Hayek vs Keynes

Posted by Larry Miller on January 26, 2010 under Why | Be the First to Comment

This video, while done in fun, illustrates the two primary competing economic theories in the world today. John Maynard Keynes is revered by the progressives as they both teach that government intervention will solve all our economic woes. If problems aren’t solved, it just means that they have not manipulated the system enough. Spend and put money in the hands of the little people. Encourage them to spend… not save! We are told by this administration that despite the fact that this spending is digging us a financial hole that we may never climb out of, everything thing will be fine. The question is… fine for whom? We the people or them, the controllers?

The thinking of F.A. Hayek and others in the Austrian school are not quite as well known and followed. The Austrian philosophy explains that the boom and bust economic cycles occur precisely as a result of the economic intervention of governments throwing money into the economy in an effort to pump it up in a effort to force perpetual expansion. The problem is that sooner or later the economic activity runs out of steam and the inflated economy comes crashing down further because of it was lifted up higher.

Currently two of the well known proponents of the Austrian school are Thomas Woods, author of the bestselling Meltdown and Peter Schiff candidate for the US Senate in Connecticut have been voices crying out in the wilderness that our country is on the wrong track. Even the previous administration exhibited the progressive, interventionist tendencies when, under Henry Paulsen of Goldman Sachs, took the first steps toward our destruction by insisting we throw money at financial institutions that they told us were “too big to fail”.

The takeaway for all of us is that it’s not just the party we need to look at, but we need to look at who will really take us back to a more reasonably sized and influential government. Economical theorists who have not been elected and who most people have never heard of, have a disproportionate impact on decisions that effect all of us and are beyond our reach. Understanding their thinking will help us to neutralize their clout and power our defenses against their outlandish schemes. Knowledge is power and it pretty much up to each of us to educate ourselves as the public schools and most of the universities are not getting the job done.

If you haven’t played the video yet… watch it, learn and enjoy!

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