Friedman’s!!! Milton Friedman did not advocate anything like the arbitrary manipulation of the money supply by the government that is practiced by the Federal Reserve. (He was in fact a consistent opponent of the Federal Reserve; he thought it should be abolished.) He advocated tying the growth rate of the money supply to the growth rate in real productivity, with no discretionary element at all. > Ultra liberal economics lead to accumulation of wealth by few super riches No, the government printing money and giving it to a few favored parties, which is exactly what the Federal Reserve does and always has done (the favored parties have almost always been financial institutions, no surprise given the background of most Fed members), leads to accumulation of wealth by a few super riches. > This happens to be one of the reason the Roman Empire fell because all this money could not be spent on keeping the army in working conditions. I don't know where you're getting your history from, but it's wrong. The reason the empire had trouble paying for a competent army was that it had debased the coinage so much that people were refusing to take Roman coins as payment. It even got so bad that the Roman government itself, knowing that its coins were worthless, stopped accepting them in payment of taxes and insisted on payment in kind instead. The emperor Constantine managed to get hold of a large supply of gold bullion and used it to mint new gold coins, which were accepted in payment of taxes. That helped for a while as the empire could use these to pay the army and the civil servants; but many people could not afford to buy the new gold coins and therefore could not pay their taxes, so the improvement didn't last too long. It also didn't help that the size of the army and civil service kept increasing, for no tangible reason, which just increased the tax burden.
  • crocal 6y ago
    > Yes, it is. Keynes said at one point that the government printing dollar bills and burying them for people to dig up would be a valid form of economic stimulus. This does not make it the center piece. The center piece of Keynesian economics is that state intervention is necessary to moderate the booms and busts in economic activity. > Milton Friedman did not advocate anything like the arbitrary manipulation of the money supply by the government that is practiced by the Federal Reserve. Sorry, but clamping the growth of money supply with a k-rule, irrespective of the market cycle, is the arbitrariest manipulation I can think of. > No, the government printing money and giving it to a few favored parties (.../...) We can agree there that governments giving money to the already super wealthy is a bad think. But why does it do that? Because same super wealthy have become so wealthy they can influence government. Which brings me to your case on Rome. The reason why Roman emperors debased their coins was because they had emptied their coffers on other things yet /needed/ to keep the army strong for what was essentially a looting regime to survive. At the end of the day, Emperors are not governments, they are another form of super-rich protecting their short-term positions at the expense of longer term stability.
    • pdonis 6y ago
      > The center piece of Keynesian economics is that state intervention is necessary to moderate the booms and busts in economic activity. Not just "state intervention", but state intervention of a particular kind, namely, manipulation of the money supply. Keynes' basic theory was that in a depression like the Great Depression, the problem was that there wasn't enough money in circulation, because people would not simply let both prices and wages fall in order to establish a new equilibrium between supply and demand. So, he said, the solution is to simply print more money. > clamping the growth of money supply with a k-rule, irrespective of the market cycle, is the arbitrariest manipulation I can think of I personally don't favor Friedman's solution either; I don't think the government should be manipulating the money supply at all. But to call determining the money supply by a known objective rule "more arbitrary" than determining it by the whim of regulators does not strike me as a sound use of language. > We can agree there that governments giving money to the already super wealthy is a bad think. But why does it do that? Because same super wealthy have become so wealthy they can influence government. No, you have it backwards. The super wealthy influencing government comes before the government giving money to the super wealthy, not after. In the case of the Federal Reserve, it came into being because the super wealthy got tired of the government coming to them for loans to bail it out every time there was a financial panic. Why did the government come to the super wealthy for loans? Because the super wealthy had already gotten favors from the government through influence--for example, monopoly privileges over transcontinental railroad routes in order to outlaw free market competition. So naturally the government would come to the super wealthy expecting a quid pro quo. Once this had happened a few times, the super wealthy figured out a better (from their perspective) solution: create a system of central banks that would allow them to transfer wealth to themselves directly, stealthily, by manipulating the money supply, instead of having to openly go to the government for favors. And sell this system to the public as a means of "preventing" future financial panics. The Panic of 1907 presented a perfect opportunity to put this system in place, and by 1913, the Federal Reserve system was law. > The reason why Roman emperors debased their coins was because they had emptied their coffers on other things yet /needed/ to keep the army strong for what was essentially a looting regime to survive. Governments always spend more money than they have, on white elephant schemes that do not benefit society. So of course governments are always looking for ways to avoid having to face the consequences. But that is a very different claim from the claim you originally made, and I rebutted, that the Roman empire fell because the ultra rich were hoarding all the wealth. In fact the Roman emperors appropriated the wealth of the ultra rich pretty much the same way they appropriated the wealth of everybody else. The reason for the shortage of real wealth in the later Roman empire was not that it was being hoarded; it was that it was being squandered and destroyed by ruinous public policy.