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This is what happens when a central authority is controlling the economy. Everyone should know that free markets can allocate resources better than any central
by Geee 5y ago
This is what happens when a central authority is controlling the economy. Everyone should know that free markets can allocate resources better than any central planner, but still somehow those economists think that we need central bank policies to control the whole thing. Central planning might be appeling idea especially for those who benefit from it, and provides unlimited avenues for complex economic theories, but it just doesn't work in the long run.
- j1vms 5y ago> economists think that we need central bank policies to control the whole thing (...) but it just doesn't work in the long run. Roughly speaking, a central authority might work in certain scenarios, for a short time, to prevent situations where market participants might otherwise panic. In the long run, the problem is the same authority does not have to all "local", decision-making information available to the individual market participants, and that might prevent the economy from reaching an optimal configuration.
- bubbleRefuge 5y agoNot a central planned economy. The fed sets interest rates to attempt stabilize the economy in terms of unemployment rates and price stability. The congress spends money in a Keynesian fashion to smooth the business cycle. Other than that, the economy goes where the actors in the economy, the corporations and consumers, want it to go within the rules.
- andrekandre 5y agoEveryone should know that free markets can allocate resources better than any central planner for the most part yes, but market failure is a thing... 1929 being the best example... and what the fed is doing is reacting to trends to prevent the system from tilting out of control, not centrally planning things (when the fed starts making 5-year plans then we can talk)
- Geee 5y agoGreat Depression was caused by the Fed and government policies: https://mises.org/library/great-depression https://mises.org/library/great-depression
- imtringued 5y agoNo, this is what happens when demographic realities make rational behavior impossible. Old people want to keep their pensions and savings with 0% inflation or even deflation. The one thing they don't want to do is spend money, for obvious reasons. They'd burn through their pension very quickly. An economy that is not spending money will die. Someone has to spend to keep it going. Interest rates must go to 0% or lower so that someone finally spends their money.
- Geee 5y agoPeople will spend when they want to spend. It's utter horseshit that economy would die and we need government which forces people to spend.