What’s so wrong with Keynes and Fiat, anyway?

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  • Fri, Feb 26, 2010 - 02:36pm

    #11
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    Re: What’s so wrong with Keynes and Fiat, anyway?

Aaron,

Ask him to describe the money creation process.

Or ask him what happens to a Keynsian economy when its saturated by debt?

(Keynsian monetary policy no longer works in this situation). 

With a little research at Steve Keen’s blog you should be able to “wipe the floor” with this Prof.

Give ’em hell….Jeff

  • Fri, Feb 26, 2010 - 04:06pm

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    Re: What’s so wrong with Keynes and Fiat, anyway?

Erik, 

Wow – sir, you’ve outdone yourself. 
Excellent information, I’ll start looking into the suggested reading and getting my stuff together here this weekend.

Mike,

This topic didn’t go over very well, and as Johnny Oxygen said the basic assumption was that I was lucky to even have such a brilliant resource to VETO my crazy libertrarian concepts. Did I mention he was educated at Columbia?

Carl V,

Thanks for the quotes!!!
Excellent ammunition. Almost nothing better than using a persons own words to illustrate their agenda.

Cheers, and thank you all!

Aaron 

  • Sat, Feb 27, 2010 - 06:09pm

    #13
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    Re: What’s so wrong with Keynes and Fiat, anyway?

 

Bring up Fractional Reserve banking, P<P+I  and the impossibility of ever getting out of debt collectively since money comes from debt. 

Debt money can be created followed by wealth money(debt-free/Greenback) to pay the Interest on all loans.

  • Sat, Feb 27, 2010 - 06:25pm

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    Re: What’s so wrong with Keynes and Fiat, anyway?

JK – Awesome point.
That’s really going to help in framing this argument.
Fractional reserve banking when mixed with Keynesian economics is a recipe for disaster. 
Autonomous of one another, the principles might be workable. When mixed, it’s chlorine and ammonia. 

Cheers!

Aaron

  • Sat, Feb 27, 2010 - 08:57pm

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    Re: What’s so wrong with Keynes and Fiat, anyway?

 

 A useful way of thinking about fiat money is simply as a new variation on an old scam..

 The original scam was this:

 The sovereign monopolises the free exchange of metallic money, at first honestly… stamping coins of a standard purity..

 Once these coins are accepted, and the old system is forgotten, the metal content dilutes.. as the face value stays constant. – “seignorage gains” for the ruler..

  Since it’s hard to spot the reduced quality, and laws can compel acceptance of the kings money, the scam works.. value is gradually siphoned off.

 

 I’d argue that the instant that the metal content is diluted, the coinage has become Fiat coinage..the new coins are declared equal to the old. even though they are not..  In that case you can argue Fiat currencies are at least 2000 years old.. probably older… I know the Roman denarius and greek drachma were subject to gradual dilution… hence the temple tax in the new testament was only payable in pure silver coins…

 Possibly the moneychangers would have made the swindle obvious, by constantly increasing the number of denarii per shekel ? Though maybe they were blamed for being the bearers of bad news.. instead of the real culprits.

 Anyway, paper money just makes the scam easier… and more efficient instead of a gradual change in QUALITY of the alloy, it’s an increase in the QUANTITY of pieces of paper.. there’s no obvious change .. the dollar bill looks identical to an old one, you can’t assay it to find how much dilution has occurred…

 moreover.. with coinage the seignorage gain is limited to new coins, with paper fiat it is extracted from ever dollar in existence..it prevents people from escaping by hoarding the older coinage – Gresham’s law.

 

 Maybe you can use the history aspect to educate your prof Aaron ?

 

 

  • Sat, Feb 27, 2010 - 09:03pm

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    Re: What’s so wrong with Keynes and Fiat, anyway?

[quote=Aaron Moyer]

Silly question, right?
Well, during a conversation about the mismanagement of our nation today, a professor of mine essentially called me an idiot for blaming our nations adherence to Keynsian economic principles and a fiat currency. Now, while I didn’t have the prescience of mind to continue the fight for long (nor the interest), I did specifically take notes on his comments;

“The nations that adopted Keynsian economy survived the great depression. Those that didn’t died.”

“Fiat was around for a hundred years before Keynes was born.”
(Implied use in the American money system)

“All Keynes did was tell people to spend their money rather than horde it”

“We weren’t using a currency back by metals at the turn of the century”
(Obviously true – he meant 1900’s, however)

And my favorite, when I said there needed to be some fact checking, “I think I would know since I teach U.S. History”. The class is not U.S. History, but in the interest of shaping Political Philosophy. 

I cited Breton Woods, Nixon and the Gold Window, the redeemability of silver certificates well into the 1970’s and got …laughed at.

So, what’s wrong with Keynes and what’s wrong with Fiat?
What am I missing?

Aaron

[/quote]Don’t ever let me know the moron’s email address.

[quote=Aaron Moyer]

“The nations that adopted Keynsian economy survived the great depression. Those that didn’t died.”

[/quote]MORON F-. Jerk probably couldn’t spot Geonoa on a map to save his tenure. Gold or any metal is an anchor. Ships have anchors. Not anchoring money to metal that can’t expand causes more paper to be printed. Econ 101 more of anything reduces it’s value. Source last weeks FSN part 3 with Dines. Geonoa took all the money and all the gold and added the two together. Money was no longer backed by gold dollar for dollar, the money supply doubled and was allowed to expand with little anchor. THAT IS WHAT CAUSED THE DEPRESSION.

[quote=Aaron Moyer]

“Fiat was around for a hundred years before Keynes was born.”
(Implied use in the American money system)

[/quote]MORON F- 3,800 Fiat currencies have died. NONE ever have lived.

[quote=Aaron Moyer]

“All Keynes did was tell people to spend their money rather than horde it”

[/quote]HAH! Leaves out the fact that he told the government to spend money they didn’t have. This guy really teaches? Guess he saw this crash, or the tech crash or the coming bond/dollar bubble bust.

[quote=Aaron Moyer]

“We weren’t using a currency back by metals at the turn of the century”

(Obviously true – he meant 1900’s, however)

[/quote]Almost every war from the Civil on gold was upheld. Lincoln paid for a lot of the war with gold. I don’t know one war that didn’t spark massive price inflation.

[quote=Aaron Moyer]

And my favorite, when I said there needed to be some fact checking, “I think I would know since I teach U.S. History”. The class is not U.S. History, but in the interest of shaping Political Philosophy. 

[/quote]Clueless.

[quote=Aaron Moyer]

I cited Breton Woods, Nixon and the Gold Window, the redeemability of silver certificates well into the 1970’s and got …laughed at.

[/quote]The proof is in the pudding. We are insolvent. Using GAAP we have in 2009 about a 8 trillion dollar DEFICIT. We take in 2 trillion. Balancing that is like balancing Enron. IT WON’T WORK. IT IS OVER.

Keynes was an @sshole – so is your prof. My heart truly goes out to you. Truly. If I were you I’d take the F and I’d write the dean and tell him the guys is an utter and absolute moron and not worth your money and he should be canned. I hope every penny his 401k and IRA is in equities and I hope his pension is 100% bonds and he just has a 1 day food supply on hand. He should not be warping bright minds.

 

 

  • Sun, Feb 28, 2010 - 02:54am

    #17
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    Be patient, grasshopper.

Aaron,

I’m going to recommend a completely different tack here.  As everyone here recognizes, the prof is an ignorant, egotistical, arrogant idiot who is totally clueless.  He will reap his reward.  Unfortunately, your position is unwinnable in your present situation.  If you win, you lose.  If you embarass him in class by demonstrating your knowledge and exposing his incompetence, remember that  he holds the position of authority and will punish you.  If he has tenure, you have no recourse.  Take my word for it … I avoided this myself through learning via the mistakes of others who had been there and done that.  In the short term, it’s not worth it.  In the long term, you’ll have your reward.

Apply emotional self control and learn what he is teaching.  Knowing his position will allow you to strengthen your position.  Isn’t this an opportunity to study and learn your enemy better?  Go back and reread Sun Tzu, Lao Tzu, and the rest of the Tzus.  Put your ego aside for this battle and gather information to win the war.

I experienced a somewhat similar situation when I was an undergraduate.  The prof was such a b****** that two of us had to talk a third classmate out of having a contract put out on the prof.  The third classmate’s uncle was a capo in the mafia and the classmate did some “work” for them part-time as well and was deadly serious about this.  Anyway, years later, I happened to look up some information on the professor and he was still up to his same old shenanigans 30 YEARS LATER!!!  I had never forgotten what he had done.  I sent a letter to him, his department head, the dean of the school, the president of the university, the board of governors, and the board of trustees.  I explained what he had done (having all my facts in order in case he hit me with a lawsuit) and explained why I thought it was disgraceful for a professor to act like this and that his actions reflected poorly on the university.  I also included a photocopy of a very generous alumni contribution check to another university that I had graduated from that treated its students with respect rather than like chattel and explained why the university where this professor taught would NEVER get a check from me.  Believe me, it was worth the wait.

  • Sun, Feb 28, 2010 - 03:20am

    #18
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    Re: What’s so wrong with Keynes and Fiat, anyway?

Aaron,

For what its worth, I agree with AO. If you can engage with your professor constructively, and he is willing to engage with you in a friendly spirit, feel free to invest whatever time and energy you have to spare. However, if this were to become a competition, you will lose, even if you win the argument.

Keep your eye on the prize, my friend. This course, and many more to come, are simply steppingstones. Don’t be willing to fall on your sword too quickly. Keep your head down, your mind working, and simply forge ahead…

Chris

  • Sun, Feb 28, 2010 - 05:00am

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    Re: What’s so wrong with Keynes and Fiat, anyway?

[quote=Davos]

 If I were you I’d take the F and I’d write the dean and tell him the guys is an utter and absolute moron and not worth your money and he should be canned. I hope every penny his 401k and IRA is in equities and I hope his pension is 100% bonds and he just has a 1 day food supply on hand. He should not be warping bright minds.

 

 

[/quote]Aaron: Just to clarify – that is what I’d do, I’m not saying you should do that. Nothing would happen to the moron. It would just plant a seed of doubt and his soil is probably so poor that nothing would grow out of it. Other than when the SHTF the light would come on. AO and CP and the others are right. Dale Carnagie goes a long way – it just isn’t me.

  • Sun, Feb 28, 2010 - 06:53am

    #20
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    Re: What’s so wrong with Keynes and Fiat, anyway?

 

 “let the wookie win”  ?

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