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Cycles of Doom (book review of "The Great Inflation and its Aftermath" by Robert Samuelson)
New York Times ^ | November 28, 2008 | Noam Scheiber

Posted on 11/29/2008 1:11:14 PM PST by reaganaut1

Inflation-racked countries scorn all the self-abnegating rituals that make capitalism work. They want their guns and their butter and they want them now. So they print money to pay for them. By contrast, low-inflation countries are committed to an ethos of scrimping and toiling that yields long-term rewards. In “The Great Inflation and Its Aftermath,” Samuel­son studies the transformation of the United States from the first kind of country to the second.

The villain in Samuelson’s morality tale is a group of intellectuals who came into fashion during World War II, then came into power with the Kennedy administration. John F. Kennedy himself had sound economic instincts. But he was seduced by his chief economic adviser, a University of Minnesota professor named Walter Heller, who argued that more rational management of the economy would produce permanently higher growth. “Heller was an aggressive salesman for what ultimately became known as the ‘new economics,’ ” Samuelson writes, but he was “hardly a one-man band.” Many of the day’s leading economic lights — James Tobin of Yale and Robert Solow and Paul Samuelson (no relation to Robert), both of M.I.T. — held similar views.

At the heart of the “new economics” was a concept called the Phillips Curve, which summarized the trade-off between unemployment and inflation. The idea was that an economy could experience very low unemployment and high inflation, or very high unemployment and low inflation, or any combination therein. Heller persuaded Kennedy to move leftward along this spectrum by stimulating the economy — effectively accepting higher inflation in exchange for more jobs.

It worked for a time. The economy flourished; inflation inched up only marginally. But as the Kennedy administration became the Johnson administration became Nixon became Carter, growth stagnated and inflation skyrocketed.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy
KEYWORDS: bookreview; inflation; keynesianeconomics; robertsamuelson
Keynesian economics is the real "voodoo economics".

The Times is favorably reviewing a book on the danger of inflation and meddling in the economy, but it favors massive new spending ("stimulus") and environmental regulations that will cause more inflation in the future. Another favorable Times review of this book was discussed at http://www.freerepublic.com/focus/f-news/2132882/posts .

1 posted on 11/29/2008 1:11:15 PM PST by reaganaut1
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To: reaganaut1; TigerLikesRooster; ex-Texan; rabscuttle385; dennisw
Keynes was asked what would happen in the long run with his theories.

He said, "In the long run, we're all dead." In other words, "The hell with your grandkids, live for today."

Well that childless old queen is long dead, but his "long run" has arrived, and we must pay the bill at last.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

-~~Ludwig Von Mises

"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market, and so check the movement."

~~Harvard Economic Society, October 19, 1929

"Business will turn for the better this month or next, recovering vigorously in the third quarter and end the year substantially above normal."

~~Harvard Economic Society, May 17, 1930

“Several brokerage houses tumbled; blue-sky investment companies formed during the happy bull market days went to smash, disclosing miserable tales of rascality; over a thousand banks caved in during 1930, as a result of marking down both of real estate and of securities; and in December occurred the largest bank failure in American financial history, the fall of the ill-named Bank of the United States in New York.”

~~"Only Yesterday: An Informal History of the 1920’s" by Fredrick Lewis Allen

2 posted on 11/29/2008 1:16:15 PM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: Travis McGee

We have had all our eggs put in the Federal basket and then didn’t watch it. Even if we did watch it, we were told our eyes lie. When Secretary Paulson says he must have 700 billion, in days, to buy home mortgages, and then days after the bill says he’s not going to buy mortgages, we like good Germans did Hitler, pretend he never lied to us.


3 posted on 11/29/2008 1:25:15 PM PST by Leisler ("Give us the child for 8 years and it will be a Bolshevik forever. " Lenin)
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To: Travis McGee
Keynes was asked what would happen in the long run with his theories. He said, "In the long run, we're all dead." In other words, "The hell with your grandkids, live for today."

As you note, Keynes was a homosexual, one of several in his intellectual circle. One problem with homosexuals is that they have no real families, so they don't think about the next generation or care about the future. It's all about them, and all about now. Eat, drink, and be merry, and the hell with other people's kids.

4 posted on 11/29/2008 1:59:55 PM PST by Cicero (Marcus Tullius)
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To: Travis McGee; reaganaut1
In other words, neither of you could be bothered to scan the Cliffnotes to his "General Theory of Employment, Interest and Money."
5 posted on 11/29/2008 2:44:45 PM PST by Jacquerie (Totalitarianism is the endpoint of Socialism.)
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To: Travis McGee
I remember seeing speculation that Keynes wrote his Treatise as a sort of schoolboy parody sort of in the făshion of some "scientific" papers that have got published by "peer reviewed" journals only to turn out to be college pranks. The book certainly reads that way. Paragraphs do not hang together and contradictions abound. Sentences do not make sense but have scientific sounding words in them. Conclusions do not follow from stated premises. I have tried to tread the book a couple of times and made it all the way through finally a few years ago.It would be easy reading, I guess, for people who just look for the conclusions and do not try to understand the "arguments." The treatise got popular with politicians because it gave justifications for control of the economy by a band of "experts" operating fiscal policy from the government center. That is why it has retained its popularity and the gravity imputed to it by Harvard and government "economists." When it got famous and often cited to support various government policies back in the 30s I guess the good lord Keynes kind of liked that and kept his mouth shut about the parody.
6 posted on 11/29/2008 3:17:14 PM PST by arthurus (Old Age beat itself with its ownguile and lack of enthusiasm.)
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To: reaganaut1
John F. Kennedy himself had sound economic instincts. But he was seduced by his chief economic adviser, a University of Minnesota professor named Walter Heller,

Kennedy signed Executive Order 11110 (which granted the Treasury authority to directly issue money in the form of silver certificates) five months before his assassination. He also gave this speech seven months before his death.

7 posted on 11/29/2008 3:20:27 PM PST by ovrtaxt (It is better for civilization to be going down the drain than to be coming up it. ~Henry Allen)
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To: Leisler

What Paulson did was obtain plenipotentiary power over the disbursement of 700bil. I imagine a certain percentage of that money is guaranteeing the prosperity of him and his progeny after he leaves government “service” as well as that of friends and allies.A lot of that money, that which Paulson and his GS allies manage to get their arms around will be transformed into inflation-proof forms, like gold in off-shore locations. Cayman Islands will prosper mightily from this economic collapse.


8 posted on 11/29/2008 3:21:48 PM PST by arthurus (Old Age beat itself with its ownguile and lack of enthusiasm.)
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To: arthurus

I am a minor fan of almost Marxist use of class as a interpretive tool. If anything Paulson has brought the loyalty of the elite and his children are guaranteed access to the temples of privilege.

Another view, is that he is a prisoner of success and sees the world not as it is and will be, but as it was. Kind of like how Russian royalty used to haunt the capitals of Europe decades after the Bolshevik revolution.

I just know that he either out and out right lied, or didn’t know what he was doing.

Just to get more weird. Maybe Congress is in on this.

When I think about this in general terms, my head swims.


9 posted on 11/29/2008 3:59:05 PM PST by Leisler ("Give us the child for 8 years and it will be a Bolshevik forever. " Lenin)
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To: Leisler

700 billion dollars for one man’s sole discretionary use is an irresistible recipe for pure unadulterated old time corruption.


10 posted on 11/29/2008 4:07:30 PM PST by arthurus (Old Age beat itself with its ownguile and lack of enthusiasm.)
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To: arthurus

You could be right.

Certain Keynsian freepers still employ the same brand of high-flying obscurantism to confer the ring of wisdom to utter BS.

It works on morons. “Gee Elmer, that shore sounds edecated and smart. It must be right.”


11 posted on 11/29/2008 4:53:14 PM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: arthurus
"700 billion dollars for one man’s sole discretionary use is an irresistible recipe for pure unadulterated old time corruption."

Yah think!? Looting the Titanic's valuables vault before taking to Lifeboat One dressed as a woman, that's Paulson et al.

12 posted on 11/29/2008 4:54:51 PM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: Jacquerie

Yeah, sure. Nice try though.


13 posted on 11/29/2008 4:55:43 PM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: Cicero
As you note, Keynes was a homosexual, one of several in his intellectual circle. One problem with homosexuals is that they have no real families, so they don't think about the next generation or care about the future. It's all about them, and all about now. Eat, drink, and be merry, and the hell with other people's kids.

Exactly. And taking lessons on economic posterity from a blarney spewing gay fop is a sure path to societal doom.

And that gay fop, wherever he rots today, would consider our current predicament a great joke, and would laugh and laugh at where our former misplaced trust has brought us.

14 posted on 11/29/2008 4:59:43 PM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: Travis McGee

Ignorance is bliss. Keep smiling.


15 posted on 11/29/2008 5:45:15 PM PST by Jacquerie (Totalitarianism is the endpoint of Socialism.)
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To: arthurus

We completely agree. Reading Keynes, particularly the General Theory, is very difficult and his admirers like to tell you it’s because he is so profound.

We do not find it so after long study.

He was, however, very skilled at making money in the market himself.

One of the more fascinating accounts of his life concerns his having an audience with FDR, after which he is said to have said that he was appalled by how ignorant FDR was of economics.


16 posted on 11/29/2008 5:52:23 PM PST by AmericanVictory
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To: ovrtaxt

Thank you for the link.

It is easy to forget how good a speaker he was and how
he moved us who were still relatively young then.

The speech of his that most rings in my mind these days is the one where he had the chart and he pointed out how reducing taxes would stimulate the economy.


17 posted on 11/29/2008 6:15:31 PM PST by AmericanVictory
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To: Jacquerie
Yeah, keep peddling your Keynsian nonsense, as the economy goes over the falls. That live-for-today, the hell with your grandkids "long run" has at long last arrived.

And there will be no hiding the reality.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

-~~Ludwig Von Mises

18 posted on 11/30/2008 9:31:22 AM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: Travis McGee

Still haven’t read a word of his works or life and times, have you?

Keep smiling.


19 posted on 11/30/2008 11:04:03 AM PST by Jacquerie (Man should tyrannize over his bank accounts, not his fellow citizens - John Maynard Keynes)
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To: AmericanVictory

We have had only one president trained in economics.Reagan had a degree in the subject and it showed. Among others Grover Cleveland and Calvin Coolidge had an understanding of how people act economically. Kennedy did one good thing, he cut taxes. Politicians are dynamic people and as such do not have time to bother with such a boring subject in college. That is why we do not tend to get presidents who understand it and why we do tend to get economic advisers who tell the president he can perfect the economiy by fiddling and jiggering.


20 posted on 11/30/2008 1:40:45 PM PST by arthurus (Old Age beat itself with its ownguile and lack of enthusiasm.)
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To: Travis McGee

There are Keynesian Freepers. There are no freemarket Keynesians. At best they are “Fabians.”


21 posted on 11/30/2008 1:46:12 PM PST by arthurus (Old Age beat itself with its ownguile and lack of enthusiasm.)
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To: AmericanVictory

Many finance people, folks who get rich in the market and running businesses are not economists. Finance is the art of making money for yourself and your employer, of getting things “funded.” and directing and redirecting streams of money. It is great for raising money and selling products. It is disastrous when finance men are put in charge of the economy.Paulson is a finance man.He has a very limited understanding of economics. Or he understands it but is focused on the narrower and more remunerative area of Finance for his own gain and his allies’ gain.


22 posted on 11/30/2008 1:51:17 PM PST by arthurus (Old Age beat itself with its ownguile and lack of enthusiasm.)
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To: Jacquerie

You are surly experiencing maximal bliss. Read Keynes. Then pick a longish paragraph that contains a premise and a conclusion and explain how he got from the one to the other.


23 posted on 11/30/2008 1:54:27 PM PST by arthurus (Old Age beat itself with its ownguile and lack of enthusiasm.)
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To: Travis McGee

Out there in the ocean there was no way to get the loot to the Cayman Islands in a form that would not sink with the ship. Paulson and the Goldmansachsians are not in that position.


24 posted on 11/30/2008 1:57:13 PM PST by arthurus (Old Age beat itself with its ownguile and lack of enthusiasm.)
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To: arthurus

Why?


25 posted on 11/30/2008 2:27:14 PM PST by Jacquerie (Man should tyrannize over his bank accounts, not his fellow citizens - John Maynard Keynes)
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To: arthurus

And, like so many of his kind, he does not understand that markets trade wealth but do not create it. Thus, he wears dangerous blinders.


26 posted on 11/30/2008 2:32:21 PM PST by AmericanVictory
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To: Jacquerie
I am very familiar with the life (gay poser) and works of JMK, and nobody is smiling. Having been sold a bill of goods for several generations, we are now forced to pay his "long run" piper's bill. The experiment is coming to an end, and history will finally write that Keynes sold snake oil to gullible politicians who wanted their cake and to eat it too, now, and let the grandkids worry later.

Now, it's later. The Austrians will be the last standing, in the economic wreckage of Keynes's long run.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

-~~Ludwig Von Mises

27 posted on 11/30/2008 2:58:51 PM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: arthurus
Exactly. JMK’s stock in trade was infinite obscurantism, designed to gull the rubes.

And it worked, for he peddled what every politician wanted to hear: play now, pay later, much later, on somebody else's watch.

Now, it's much later, and we're going to pay and pay.

28 posted on 11/30/2008 3:01:24 PM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: Jacquerie

ob·scur·ant·ism (b-skyrn-tzm, b-, bsky-rn-)
n.
1. The principles or practice of obscurants.
2. A policy of withholding information from the public.
3.
a. A style in art and literature characterized by deliberate vagueness or obliqueness.
b. An example or instance of this style.


ob·scurant·ist n.

The American Heritage® Dictionary of the English Language, Fourth Edition copyright ©2000 by Houghton Mifflin Company. Updated in 2003. Published by Houghton Mifflin Company. All rights reserved.


obscurantism
the use of argument intended to prevent enlightenment or to hinder the process of knowledge and wisdom. Also spelled obscuranticism. — obscurantist, n. — obscurant, obscurantic, adj.
See also: Argumentation


29 posted on 11/30/2008 3:07:12 PM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: Travis McGee
Your posts are preoccupied with homosexuality. Repressed feelings?
30 posted on 11/30/2008 3:31:54 PM PST by Jacquerie (Socialists believe in two contradictory things, freedom and organization - Elie Halevy)
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To: Jacquerie

Nope, simply the point that JMK, a childless gay bon vivant, had a psychological world view tending toward live for today, live for myself, the hell with others, and especially the hell with future generations.

Is this so hard for you to fathom?

It’s just a shame he was able to peddle his BS to politicians, eager for a cornucopian solution, where today’s deficits will always be repaid on somebody else’s watch long in the future.

The future is now, and the bill must be paid.


31 posted on 12/01/2008 5:18:01 AM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: Travis McGee
Is this so hard for you to fathom?

I fathom that you once again prove you don't know of what you speak.

Here is a for instance.

Keynes worked for the British Treasury during WWI. He was an advisor at the Versailles Peace Conference. Three days before the treaty was signed, he released a book, The Economic Consequences of the Peace. He presciently saw the treaty as a settlement of political grudges that ignored the problem of restarting the European economy.

Keynes was the first to point out the problems and recommend a revision. It took some personal bravery to publicly criticize the government he served. He was concerned about the future of Europe and offered solutions.

So please, stop showing your ass.

32 posted on 12/01/2008 2:34:12 PM PST by Jacquerie (Nationalization of thought everywhere precedes nationalization of industry - E.H. Carr)
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To: Jacquerie

So what does that have to do with his ultimate legacy, the multigenerational slow-acting poison of deficit spending by design?


33 posted on 12/01/2008 6:06:35 PM PST by Travis McGee (--www.EnemiesForeignAndDomestic.com--)
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To: Travis McGee
his ultimate legacy, the multigenerational slow-acting poison of deficit spending by design?

Only in your dreams.

34 posted on 12/02/2008 3:22:18 AM PST by Jacquerie (The lowest common denominator often unites the largest number of people.)
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