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aliveandkicking

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  1. aliveandkicking

    What is "Austrian School"?

    I must admit i am not a well read person but instead i have learnt most of my stuff from living my life and talking to people. Even so i have i think learnt from the internet and have spent many years reading the internet. Most people dont seem to understand Keynes in my estimation Keynes is not just about spending in a recession. It is reducing spending during the boom times and increasing taxation and interest rates in a depressing manner to enable a saved reservoir of stimulation ability to be applied in the recessionary periods. The strict Austrian definition as applied above appear to have a fundamental aversion to managing an economy so that individual spending and group spending can be altered to suit the conditions of the time for the benefit of a group of people. So if we are to compare like for like i think we need to understand what they are and how they differ. To my way of thinking about it Austrian economics appears from the above definition to be too exstremely individuallistic so that resentment of government interference in an individuals ability to create their own local economy is somehow felt to be wrong or harmful to the individual and the resentment is justified. For example our modern central banking systems can be seen as a form of evil to benefit a few to the detriment of the individual or smaller groups or they can be seen as a way of balancing economic conditions over a longer period of time. So here we seem to be talking about philosophical differences to the way an individual human being feels they should be living their lives. Ie either as individuals or as individuals in a group or society As individuals we are self serving because our survival is uppermost in our minds But as individuals in a group we care about the group so that we as group can survive. Keynes cared about the group. He dirtied the towels to create work for people less well off than he was. Even though he was a priviledge member of the upper echelons of society he cared about people who had less than he had - that is how i read this anecdote about him. Todays society has moved away from the concept of society. Todays society favours the cult of the individual. Today we are in a mess as a group, and individualistic approaches that are self serving are not likely to create a world any of us will want to live in. Hitler for example was an individual who wanted things done his way. Therefore i think that even if Keynes was not properly applied in the past it still can have a place today to create a better future if it is well applied.
  2. aliveandkicking

    Punish the prudent

    I am not sure if this is the best thread to talk about this theme? And it is not my intention to cause offence. I do care about the planet and would like to see a sustainable future. I did not join this forum last july to cause trouble. I joined because i am interested in what is happening today and how that is going to influence our futures. Governments dont need to borrow from 'an entity' to spend now. They can "borrow from the future" to spend now. Because they can create inflation they can force prices to rise and enable their borrowings taken from the future to be repaid by money that is taken from the present and returned to the past - which is then in turn a deflationary process. But the inflationary process also reduces the value of existing debts that are held in fixed 'prices' while the value of money is reduced. Obviously this does not favour those who save only and obviously it tends to favour the prudent debtors and savers who buy assetts protected from inflation while having even so savings for a rainy day and opportunities. So there are differences between individuals and governments. A government can devalue debt by introducing an excessive amount of money into the economy. Debt is now the problem for many people. So Government spending makes sense from that point of view. The issue in the future is then if you intend behaving prudently like modern Germany has said it will do or if you behave like say Zimbabwe or Argentina etc. In a temporary situation for example where Eastern countries have saved and western countries have not saved then if economies are otherwise sound (given that we dont live in a perfect world) western countries can now borrow from the future while Eastern countries can spend the saved western money in a way that could go some way to making our future a bit better. If the savers save less while the spenders are unable to spend so much there could be a balancing effect of sorts. If you save in a mattress your money is not spent by somebody else, but if you save in a bank for profit your money is being spent by somebody else. Saving is a way for you to spend less and for them to spend more from that point of view. Obviously if you are a government and there is a recession you want savers to spend their money also, because the government does not need savers to be able to spend itself. Because we are now in a recession, prudence will now be punished. That is a sort of fact of life i think. But the question remaining is when will it be prudent to move from being a saver to being an investor? Another point about the future is that you cannot know the future. You know the future when it is the present when it is no longer the future. So if you want to talk about knowing what the future holds you are moving into faith based ways of analysing todays situation. Personally I have faith that things will work out ok somehow. And i know it does not make me very popular. Even so my faith is reasonably well grounded in my life experiences and i guess i am wanting others to also ground their faith in data and trends and observations before they only use their faith that they know the future better than i do. Anyway at this point in time my observation is that a government is different to an individual because the goverment *can* create the future via its actions in a way that an individual cannot do when it acts alone. Cheers AAK
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