I'm not sure which history shows that Britain recovered first and most strongly from the Great Depression of the 1930s. The history I learned in school was that the British economy was pretty much in the doldrums from the end of WW1 until the late 1930s, improved due to government investment in armaments (a bit Keynesian there), then went through a slump in the post WWII years until Marshall Aid gave it some impetus again. Then very Keynesian economics during the 1950s and 60s led to massive growth before it all came crashing down in the 1970s.

I can't talk for Australia.

I think the anti-consumerist message is the one that should have been adopted at the height of the boom.
It may be true that Britain recovered from the depression without pump priming. I'm not sure this is correct because from 1935 onwards Britain embarked upon a substantial program of re-armament (pump priming by another name). But what effect did pump priming elsewhere have upon Britain's terms of trade? Did it benefit from the resurgence in America?
This article offers no strategies for dealing with the current crisis other than extreme pain. It is so easy for academic economists to sit back and talk about pain in the abstract. But that pain = wholesale social dislocation, families torn asunder, a potential resurgence in fascism caused by resentment at the economic collapse?
Not only is this politically unacceptable. It is socially and morally unacceptable.
And the author gives himself away when he says that you should legislate against malfeasance and stupidity in order to regulate capitalism. So the free market works but you have to protect it from itself? Some system!!

The author makes a mistake often made when evaluating Keynes. Keynes prophesised that people would still be applying his remedies when the problems have changed. His views were everlasting; look at the current problems and devise solutions to them.
He foresaw the long term problems likely to flow from having a single currency (the $US) as the reserve currency or the currency of international trade. For that reason at Bretton Woods he wanted a derived currency for trade in real goods.
The American standard of living, particularly of the wealthy classes, has been based on printing money. The $US ceased to be a sensible basis for international trade when the USA passed peak domestic oil production in about 1970. An Australian, Neil McInnnes, drew attention to this at that time. Since that time actions have all be designed to push out the day of reckonning.

Author's note: Foyle's point is apt. It is precisely the politicized rescripting of Keynes' theory that should be cast adrift. I had thought that implicit in the article, but clearly, I could have been clearer.

Shal, I'm sorry to have to say this, but your statement "But that pain = wholesale social dislocation, families torn asunder, a potential resurgence in fascism caused by resentment at the economic collapse? Not only is this politically unacceptable. It is socially and morally unacceptable" is naive to say the least.

Foyle, I agree. Unfortunately, the day of reckoning is upon us and whatever Rudd, Shal and his/her friends may think, will be with us for a considerable time. The depression of the twenties lasted for the best part of two decades. The U.S. is currently already involved in a couple of wars which have stretched their resources, so the option of starting another one to boost the economy is not a feasible solution, so we will all have to muddle along at the bottom of the cycle for however long that it takes for confidence in the capitalist system to be restored.

As for Rudd's solution, there is no point in priming a pump when you don't have a nett positive suction head and the pump is still sucking air.

David

I find it amazing how these historical revisionists now say that FDR did nothing to help save the US from the depression despite the landslide wins and popularity of FDR making him one of the most significant politicians of the 20th century. It reminds me of holocaust or climate change denial. Lets look at the facts. US GNP was 34% higher in 1936 than in 1932 after FDR's new deal. Unemployment fell in FDR's first term, from 25% when he took office to 14.3% in 1937. I am glad Richard Laidlaw was not US President during the great depression or PM in Australia now.

I thought the problem stemmed from ignoring Keynes at Bretton Woods and following Harry Dexter White to hell.

As regards Keynsian economics, must say that most of my farm life before and after army service during WW2 existed under Keynesianism.

Further, although during my retirement our familycompany has grown successfully, also as a political scientist have not been particularly happy as the safety of Keynesianism ended with what has been termed the greedy get big or get out phase, including the associated boom propped up so much by what social scientists have called both quarry economics and the resultant pitstock politics which anyone with any historical sense knows could never last.

Indeed the language alone should have been a warning.

Terms like free market associated with scary words like need and greed with the term deregulation sounds like letting all the shysters out of gaol and letting them have a free go - which certainly has happened.

Certainly Adam Smith, so-called father of Laizess-faire knew what he was talking about when he said that unfair competition gives its own warning.

But all I ever get is the worry that the good times can never last.

Have Fun, BB, Buntine.

Keith in Perth
"US GNP was 34% higher in 1936 than in 1932 after FDR's new deal. Unemployment fell in FDR's first term, from 25% when he took office to 14.3% in 1937."

These figures by themselves don't show that the Yanks were out of the depression, just that they were somewhat better off. After all, 14.3 percent unemployment is not good in anyones language. It wasn't until the war got underway that things really improved.

David

Shal
"But that pain = wholesale social dislocation, families torn asunder, a potential resurgence in fascism caused by resentment at the economic collapse?
Not only is this politically unacceptable. It is socially and morally unacceptable."

It is important to understand that the social dislocation takes place in the boom, when capital and labour flow into the bubble caused by new money entering a sector of the economy. The new money - created by government lowering interest rates - causes inflation as those with the new dollars are able to bid up prices. Classic example is the sub-prime bubble leading to the housing bubble.

The boom causes the malinvestment, only the bust makes it apparent. The supply of newly printed money makes investments appear to be profitable which, absent the rising prices, would be seen to be loss-making. Eventually the boom comes to an end, because society's supply of capital - real capital such as trucks, machine tools and bricks - is unequal to the old demand plus the demand set off by the new money. There is a need to rationalise scarce credit between competing possibilities. The process for discovering which investments are non-viable, is the process of profit and loss. This then shows that many of the activities funded during the boom, are in fact loss-making.

The social dislocation, unemployment, hardship, and tendency to fascism must be stopped where it started. What is morally unacceptable, and should be socially and politically unacceptable, is government's monopoly control of the money supply. It should be abolished.

The author was wrong in saying that there is a need to regulate against stupidity. It was the belief that government knows better that caused the entire problem in the first place. It is important to understand that governmental intervention can only make the problem worse and longer, and *is not capable* of making it better. If it was, the problem wouldn't exist in the first place.

And of course the boom caused many problems for the lowly paid. The boom was not a boom for them. It even caused the 'working homeless' syndrome. How can it have been a boom when people with jobs could not afford a place to live?
And we will probably just do it all over again.
Look at Keynes and learn from someone who at least had a glimmer of an idea about what he was doing.

Thanks,Daviy, concerning giving credit to Keynes, and must say that we are backed by many social scientists, though not sure about our modern business managers who probably as in the Roaring Twenties, saw the recent boom as never ending or rather never bursting.

Further, as simply just fiddling with interest rates to fix the problem, it is only the lesson of going broke that can cure the business recklessness caused by seemingly simple economic terms like deregulation which means simply to go ahead and be reckless with your spending.

Cheers, BB, WA.

Rudd's massive spending does nothing to improve the long-term structure, productivity and prosperity of Australia. It is not clear what, if any, short-term benefits it will bring. It is clear that it will lead to higher taxes and interest rates in the longer term, with negative impacts on incomes and employment. I suspect that a cost-benefit analysis of the impact would be very negative.

If the government feels obliged to spend for short-term reasons, it should do so in ways which address long-term issues, e.g. the welfare-to-work transition, productivity-enhancing infrastructure, incentives to start new businesses and to innovate. It's rare for government's to commit such vast sums of money in one hit, I think we will look back and see a wasted opportunity.

I have no idea about economics - but this article makes eminent sense to me. Intuitively, I feel we shouldn't spend what we don't have. This is how I've always lived as an individual and maybe how the nation as a whole should react to the crisis (the crisis was the bubble). We should let the correction happen and not try to postpone it by a 42 billion dollor stimulus package. Taking the medicine now will ultimately be less painful.
Creating a massive deficit is like gambling - it might work and we might be able to go back to our ways of over consumption - but more likely it will fail and we and future generations will have to pay for it, that is, pay it off or wait for hyper inflation to reduce it in 'real' terms.

"If the government feels obliged to spend for short-term reasons, it should do so in ways which address long-term issues..."

Spending on infrastructure is less wasteful than spending on handouts that go on overseas holidays and heroin, because at least you've got a road or a bridge to show for it.

But it is important to understand that *even if* the government spends money on infrastructure, it is still actively making society poorer than if it didn't take the money in the first place. To understand it, it's not enough to look at the visible benefit. You have to look at the invisible cost as well, otherwise we're just chasing an illusion.

The only reason government spending is "necessary" for public works is because such schemes do not cover their costs. If they did, private capital would fund them in order to make a profit. The crazy thing is, the only reason government is doing it is because it makes a loss, if that makes sense, which it doesn't.

With private projects, the owner directly confront the benefits against the costs.using the tool of profit and loss. But the whole point of getting the government to do it, is because profit is thought to be something evil and anti-social. The only reason government projects seem to be beneficial, is because the benefits are visible and apparent, the costs are hidden in the general tax account. All that is happening is that more productive activities are being ground down to build up less productive activities, making us as a society worse off, not better off. It's nothing but an illusion.

Government wealth creating is in principle no different from breaking windows on the one hand, and on the other boasting about the wealth you're creating by giving the glazier a job to fix it.

According to the Keynesian logic the government is advocating, the recent bushfires are economically a good thing because of the economic 'stimulus' of all the jobs they create.

But destroying wealth makes us poorer, not richer… durr.

Keynesian theory is wrong, and it's as simple as that.

Perhaps it is time to also cast adrift, not only Keynes, but some of the other latter day economists in favour of John F Nash and see where his "Games Theory" has application to our present turmoil. I am after all reminded of a comment made by my economics lecturer some twenty years ago that in the subject of economics, the questions may be the same, but the answers are invariably different.

David

Foyle speaks sense Keynes is the only way forward Nationalisation cease all privatisation direct Labour work force to build roads schools hospitals etc. Nationalise all Hospitals, Schools, Minerals, Big three Banks expand the Australian Post Office as a National Bank.

The only uncharted territory we endure is in our own minds. We have all the examples and case study material we need between Africa, Darfur, America, Europe as well as our historical knowledge. What is missing is our humanity.

The fault is not so much a question of yes or no to the contributions of ohn Maynard Keynes as much as who we are.

Before we can't honestly change what's impacting our lives, it is probable that we need to change something at work.

Have a listen to this;
http://www.ndbroadcasting.org/program.php?id=3275

It takes All if we mean to improve the lot, else we do more loose change on what we've got.

http://www.miacat.com/
.

Wing Ah Ling, I fully agree, I'm not arguing for government spending but taking a "second best" line, that given the government is determined to spend, it should do so in the most beneficial (or least harmful) way. While the opportunity cost for government infrastructure spending would normally be the alternative use of funds with the best risk-adjusted rate of return (and that would often be tax cuts), here I'm looking for better (even if still negative) returns on massive expenditure which will have to be recouped from the taxpayer eventually.

I find myself largely in agreement with the author -if not for reasons he might admire.
All the billions currently being spent will simply prop up a system which has proven itself to be fundamentally flawed.
The world is -typically- going with a 'better the devil you know' approach.
Hopefully, there may be a few long term changes, such as better regulation of money -if not outright nationalisation- but the essential problem is yet to be addressed.
Charging interest is nothing more than penalising people for the crime of being poor.
The problem is not so much what we consume, but how much -or how many times- we pay for our goods.
Rich people only have to pay once.
Ironically, Bono now has a real chance of seeing a moratorium on foreign debt.
Now that the USA is the most indebted country on the planet...

Grim
It is useful to compare the attitude of the mediaeval church in trying to understand the motions of the planets, or the origin of species. Instead of making sure that they understood the facts by sound theory, they started with an arbitrary moral judgment which they got from holy scripture, which they got from some anonymous goatherd in the Middle East 3,000 years ago.

The economic crisis has been caused by the great mass of people, including politicians, who
1. Didn’t bother to understand the facts about the economic phenomena they were talking about: they just started with a position of moral judgment (like “interest is morally evil”), and didn’t care that they were ignorant about the facts, and
2. Just assumed that there is a big magical thing like God, that can just fix things up without any economic cost – the State.

It is the State’s policies of lowering interest rates that have caused the following economic crisis. Those who do not understand this are merely displaying their ignorance.

Let’s understand the facts first. If I offer you $1,000 today, or $1,000 in fifty years’ time, which do you choose? Well guess what? The rest of the world is like you. It is part of human nature to prefer present satisfaction over the same satisfaction in the future. It derives from the fact that we are alive and our time on earth is limited. Because if it wasn’t so, and we preferred a future meal to a present meal, we would never eat.

Interest on capital is the monetary expression of this fact. The only way to make interest disappear would be to persuade the human race to value something now the same as the same thing in 50 years time. No-one can do it.

The idea that interest is some kind of evil wicked immoral exploitation of the poor goes back millennia, and has its roots in religion. But this is just another case of being so concerned about engaging in moral judgment, that they didn’t stop to find out what the facts were.

Today the lenders are far more likely to be the ordinary working people, through savings accounts, savings bonds and so on, while the borrowers are far more likely to be speculators on real estate, big corporations, and entrepreneurs trying to reduce their tax bill.

You are floundering in vacuous moralizing that is empty of factual explaining power, and is the main cause of the problem you are railing against.

When governments lower interest rates, they send false signals to everyone using money. These false signals are what causes both the bubble and the bust and all the resulting dislocation, bankruptcy, unemployment and hardship.

The essential problem is exactly the kind of ignorance you have displayed in calling for more regulation to fix a problem caused by government regulation of the interest rate in the first place.

If you want to move from publicly displaying your ignorance, to understanding the facts behind the economic crises, its causes and cure, you can find out here: http://mises.org/story/3128 .

But if you don’t, probably the less said the better eh?

I'm sorry, Wing Ah ling, but I find your attitudes on Mises/economics no more rational than Runner's on Creationism/evolution.
To claim that any economist has ever got it exactly right shows a greater degree of blind irrational faith than any religionist.
The essential problem in the world today is simply the level of credit.
The level of debt worldwide vastly exceeds the levels of available goods. This situation must always inevitably create times when a 'radical adjustment' is necessary; such as we are going through now.
Another 'recession we had to have', in other words.
The problem is not how we deal with credit, but the concept of credit itself.
In return for your link to Mises, let me recommend Steve Keen's Debtwatch:

http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/

I doubt you will give it a full reading; it contains that dirtiest of words:'Marx'. I hasten to add, Keen does disagree with Marx on many points.

"Charging interest is nothing more than penalising people for the crime of being poor."

Interest is a price, like any other price. It reflects, inter alia, how willing lenders are to relinquish control of their assets, and how much the borrower values access to assets. Both providers and borrowers make a judgement in the context of their broader values and options. As WAL says, no moral element.

David,

"Shal, I'm sorry to have to say this, but your statement "But that pain = wholesale social dislocation, families torn asunder, a potential resurgence in fascism caused by resentment at the economic collapse? Not only is this politically unacceptable. It is socially and morally unacceptable" is naive to say the least."

So David will you volunteer to go on the breadline and let someone more deserving have your job?
I assume that the market will ensure that only those who are most able to bear the pain will be forced to do so.
What a pity i am cursed with the burden of naiivete. Otherwise I might be able to see the world in more pragmatic terms which sees people as cogs in the economic cycle.
Perhaps we should legislate against naiivete in the same way that you advocate legislation agains malfeasance and stupidity.
After all if capitalism needs protecting from itself so perhaps do Keynesians.

Richard Laidlaw's provocative article is timely.His summation of Aust's fearless leaders is spot on. They are mindless / clueless oxymorons clutching at straws, mimicking the antics of the US Administration which is hell bent on rewarding the wrong people with giant slabs of " peoples money ". All those greenbacks meant to revive the Economy has been recklessly squandered with recipients clamouring for more. The stimulus didn't shore up the Banks, GM/Chrysler, housing industry etc The abyss is still there. A dismal failure of Corporate governance and Presidencies.

The Obama rescue package is not addressing core values. It will soak up the $ 3 T, and still not resolve the melaise. The cat is chasing it's tail. His Presidency is crippled.

Create jobs. Stoke up the fires of manuacturing. Curtail the drain on imported Oil. Stop phony subsidies across the board. Rein in the colossal Military budget, and the many contractors bleeding the Nation dry. Beef up the SEC. Purge the 17,500 lobbyist in Washington. DC. Kill off Bush's Home Land Security with it's $ 55 B budget. Deport the 15 million illegals on welfare. Stop the rorts and triple duplication of security org's that are slurping the gravy train. There's umpteen more.

The Wizard of Oz - Kevingate, may spruik economic double-speak in his thesis in the Monthly, but it does't detract : Unemployment is 4.9 % and rising, aussie dollar's worth 63 cents, petrol $1.29, food costing 15 % more, rents/rates skyrocketing, housing affordability a myth, pensioners / retirees crying out in despair. Rome burns. Kevy fiddles.

His Dec $ 10.4 B stimulus only satiated the Gaming and Alcohol beverage industy. 60 % went to expatriates on dual citizenship living Overseas, 15 % went to servicing the burgeoning consumer credit card debt, and only 3 % assisted first home buyers, who are flat chat battling to service the 30 year loan, in the present climate. BTW, the ABS stats is 3 months in arrears.

The General Motors Holden bonanza which bolstered Vic's red-flagging economy in election year, but little in the way of boosting employment. GMC stood down

ring River scheme. $500 M for Senator Fielding's vote, $ 800 M for the Greenie Senators from Tassy. Brown was ecstatic. His party guaranteed another term, and his superannuation tripled. Kevin baby, hadn't done his kinder garden sums. An economic guru ?

In real terms Kevin is shamelessy Oz's biggest handout specialist in our 221 year history. He made the Guinness Book of Records. It will take 5 generations to wipeout the deficit " black hole ". At this rate, he's a prime-ministeral loose cannon.

Fall out: It took Costello a decade to redeem Labor's excesses ( Whitlam, Hawke, Keating ) $ 100 B. With our GDP shrinking, deficit balooning, abysmal commodity prices and exchange rate, 4 State treasuries in recession, unemployment at record levels, and Moody, S & P credit rating revision AAA's to AA, it must dawn on some, our economic credentials is in smithereens.

Meanwhile, denuded Glen Stevens, RBA Governor, assures us, the economy's in great shape ( aside:" compard to our Asian neighbours " ) wholly compromised, and in Swan's pocket, his avowed policy is to support his employer's fantasies.

His 3.5 % cash rate, Treasury Bills & Bonds is floundering. Banks
and Foreign investment are not supportive. Dick Smith prophetically predicts there will wont be an iconic Business in Aust that will be native owned. Is this a sign of the times ?

Or is it my imagination?

"Both providers and borrowers make a judgement in the context of their broader values and options. As WAL says, no moral element."
What if borrowers have no options?
So long as people need money to eat,
So long as people must work to make money,
So long as people need clothes and cars and petrol in order to work
So long as people need houses,
It is not just possible to coerce people into debt, it is inevitable.
Coercion is always a 'moral element'.
By definition you cannot lend money unless you have more money than you immediately need, -unless you can create money from thin air, as banks do.
In a charitable society, the rich would give to the poor. In our society, we force the poor to subsidise the rich.

Apologies . I misread the name of the person who posted a comment on my comment

It should have been addressed to VK3AUU
So,

"Shal, I'm sorry to have to say this, but your statement "But that pain = wholesale social dislocation, families torn asunder, a potential resurgence in fascism caused by resentment at the economic collapse? Not only is this politically unacceptable. It is socially and morally unacceptable" is naive to say the least."

So VK3AUU will you volunteer to go on the breadline and let someone more deserving have your job?
I assume that the market will ensure that only those who are most able to bear the pain will be forced to do so.
What a pity i am cursed with the burden of naiivete. Otherwise I might be able to see the world in more pragmatic terms which sees people as cogs in the economic cycle.
Perhaps we should legislate against naiivete in the same way that you advocate legislation agains malfeasance and stupidity.
After all if capitalism needs protecting from itself so perhaps do Keynesians.

The two great advances in economics in the 20th century were Keynesian and monetary.

However, they both have their weakness and are to some extent applicable in different areas.

Keynesian economics was born out of the depression and high unemployment, and its remedies worked very well in resolving them. However, as employment improved, these remedies tend to fail and produce inflation, and the use of monetary policy is more effective.

For several decades we have had low unemployment, and the control of the ficus has been monetarily based. With the recent events, it would be worthwhile dusting off the Keynesian policies once again as is being done by most of the world.

However, as things return to normal, there will be a price to pay.

Shadow Minister et al, I have just read and recommend articles on Keynesianism and appropriate policies for the current situation by economists Steven Kates and Peter Smith on the Quadrant Online site. Both demolish any rationale for the current splash-the-cash approach.

Kates writes: "But to believe it is possible for governments to spend our way to prosperity would be a major error in policy. There is no previous occasion in which such spending has been shown to work, while there are plenty of instances in which it has not. On every occasion that such spending has been used, the result has been a worsening of economic conditions, not an improvement."

Smith notes that: "Essentially governments should try to increase demand but in a way which hands the disposition of that demand to the market. This will ensure that forward looking market forces guide the pattern of demand and correspondingly the productive capacity of the economy."

I particularly recommend these articles to Kevin Rudd and his advisers.

The stimulus package(s) will not be able to cure the problem.

But that is not the intent.

The intent is to mitigate the worst effects of the downturn, to soften the blow, to assist in recovery and to help reduce the size and duration of the defecit.

We are going into defecit with or without government borrowing. The biggest part of a downturn-driven defecit is not government spending programmes, it is the collapse in revenue earnings. The government faces a double whammy - incoming revenue shrinks due to loss of company taxes, rising unemployment etc while at the same time, the need for outgoing expenses such as welfare increases, due to that very same rising unemployment. So in a downturn, the less money that comes in, the more that needs to be payed out.

Pump priming the economy with (properly targeted) government spending can help reduce the rate of business bankruptcies and job losses. While vehement anti-Keynsians may deny it, relatively small, properly targeted defecit spending now can help prevent a bigger defecit down the track.

Grim

The problem is not that Marx is a dirty word, it is that his theories are wrong.

It's not a question of taking what an economist has said as a matter of authority, it's a question of the explaining power of theory, and the theories of Marx, Keynes, and Friedman are demonstrably wrong. Implementing these theories is what has caused this mess!

But I have never seen a refutation of the Austrian theory of money, credit and the business cycle. I have seen lots of name-calling, lots of *claims* that someone else has refuted it. And maybe they have. It's just that no-one has actually been able to come up with anything more than an appeal to absent authority. Maybe you can refute Austrian theory. I would be pleased to see it. Can you? Unlike the Marxists, I don't ignore refutations, I seek them.

I have read and digested Keen's interesting article in full and the following thread.

Keen recognises that Marx's theory of value was wrong. So if his theory of value is wrong, what makes anyone think that his theory of money is going to be right? How could it be?

Both Marx and Keen make the mistake of seeing the creation of money by banks, and wrongly assuming this has nothing to do with government policy. In fact, it is government policy privileging the banks in the creation of credit that is what is causing the problem, because in the absence of such government policy, such banks would go broke, as they should.

"The essential problem in the world today is simply the level of credit"

True. But if we don't have a sound theory of money and credit, we will be unable to identify the cause and the cure. We will get matters back the front, as Marx did.

"The level of debt worldwide vastly exceeds the levels of available goods."

It exceeds the level of money in specie in reserve with which to redeem the debts

This is caused because government policies of money and banking protect banks from going broke when they make loans unbacked by money in specie. In a free market governed by the contracts of the parties, banks that did that would suffer loss and bankruptcy. What is causing the problem is government policy, because government profits from looting the population by privileging the banks. Without government’s control of money and banking, the problem wouldn’t exist.

"This situation must always inevitably create times when a 'radical adjustment' is necessary; such as we are going through now. Another 'recession we had to have', in other words."

Yes. That ‘radical adjustment’ is the recession. Everyone decries the bust, but the damage is done during the boom. The radical adjustment is necessary because capital is destroyed and people stop buying the government’s fraudulent valuation of its own money supply. The capital needs to be re-directed into productive lines, and that costs both time and money - real wealth.

"The problem is not how we deal with credit, but the concept of credit itself."

The problem is that most people do not understand what they are talking about, because they lack an understanding of the necessary basic concepts based on sound (non-refuted) theory of money and credit. Peter Hume explains the basic concepts in his post, and shows the errors in Keen’s argument, at the end of the thread in that link you sent me.

Government manipulation of the money supply causes the privilege and social injustice that the people, in their ignorance of sound theory, blame on ‘unregulated capitalism’. Then government pretends to be everyone’s saviour s with more of what caused the problem in the first place, which is what Rudd and Obama are doing now and a grand scale.

See:
http://mises.org/story/3340
http://mises.org/story/3353

"Peter Hume explains the basic concepts in his post, and shows the errors in Keen’s argument, at the end of the thread in that link you sent me."
Oops. You probably should have signed this piece "Wing Ah Ling" rather than Peter Hume. Offering quotes of yourself as irrefutable evidence for your own arguments is so passe, don't you think?
I did take the trouble to read your contributionns to the Steve Keens website; sadly the only 'hard' evidence I saw was of bad manners.
Once again, I am struck by the similarities between 'Wing Ah Ling/Peter Hume' and Runner. All three persona's offer "rock solid",irrefutable data, rather than opinions, and all three have absolutely no tolerance for anyone's opinions which contradict their own.
In truth, there is some worth in the Austrian School of economics. Mises (and Hayek) did make some worthwhile contributions to economic argument.
I still believe you keep putting the cart before the horse.
Morality -meaning how we treat others- should come first. Economics should describe how best we do this.
Putting economics before morality is to put numbers before people.
when 30,000 children die (every day) the emphasis should be on the word "children", not on the number 30,000.
Living, breathing, innocent children. If your economic model cannot encompass the idea that those children were loved, as much as you love your children...
then your model is wrong.

The point is Grim, that it is government policies that have caused the social dislocation and injustice which Shal and Steve Keen now want to use government policies to fix up. No-one has refuted the arguments that show that these problems aren't 'endogenous' to the banks, they are caused by government manipulating the money supply, creating a short-term artificial boom favouring some at the expense of everyone else, a short-term electoral benefit, while leaving a long-term economic mess and wreckage. Not *numbers*, Grim. Real people that are now unemployed and distressed because of these policies. The boot is on the other foot. I cant understand how you can't understand it.

The idea that we as a society will have a greater abundance with which to feed the poor, by giving government more control of the money supply, or anything else, is simply wrong. When the socialist countries in the twentieth centuries tried doing social justice by taking over land, and the supply of food, tens of millions of people starved to death. These well-intended policies of 'easy money' have just destroyed, and are in the process of destroying trillions of dollars worth of capital - wealth taken from ordinary people including the poorest, which will now leave them destitute or working the rest of their lives to pay for this official fraud and theft. Don't you get it? There is no ground for the government policies that people are urging to fix it - they are what caused it! So spare me your fake moral superiority.

As for the ethics, all government has to add, apart from economic chaos, is force, compulsion, violence and threats.

Both for ethical and for practical reasons, the solution is to abolish goverment's abusive and incompetent 'economic management', which are creating the problems that people in their utter ignorance are blaming on anyone but the government. If this were not so, Steve Keen would have been able to defend his own ignorant and clearly mistaken proposition.

Peter Hume, the least you could do is actually UNDERSTAND Steve Keen's views rather than grossly misinterpreting them to the point of obscenity. If you read Keen's reply to your comment and actually read his views on Marxism and Marx's theory of value you would understand that Marx had two theories of value, denoted by his two axioms: the Labour Axioms and the Commodity Axioms. The LTV is derived from the labour axioms and Marx's other theory of value is derived from his commodity axioms. Keen rejects the labour axioms, and accepts the commodity axiom.

"Keen recognises that Marx's theory of value was wrong. So if his theory of value is wrong, what makes anyone think that his theory of money is going to be right? How could it be?"

Clearly from this post you have absolutely no idea about this discrepancy. This in turn makes the rest your drivel irrelevant. Keen is not basing his ideas off a theory of value he has rejected. Why would he?!

On the issue of money supply being either endogenous or exogenous, the empirical evidence to date would suggest that it is created endogenously.
See: Kydland and Prescott, Business Cycles: Real Facts and a Monetary Myth
Setterfield and Basil, Complexity, Endogenous Money and Macroeconomic Theory.

Finally if you want to see Austrian theory refuted on that blog, see the exchange between Keen and Jefferson in the following:
www.debtdeflation.com/blogs/2009/03/05/after-our-economic-dunkirk/

On another note, I would be generally interested in an Austrian analysis of the Australian banking crisis of 1893. From a superficial level it appears as though Australia was largely operating under a free banking system without a central bank and what appears to be minimal government intervention. Does the Austrian analysis of this crisis prove or disprove this to be the case? Please don’t link to a general Austrian theory of credit and money, I want a genuine Austrian analysis of this crisis and its causes.

See: Hickson and Turner. Free Banking gone awry: The Australian banking crisis of 1893.

Regards,
Mark.