Wednesday, September 21, 2016

Why Is There So Much Confusion 
In Macroeconomics?
Free market economist Frank Hollenbeck highlights the differences in philosophy & approach between the Keynesian School of Economics versus the Austrian School of Economics, how the answers to questions of economic policy & approach are confusing if one does not understand these differences .. "If Keynesians are really concerned about this deflation-depression spiral, they should be addressing the cause — fractional reserve banking — and not the result. Telling a drunk that he can avoid the hangover by drinking more is simply making the situation worse. The real solution is to have him stop drinking. While Keynesians may have been able to make a case for printing press money as a substitute for hoarding in the financial crisis, it is impossible to do so today. Current government spending or printing is simply displacing claims from the private sector. Today, there is no theoretical justification for the current overzealous printing, borrowing and taxing. Economists should be united against this displacement of claims. Growth and employment are simply more likely if claims are in private hands than in public hands. Surprisingly, Keynesians and Austrians should be uniting to achieve the same goal, albeit for different reasons. Austrians fear the boom caused by excessive credit growth, while Keynesians (and Monetarists) fear the bust created by increases in hoarding. End fractional reserve banking and satisfy two birds with one stone."
LINK HERE to the essay

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