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The Keynesian Revolution: A new biography of John Maynard Keynes

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Re: The Keynesian Revolution: A new biography of John Maynard Keynes

#41

Post by 082349872349872 »

nickik wrote: post #19
082349872349872 wrote: post #11

Earlier quoted context omitted.

A hypothesis which I ran across but haven't yet had the time and inclination to back-of-the-envelope: had germany sought to peacefully outcompete the british empire, they might well have succeeded by mid-century, instead of suffering all the ill effects of 1914-1990 ("the short twentieth century").

In capitalism there isn't really isn't a need for a 'winner', its not zero sum. Britain and Germany would have been both 100x better of to not fight any idiotic wars over strategically worthless land in the Balkans. Many people from both sides realized this but the German leadership sadly was of a more conservative mindset.

Kissinger blames the entire slide into the Great War on blunder after blunder[1].

I was surprised to learn from Zweig's first-hand account how much Orwell's MiniTru was based on western behaviour during the Great War.

https://ia801609.us.archive.org/21/items/in.ernet.dli.2015.1...

p.182 "German professors declared that Dante had been Germanic, the French that Beethoven had been a Belgian, intellectual culture was requisitioned without scruple from the enemy countries like grain and ore."

[1] Among which: having remembered the iron fist but having dropped the velvet glove: https://en.wikipedia.org/wiki/Dropping_the_Pilot#/media/File...

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Re: The Keynesian Revolution: A new biography of John Maynard Keynes

#42

Post by baybal2 »

pessimizer wrote: post #8
baybal2 wrote: post #2

I think Keynes was misunderstood massively like Karl Marx. Marx said "I am not a Marxist" when he saw his ideas being put into a something bordering a religious teaching. And later, I think, Keynes was rather unsettled with how his works been used to legitimise a new maxim "government can print money out of thin air," from an inverse of what dominated US economic thinking before him. It was not his idea at all. Beyon…

Keynes explicitly wouldn't have been concerned about government debt, which is just the government's portion of the national debt. The other part of the national debt is held by the population of the country, and there is an identity that if you increase one, you lower the other. Where you decide to balance that is arbitrary, although debt held by individuals makes them individually subject to the demands of the peop…

> The US suffers from a strong dollar policy intentionally instituted after 70s inflation that demands that the trade deficit be massive forever. A refusal to print money under those circumstances is just pawning off that debt onto individuals,

Excuse me, the gigantic trade deficit USA has is a product of T bill, and stacks of dollars under pillows being being a preferred saving medium of rich, and middle class all around the world. It will keep increasing even if US will put Tbills with garbage rates on the market, and print dollars completely not backed by anything.

USA needs an enormous shock to shock to change the situation with dollar being overvalued.

They key to it is stopping the profligate govt spending.

Re: The Keynesian Revolution: A new biography of John Maynard Keynes

#43

Post by yyyk »

woodandsteel wrote: post #30
yyyk wrote: post #6

The treatment of Keynes' post-WWI comments is an apologia that misses the deeper point. Keynes was not merely wrong about the German ability to pay, he misread the strategic situation. The French position was not merely motivated by vengeance. The Post-WWI situation was simple in a way yet strage. Germany was defeated, yet it remained the strongest country in continental Europe. Britain and France were bled dry, Russ…

Your point that the French were taking the Realist position re: the German problem makes a whole lot of sense to me. But what about Keynes idea that Europe as a whole was in economic ruin and it was necessary to rebuild it with economic aid or it would lead to political disaster. He seems to be to have been right about that.

Frankly, this part of the article reads like a bit of a distraction - the author is friendly, and since Keynes' original position is becoming hard to defend, he looks at a different matter which is simply not important compared to the elephant in the room.

Everyone at the time including Keynes himself realized the German issue was the primary issue. The petty authoritarianism that affected E. Europe in the interwar years was a mild headache compared to the nightmare that followed.

Economic aid might have helped with minority rights in the new countries, but I don't think it would have done much beyond that. We would still have had the Great Depression, and we would have gotten the political disaster then.

Re: The Keynesian Revolution: A new biography of John Maynard Keynes

#44

Post by pdonis »

qnt wrote: post #39
pdonis wrote: post #37

Earlier quoted context omitted.

> I take what you say as ‘losing buying power’ to mean that a lower quantity of real goods and services can be purchased for the same amount of currency. It's not a matter of quantity, it's a matter of which goods and services get bought. Shifting buying power means shifting demand, which means shifting the economic incentives for producing goods and services. In the case of the Fed's QE, which gave printed money to…

Your example is backwards; the McMansions, oversupply of CRE, TARP and the rest of the 2008 fiasco was the result of private sector speculation. Private sector misallocation of credit, not public sector. Look at US private home starts [1] for example. All the misallocation was done well before QE started, and no-one was building new homes for years following the Fed MBS purchases. [1] https://fred.stlouisfed.org/seri…

> the McMansions, oversupply of CRE, TARP and the rest of the 2008 fiasco was the result of private sector speculation

Enabled by a combination of the Fed printing money and giving it to financial institutions for mortgages and commercial real estate loans, and Federal government policy requiring financial institutions to give loans to people who would not normally qualify for them, in the name of expanding home ownership.

> Private sector misallocation of credit, not public sector.

There certainly was private sector misallocation of credit, but it was enabled by the above policies plus the belief on the part of the private sector financial institutions that, if push came to shove, they would get bailed out and the loss would be put on the taxpayers, not them. Which is exactly what happened.

Re: The Keynesian Revolution: A new biography of John Maynard Keynes

#45

Post by pdonis »

qnt wrote: post #40
pdonis wrote: post #38

Earlier quoted context omitted.

> This seems to me like saying that if the size of an inch shrinks, things measured in inches will too. No. Read my example of the ten people again, carefully. I don't think you have grasped it yet. > People complain about stagnating real wages, but I'm unaware of exponentially declining real wages I have said no such thing. I have no idea where you are getting this from. I have said nothing whatever about wages. > i…

> The financial institutions are not hoarding the money the Fed prints and gives to them. They are using it to make mortgage and commercial real estate loans, because that is what they are allowed to use it for under current policies. Again I think there’s a misunderstanding of monetary operations that lead to these conclusions. Banks absolutely do just sit on these reserves [1]. Banks do not lend reserves, nor do th…

> Banks absolutely do just sit on these reserves

They have been to a much larger extent since the 2008 crash, yes. But not before that, as the graph you reference shows. What I am saying is by no means limited to the time after 2008.

> Banks do not lend reserves

There is a minimum reserve requirement, but for virtually all banks it is minimal--3% last I checked.

> nor do they need reserves or deposits in order to make new loans

They absolutely do depend on central bank policy, precisely as your second reference says: "The amount of money created in the economy ultimately depends on the monetary policy of the central bank."

What your reference is describing is not in any way inconsistent with what I said. It is simply describing the details of how the process works. Yes, the official line is that the banks create money by making loans. But how much money they are allowed to create this way is determined by central bank policy.

Also, the very fact that banks can create money this way, whereas you and I can't, is government favoritism of the banking system. In a sane economy, banks creating money out of thin air by making loans would be illegal, since it would be considered as what it is: counterfeiting money. But in our insane economy, this practice (fractional reserve banking with maturity transformation) is considered completely normal: notice how your second reference treats the idea that banks would only lend out money that is given to them as deposits as a quaint old-fashioned misconception, instead of obvious common sense.

Re: The Keynesian Revolution: A new biography of John Maynard Keynes

#46

Post by woodandsteel »

yyyk wrote: post #43
woodandsteel wrote: post #30

Earlier quoted context omitted.

Your point that the French were taking the Realist position re: the German problem makes a whole lot of sense to me. But what about Keynes idea that Europe as a whole was in economic ruin and it was necessary to rebuild it with economic aid or it would lead to political disaster. He seems to be to have been right about that.

Frankly, this part of the article reads like a bit of a distraction - the author is friendly, and since Keynes' original position is becoming hard to defend, he looks at a different matter which is simply not important compared to the elephant in the room. Everyone at the time including Keynes himself realized the German issue was the primary issue. The petty authoritarianism that affected E. Europe in the interwar y…

>We would still have had the Great Depression, and we would have gotten the political disaster then.

I hate to say it, but I have to admit you are probably right.

Re: The Keynesian Revolution: A new biography of John Maynard Keynes

#47

Post by yyyk »

nickik wrote: post #20
yyyk wrote: post #6

The treatment of Keynes' post-WWI comments is an apologia that misses the deeper point. Keynes was not merely wrong about the German ability to pay, he misread the strategic situation. The French position was not merely motivated by vengeance. The Post-WWI situation was simple in a way yet strage. Germany was defeated, yet it remained the strongest country in continental Europe. Britain and France were bled dry, Russ…

I totally agree, Keynes was just one of many who made huge mistakes in the inter war years and in the WW1 resolution. > a defence alliance to prevent Germany from making trouble. Which was something that was probably politically impossible in the US, and I don't recall Keynes advocating for it. It was actually not impossible. If you don't take the standard US history crap about how 'isolationist' are the worst thing…

Thanks! the talk is quite enlightening. So perhaps an alliance wasn't politically impossible. Wilson played with that (never knew that) and there was some Republican support. Alas. There's a good chance WW2 wouldn't have happened at all.

Re: The Keynesian Revolution: A new biography of John Maynard Keynes

#48

Post by ultrarunner »

QuesnayJr wrote: post #28
ultrarunner wrote: post #27

Earlier quoted context omitted.

I wouldn’t much like to trade the things that fill my house for shovels and other money-digging items. How many people can the economy afford to allocate to money-digging before the production of other things that support our current quality of life begins to suffer?

You are misunderstanding the basic idea. Keynes is writing in a time of massive unemployment and idle resources. If you have massive unemployment and idle resources, then there isn't much of a trade-off. And he even says right there in the quote it would be better to have people do something productive.

I'm not misunderstanding the basic idea so much as rejecting it.

Isn't one of the supposed benefits of UBI that people, once no longer occupied by work in order to provide for themselves, will be free to pursue other interests? That it would enrich our lives to be free from labor prescribed by others?

Burying and digging up money is not productive; that's exactly the point. To the extent that scare resources are allocated to unproductive work, actual productive use of resources (time being one) suffers. If money-digging is more lucrative than producing food, people eventually begin to starve, increasing the demand for money-digging. If a person spends his time digging for money instead of learning something (or, indeed, planting his own garden) society is immeasurably worse-off.

Re: The Keynesian Revolution: A new biography of John Maynard Keynes

#49

Post by ultrarunner »

TheOtherHobbes wrote: post #29
ultrarunner wrote: post #27

Earlier quoted context omitted.

I wouldn’t much like to trade the things that fill my house for shovels and other money-digging items. How many people can the economy afford to allocate to money-digging before the production of other things that support our current quality of life begins to suffer?

"Unproductive money digging" is exactly how this financialised economy operates. The only difference is that process of production and mining is a little less obvious - to outsiders - than stuffing cash into bottles and burying it. And of course it's privatised, which is better by definition, supposedly. Some useful work is a byproduct. But the total of useful work isn't necessarily higher than in Keynes' example - s…

I agree that many aspects of the (U.S.) economy are wholly unproductive, and even that such behavior is made possible (if not outright incentivized) by institutions like the Federal Reserve and many aspects of the U.S. military. I'm not sure I'd hold that up as a shining beacon of privatization. You'll have to extrapolate on why you think that's "better by definition, supposedly."

If you're trying to speak solely to the financial sector divorced from the rest of industry, I'd be curious to hear your thoughts on whether money-digging would be a suitable replacement.

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