The indefatigable efforts of J. M. Keynes | Hacker News Reader

The indefatigable efforts of J. M. Keynes

the-tls.co.uk

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"This revolutionary theory – his Liquidity Preference Theory – is still considered too radical to be acceptable today."

What? Liquidity preference was taught in my undergrad macro class using the textbook by Greg Mankiw. It's the basis of the IS/LM model. And central banks are constantly worrying about interest rates and liquidity. To whom is it too radical? Probably some people disagree with it, but I wouldn't call it very "radical" today. The author is fighting straw men.

Exactly right. And the IS/LM model, which is Hicks's interpretation of Keynes's General Theory, is the basis of current macroeconomic theory.

People always talk about Keynes but its really Hicks interpretation that got everybody on that track.

Short summary of the difference between supply-side (Milton Friedman) economics vs demand-side (John Maynard Keynes) economics:

https://www.investopedia.com/ask/answers/012615/what-differe...

My main experience with this on a microeconomic level was during the housing bubble and recovery. I tried working at home flipping used Macintosh computers to sell on eBay and found that as money got tighter and tighter around the country, prices kept falling from $300-500 in the course of a year to $150-300 and eventually I couldn't make any money at it.

Part of this was the natural drop in price of electronics but part of it was also the fact that everyone was broke so demand for computers fell. I think we could do a lot for the US economy by putting more money in the hands of consumers and raising demand. We could also think about what people are buying, and start investing in projects that pay off in the long run (renewable energy, permaculture, automation etc) vs projects that are unsustainable (coal, monocropping, the service economy).

The fact that most people have never really heard of these sorts of government-driven public works since roughly the late 70s tells me that supply-side economics won. But I think on a local level, we might see a resurgence in demand-side economics with recycling, cooperatives, some level of universal basic income - things that make life easier for working people. At least, I thought that before the last presidential election. But if people are looking for hope in these times, Keynesian economics is a great place to start.

I think you need those programs to start at the federal level rather than the local level if you want to avoid bankrupting the more local governments. I would like to see more of those programs by the way.

I'm sorry but your comment and the post you link to is complete nonsense economically and worse applied to Keynes and Friedman is utterly wrong. The article you linked is an honestly an embarrassment.

Furthermore nothing in the actual economics of either of these two people puts them squarely in the supply-side/demand-side 'camp' and furthermore those terms are used competently wrongly to the point of meaninglessness in public discussion anyway.

I don't want to get into a long post here, but your way oversimplifying the issue economist discuss to a point where it borders on satire.

To get a somewhat better understanding in a short time:

- https://www.econlib.org/library/Enc/KeynesianEconomics.html (written by Alan S. Blinder)

If you are further interested in the history of economists long dead, consider:

- https://www.mruniversity.com/courses/great-economists-classi...

So you're a Friedman fan I take it? ducks

I'm a fan of R. G. Hawtrey

The "Friedman vs. Keynes" split exists to a small extent, but the imagination that's a deep divide between neocon and neoliberal (or whoever) is almost entirely a fiction of op-ed writers and armchair economists. Both are considered foundational to modern economics. Liberal economists took a lot from Friedman and many prominent conservative economists (Mankiw for one) consider themselves Keynesians. And "supply-side vs demand-side" is not at all the axis that divides the two; that's another fight far more fascinating to the armchair crowd than practicing economists.

Is there an "Economics for Hackers" resource or book that isn't tainted by political bias?

No, but there are plenty whose politics are obfustacted enough that you could confuse it for steely-eyed objectivity.

What would you like to see in a book like that? Seems an interesting idea

Why rich countries/cultures are rich and poor countries/cultures are poor.

> Worse, it has led to increasingly frequent financial crises. These began first on the fringes of the global economy (in the 1970s and 80s), but in 2007–9 moved to its core, the US and Europe.

Far as I got in TFA...

Anyone who doesn't recognize "financial crises" have been going on for, like, forever probably isn't that much of an expert on the subject to even consider their argument.

The first of the "increasingly frequent financial crises", I should think, is what's intended. Not the first one period. Not to defend that point—my background is little help here—but I think yours is a misreading.

Recessions have become increasingly less frequent since Keyenes.

I think there may be an argument around the US experiencing fewer, but greater in magnitude recessions, but im not sure of the specifics.

No you´re right. The banking system was bouncing up and down like a yo-yo in the 19th century, on average there was a crisis every 10-12 years (also astonishingly regular). The mean time to crisis is several years longer these days.

We had a respite after the Depression and banking regulations. Then Reagan(?) and deregulation, and now we're right back to the yo-yo

Markets and bubbles crash because of a mismatch between a price and actual comparable value (which, in their large form, are usually caused by artificial market levers or _regulations_).

Stop with this mysticism inspired "greed is bad and therefore actions inspired by greed are inherently bad so we need even more powerful people who are of course not influenced by greed to set rules for the greedy" nonsense.

We are not back in a yo-yo compared to the 19th century. We are two recessions apart from the longest period of continued growth in US history (1990's). Then there was a recession in 2001, and then another in 2008-2009.5.

You should check out the Wikipedia article for "list of recessions in the United States." It spells out recession duration and time since previous recession.

Bank failures were very common in the US specifically, especially in the GD. The reason is that the US had 10000s of banks because of a regulation called 'Unit Banking'. This made banks incredibly weak (not diversified) to shocks and failed often. Because of other problem in the US system this often lead to lots of banking failures. 1000s of them went down in the GD for example. Compare to Canada where no bank failed (there were less in the first place of course).

It was deregulation that finally abolished that absurd practice along with other changes, including some more regulation, and the removal of lots of old regulation that lead to an improved banking system.

The Depression of 1929-1933 was followed very quickly by a recession in 1937 but banks didn't fail anymore. Pretty much every economist agree that the reason was the FDIC and the consolidation of the banking system in the following years.

To track bank failures today on deregulation in the 80s is a really hard sell, if you study the history of banking you will see huge changes in regulatory structure, types of regulation and so on all the time, including after Reagan. To sell the old 'evil republic deregulation is cause of all evil' story is always easy but unless you are at a political rally it is a pretty meaningless statement.

Oh, I realize that most people don't study historical banking system but what your saying is only partly and only if you look at specific places.

The crisis in the US system in the 19th century were usually based on bad harvest that lead to a banking crisis. The US was suffering from absolutely horrible banking regulations back then and that was acknowledged by everybody (and was blocked from being reformed for 25 years).

However the severity and duration were not necessary longer then they are today. The Great Depression and Great Recession were easily as bad or worse then any of the recessions in the pre-WW1 era.

Furthermore Canada, who was just north of the US and with a similar economy suffered no banking crisis at all during that period. So saying that it was like a yo-yo in the 19th is simply not true unless you are locking at the US. Even in the US banking systems in some states performed significantly better then others (more diversity in regulation back then).

Actually, some of us do, and some of us study it rather more widely than the US - which is actually regarded as having one of the world's more dubious banking systems during the 19th century.

Some of us would also make the claim that the reason the European banking system was also bouncing up and down like a yo-yo in the 19th, was that the American system kept crashing it (cascade failure.)

Canada's branch banking system was quite different to that used in America, and probably played a part in the relative stability. It probably also helped that during that period Canada was a big exporter, and was to some extent protected by the Sterling zone. However the British banking system was also suffering from periodic crashes during this period.. so it's unwise to get too carried away with that analysis.

Great. So we are in agreement. 19th century banking was not 'like a yoyo' it depended on lots of factors and was the opposite of a yoyo in some places.

The US history of banking is really a fucking mess. Its a travesty.

This is a fun little podcast about banking history in the US:

- https://soundcloud.com/macro-musings/hughrockoff

I think Keynes is a lot more comparable to Freud than to Darwin. Hugely inspirational in his day, inspired a lot of interesting ideas, clearly a very bright guy. But not necessarily ever right about anything, or at least anything new.

This article contains so much nonsense its hard to comprehend how this is not an attempt at satire.

It seems the anther has read some Keynes and has defined a whole new history around it.

I highly recommend people against reading this text, it represents the worse kind of historical rewriting and reinterpretation to serve the needs the person writing it.

I would also point out that a lot of the insights that Kaynes made popular and enjoyed wide popularity from the 1950 to 1970s has since gone away. The theories today called 'New Keynesian' really are far more evolution of 70s monetarism.

> Keynes’s development of the science of macroeconomics goes largely unacknowledged by a profession still

So all of this is wrong. In no meaningful way did Keynes develop the science of macroeconomics.

There were working on the exact same topics as him for a very long time before him. One might argue that he was the most well known macro economist in England at the time, but that's about it.

Furthermore, the idea that Keynes is 'unacknowledged' is unfathomably wrong. There are macro economics schools today that refer to themselves as 'New-Keynesian', 'Post-Keynesian' or 'Old Keynesian'.

> by a profession still steeped in classical microeconomics

I don't even know what he is referring to. Nobody does 'classical' economics since the 1870 (except some forms of Marxist economics).

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