Without taking a side on the actual point: that's not a hint, that's just you stating what you happen to believe with no argument to back it up. It doesn't convince anyone who doesn't already agree with you.
That said, I would love to see the arguments and evidence in favor of either standpoint if anyone has some useful resources to that effect.
Therefore when demand is low across the whole economy, there is a rationale for govts/central banks either to directly boost demand by spending or indirectly lower the costs of capital investment by lowering interest rates. The evidence for and against the efficacy of certain interventions is basically the entire field of macroeconomics, but Keynes' General Theory is the starting point and something like Woodford's Interest and Prices: Foundations of a Theory of Monetary Policy or most undergrad macroeconomics textbooks more reflective of current practice.
Some salesmen try to sell their own tool box set as the best that will solve all your problems when the truth is you must use the right tool for the right problem.
For example Austrian economics can be the right tool if you have an economy that is suffering from high inflation. Let's take a look at Greece [0]. Inflation peaked at 6% in 2008. You can call that high but most economies that suffer from the negative effects of inflation have double digit inflation. Inflation fell straight to -2% in 2014. It certainly doesn't look like the type of economy where Austrian economics would be the right tool.
However, if you were to use Austrian economics in say Argentina [1] you could certainly speed up the economic recovery. It certainly has a place on earth but not in most first world economies.
[0] https://tradingeconomics.com/greece/inflation-cpi [1] https://tradingeconomics.com/argentina/inflation-cpi
If we find that unemployment does not improve quickly enough coming out of this we could be in for some pretty hairy downward spirals.
The cheques that were/are issued by the US Congress should not be thought of as stimulus packages (which they are not): they are disaster relief.
The economy (or economies, plural, of states considered individually) were put into a coma purposefully for health and safety reasons. It would be paradoxical to 'jump start' the economies when they have been shutdown at the same time.
The purpose of the cheques is that help those who cannot work, and draw an income, to pay the rent and purchase food. At least that is the opinion of folks like Ben Bernanke and Paul Krugman.
Some people are of course labelling them as "stimulus cheques", but that is incorrect: it is probably undesirable for people to go outside of their homes and try to do 'normal' stuff. At least not until vaccines are rolled out in volume.
In Australia the government handed out $600 to individuals who were on income support, and I can guarantee some of those recipients went straight out and bought a 60" television. This would naturally stimulate some sales but do absolutely nothing beneficial in the long run because the rest of us will have to pay for it eventually.
* https://en.wikipedia.org/wiki/Federal_aid_during_the_COVID-1...
> This would naturally stimulate some sales but do absolutely nothing beneficial in the long run because the rest of us will have to pay for it eventually.
Define "rest of us". The UK is still rolling forward debt from the 1700s and 1800s:
* https://www.theguardian.com/business/2014/oct/31/uk-first-wo...
* https://www.theguardian.com/business/blog/2014/oct/31/paying...
Unless your government has run budget surpluses sometime in its history, then the debt you have accumulated has probably never been paid off, but simply rolled forward. This generally isn't a probably as long as economic growth is higher than interest rates, which for AU look to be quite low:
* https://ca.investing.com/rates-bonds/australia-government-bo...
And interest rates have been (generally) falling for Western European countries for 700 years (with some gyrations):
* https://www.visualcapitalist.com/700-year-decline-of-interes...
So it's probably cheaper to pay off old debt with new debt. In Canada for example, even though we had an unprecedented CA$ 340B deficit, our total debt servicing costs will be lower over the next few years.
I'm with Piketty here and have no problem with more redistribution:
* https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
We're living in another Gilded Age.
To have transactions for goods and services. Anything that creates more transactions "drives" it. Generally the Keynesian view is that it is demand (for goods/services) that creates/drives activity.
If people are scared of losing their jobs (or have lost their jobs) they won't spend money because they may not have any more. If people are confident of their future prospects they'll be more likely to spend now because they have faith that they'll get more money later.
The best ELI5 of Keynesianism that I've come across:
> I would summarize the Keynesian view in terms of four points:
> 1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond.
> 2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain.
> 3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down.
> 4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses.
* https://krugman.blogs.nytimes.com/2015/09/15/keynesianism-ex...
Appropriate capital investment table stakes, now. Innovation isn't a machine you put capital investment tokens into until you get a breakthrough.
Really it’s mostly a question of short vs mid term results, in a world of feedback loops either can dominate.
As far as I know no central bank gives you money to buy consumer goods, they give money to commercial banks who let you borrow money to buy real estate (an investment if you rent it out) or to your startup or existing business so that you can expand faster (also an investment). That's the end of the short list of things that the central bank does that had even a tiny chance of directly involving consumers and the vast majority of money does go into capital investments.
Finally there is QE where the central banks introduce money into capital markets directly. Again unless you are a retail investor you are not going to transfer that new money into consumer spending. The vast majority of retail investors have a small net worth which means most of the money is going to a minority of wealthy people. Those wealthy people own businesses and would rather earn even more money (capital investment again).
So, every time the author complained about the central bank following keynesian politics too much, they didn't...
If anything, there is too little keynesianism. Inflation is low because money isn't reaching consumers at all. Now that we have arrived at inflation we can put another piece of the article in perspective.
>Economists of the Austrian school understand, that the boom is the real problem and the economic crisis is the necessary and positive cleansing mechanism.
Consumer inflation is a positive cleansing mechanism, it tells you "you have to be at least this productive to break even". Companies whose returns are below inflation have to close up shop eventually. Why is that? Because there is a shortage of goods or workers and those few precious goods or workers should be used in the most efficient way. Except this isn't what is currently happening, there is an overabundance of goods and labor and therefore there is no need for any sort of economic cleansing in the name of efficiency. It's the biggest reason why austerity policy in Greece did not work as "advertised". Their unemployment rate was so high that no job or company could be considered too inefficient. Simply getting people to work is already success.
I'll take advantage of this to also talk about something unrelated to the article. Some capital owners argue that their wealth should not be taxed on inflation. Well, that would completely go against the idea of the cleansing mechanism and inflation would just be central bank money straight into the pockets of the rich (it already is to a large degree).
Does this author have vested, financial interest-motive in Bitcoin or other crypto-"currencies" - which centralized digital currencies (legitimately fiat, a better transparent version of)?
Edit to add: looks like they likely do, re: a project they list in this site's menu - oh, and in their about me: "Early Bitcoin adopter, now Bitcoin Cash supporter." Would it not have been best practice for the author to list their vested interests as they're writing about a competing product/offering?
Imagine if everyone countering the positive narrative (propaganda in part) perpetuated by the "army of HODLers" was financially incentivized to counter that narrative whenever they had a chance, and not only that but proselytized their position, Bitcoin et al would have never reached its position today and many people who bought into the hype - or even killed themselves because of their losses - would have not unnecessarily, unreasonably transferred their wealth to someone else; a true centralized digital currency could take the cash you transfer into the digital currency "out of circulation" instead of giving it to someone, Bitcoin et al similarly structured - the "army of HODLers" are akin to a religion that's financially incentivized - even Fred Wilson - https://avc.com/2019/04/orthodoxy/ - stated he dislikes the cult-like behaviour of some in their community, without realizing he's in the community but just taking a priest-like role where he's in a more refined position and better controls his behaviour/image.
I am glad higher profile individuals are starting to voice their opposition, dislike of Bitcoin et al - Elon Musk recently tweeting out "Bitcoin is almost as bs as fiat money;" https://twitter.com/elonmusk/status/1340588909974200321 - fiat currency can shift into a better system supported by immutable, transparent blockchain - but with centralized control so no shenanigans can occur hidden from other allied nations you're trying to fairly balance economies with, arguably who will all be democratically elected governments, democracies.
Edit to add: With the growing "army of HODLers" with more vested asset holders waiting for the value of Bitcoin et al to recover and then some - while chanting the mantra "HODL!" - we need to pay attention to counter regulatory capture that this newer industrial complex will work towards.