Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.
In particular, amid inflation, investors should exercise caution when it comes to their exposure and new purchases. It is only feasible to get such high yields during a recession with the guidance of a qualified specialist or reliable counsel.
True, initially I wasn't quite impressed with my gains, opposed to my previous performances, I was doing so badly, figured I needed to diversify into better assets, I touched base with a portfolio-advisor and that same year, I pulled a net gain of $550k...that's like 7times more than I average on my own.
@@williamDonaldson432 This aligns perfectly with my desire to organise my finances prior to retirement. Could you provide me with access to your advisor?
Annette Marie Holt is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
as a Venezuela who lives in Argentina. whenever someone says that things about the hijacking of the Economic studies by the propagandist i deeply feel it... in my heart, my stomach and my pocket
Electrones are a part of what creates feelings.....and we have noe clue as to how. If we had, we could have created a robot able to laugh when told a new joke.
Lex responding with, "I don't know that anything that involves human nature deserves this level of certainty" is likely the most astute way to approach economic theories. I'm sure he would enjoy a conversation with Dan Ariely.
My biggest problem with Keynesian economists is that they never advocate for their theories in good times. In good times interest rates are supposed to go up and the printing of money is supposed to stop. It never does.
Austrian economists seem to overlook the power fake money has had to create real goods - this means people everywhere have been able to acquire physical assets, which will persist regardless of inflation's effects. Prior to fake money, people had a lot less access to goods and services. It's no coincidence that post-Keynes there has been an economic explosion. I say this as someone who thinks the Fed is destroying the country...
"Inflation and Credit expansion, the preferred method of government open handedness, Do not add to the amount of resources available, they simply make some more prosperous, but only to the extent that they make others poorer" -Ludwig Von Mises "We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power" -Alan Greenspan
I think it's dumb to say that letting arbitrary entities literally counterfeit money is anything but a crime, still. Seems pretty easy and straightforward to me
I don't know who "we" are, are they the same people as "they" who rule the world in the dark. At least I know what the hell I'm doing, unfortunately I also get affected when you are lost.
Charlie Munger once said “show me the incentive and I’ll show you the outcome.” Governments have every incentive to push Keynesian economics because it justifies their growth and desire for ever increasing control of the economy. All the money and research goes there accordingly.
They can mismanage all they want and then print money to patch up the mistakes they made and in order to enhance their re-election. That’s the incentive in a nutshell.
Yh it’s the problem of self sustaining government agencies, rational agents will always find justification to continue their employment (since the skills aren’t very transferable), even if there is no demand for their role
Yet another clown that has zero idea about economics. Where do you people come from? You do know that Adam Smith has an entire chapter on the need to regulate business and that he uses the "invisible hand" phrase once in his 800 page Wealth of Nations and used it as something to be avoided, correct? Of course you don't. Bet you feel pretty stupid right about now...lol
@@alfredjovanovic2106 It is the problem of business needed to be bailed out by tax payer money, seeking rents from governments, and killng competitation. Bet you feel pretty stupid right about now...
This is the first video I've seen of Lex and I have to say he, as opposed to most interviewers, actually has a lot of critical questions and digs deeper to try and catch him off balance, but in a relaxed and intrigued way.
The problem is he's an idiot who has no problems whatsoever with using the violent coercive power of the government to force individual choices. He's a sweetheart apart from that, I guess?
@@friendlyone2706 yeah, obviously when he’s got someone in the computing field on his questions are precise and very good because that’s Lex’s own field of study. But even in this economics discussion, where Lex clearly is not totally familiar with the terms used, he still provides great questions. Unlike other podcasts where they might try and keep the conversation always flowing for easy listening, Lex isn’t afraid to ask people to repeat themselves, nor is he afraid to think for a while on a question. Combined with his genuine curiosity and intellect and he can have a decent discussion with anyone from any field.
Yes, he's doing a great job of being friendly yet as probing as deeply as possible and exploring posssible problems or contradictions in what the interviewee is saying. A rare skill indeed.
Lex Friedman is the most balanced interviewer in this genre. I can’t think of another who is more reserved with his own opinions, but still demands his guests “show their work.” It’s an impressive display of humility.
It’s a shame he never really gets this guy to defend his position other than what boils down to something like “all government is bad because tax is theft”
@@simperingham the guy defended it quite well and illustrated how printing up money based on nothing and depending on inflation is the cause of the problems.
The problem is modern economy has so much inertia and is so complex, you can get away with terrible policies and actually claim to be the saviour. The input and output are not connected directly. Output of the first order is also typically much different from that of the higher orders.
Very good observation, it is the same in big R&D companies e.g. pharma. Very few people are actually crucial but you have hundreds of department that exists mostly due to regulatory pressure and their contribution is extremely hard to calculate.
So you are saying that when the fed raised interest rates, the economy did not slow and inflation did not come down. You are drinking the Austrian cool aid.
@@rlkinnardif you notice a sign of good direction when they reveresed coyrse on their policies, imagine what would have happened if they would have left the interest rates to be dictated by the market and never have messeed with them in the first place. 🤔 I would encurage you to read Hazlitt's Economics in One Lesson to understand a bit the part of the economy we never see because it's not left alone to happen as it should.
@@mariusceterchi5269 The Fed produces the quantity of money in conjunction with the banks; the market produces the interest rates. Something has to produce the quantity of money. China is allowing excessive savings which produces the economy of thrift. Watch and see that Hazlitt is wrong as this can happen. Sometimes an economy can go off the rails for a long time, and Xi seems to have a Austrian bias.
@@mariusceterchi5269 Oh, by stimulating the economy the US economy produced 14 million jobs under biden. How many jobs would have been produced without stimulus? And how do you know that?
@@rlkinnardYeah you really suffer from a major lack of understanding in economics. The government cannot "create jobs". Any money spent on the government comes from the taxpayers pocket. Loans are just pushing the taxes to a later date. Printing more money results in inflation which is the worst taxation of them all. The government cannot "create" jobs. They can only move them from the profitable private sector to the unprofitable government sector. You have not stopped to think how many jobs would have been created had the average American not suffered the brutal and vicious effects of inflation. As the previous comments said, you need to read "Economics In One Lesson". If you have read it, read it again.
The many varying measures of inflation is the cause of so much confusion in economics. CPI, ppi, monetary inflation. I hope for a day when it has a uniform meaning.
@@randoroo2540 Welcome to the messy world of data and measurement. No single measure will be perfect when you try and capture "the change in the general price level". But what IS clear is the definition or concept of inflation, that is general price changes.... NOT money supply as this guy claims. Money supply is well... money supply lol although that comes with it's own measurement issues.
@@drdoob246 you don’t understand inflation. Inflating the money supply inflates prices, there’s just a delay between inflation of the money supply and price inflation. Price inflation doesn’t happen without money inflation.
Lex Fridman, please have on both a Keynesian and an Austrian economist at the same time on your show and have them debate. Preferably have Paul Krugman and Saifedean or some other Austrian economist
Debates, particularly these on highly complex matters, tend to turn to an exchange of non-sequitur answers, flowery soundbites or scholarly nitpicking; that's not to say that we should not have debates, these can be useful as well, let's just make sure their scope is properly defined and the facilitator is well prepared and forceful enough to prevent participants to get away with nonsense (all without showing bias! i.e. a tough job). BTW, Lex Friedman does a fantastic job in the alternative format. He is a great Candide as he prompts his guest with _apparently_ naïve questions, fostering slow, calm responses and restating the guest's key point in a simple but explicit fashion. Lex' great abilities and preparedness in this format give no indication that he'd be successful as a debate moderator.
I went to Indiana University and both my macro and micro profs did a good job of presenting a couple different perspectives. They started with scarcity and didn't advocate for printing to solve problems and focused on human behavior.
My micro economics professor was good (never took macro). But I'll always remember a gov't professor, while talking about the effects of hurricane sandy, said something like "but rebuilding will stimulate the economy." I can't stand that way of thinking
@Dalton Finney I can't remember. Micro was a Russian gentleman and macro was a guy who had curly hair and his attire hadn't changed since the early 2000s 😀
@@crusherven This is an opportunity cost fallacy. One of the key arguments in favor of Austrian economics. Hazlit’s, economics in one lesson, has a chapter dedicated to this fallacy. It’s a silly argument, because we should all be plundering, rioting and warmongering if following that professor’s logic (also had some of those bozos myself)
All of my economics professors did a good job of staying objective and presenting multiple opinions. My micro professor taught us the diamond and water paradox too lol
How amazing is this discussion!?! Having contrarian perspectives from people who are well versed in the dissenting opinion is probably the most valuable commodity that exists in the public square today. I sincerely hope that this type of dialogue continues and flourishes unencumbered. Lex, you are the best. I hope that I get to roll with you someday in Austin.
It's actually sad that being an Austrian economist (or as he said, economist) is the dissenting opinion these days. Unfortunately we are in the middle of experiencing what happens when you play Keynesian games and continue to kick the proverbial can down the road. Eventually the piper needs to be paid...
@@kutark That’s definitely an interesting perspective. But will the Fed ever run out of money to print? They’ll just continue to print. The most important leverage is the Greenback’s “privilege!” All’s at stake if a catastrophic foreign policy blunder destroys that privilege. I think the problem will come from outside rather than inside. Don’t you think?
But he isn't well-versed in the opposing theory, or at least he does not demonstrate that he is by way of steel-manning (or even dispassionately enunciating) the theory he opposes. Instead he begins from the tendentious premise that it is wrong and evilly-motivated.
Glad I read this. Went down to the comments 20 min in to see if everyone was going to discuss that this guy is all hyperbole, insults, and opinions. Now I'll wait until the end.
@@TheCrouchingZebra I mean the guy spends 20 minutes calling everybody that disagrees with him propagandists and frauds, and then fails to present the actual arguments Keynes made. And then Saifedean even fails to explain marginal utility and his own position. How can the last 20 minutes become better?
This guy was just full of opinion pieces, the fact he can't talk about them without insulting them. Not very professional, I think Lex handled this guy really well 🙂
Keynesian economics may be the devil and Austrian may be economic messiah, but this guest didn't convince me of it. For all his talk of propaganda and hucksters he sounded an awful lot like a huckster chucking propaganda. "Let me tell you why the other side is bad, dumb, idiots and hucksters and how my side is the only smart, reasonable choice and will save everything" is textbook propaganda tone. Lex danced around this but I wish he would've just called him on it. His ideas may be good but he spent most of his time just slinging insults at people which is pretty much the antithesis of a reasonable argument. It's basically dog whistling to a base that already agrees with you and does nothing to convince others.
Listen again. Keynesian's claimed for decades stagflation was impossible and could never happen yet it did. This is a CENTRAL PREMISE TO THE ENTIRE THEORY.
Well, stagflation in the seventies was easy to understand: The problem was simply the rising oil prices, that made everything more expensive AND caused unemployment, therefore inflation and rising unemployment at the same time. This just shows the problems will all these theoretical approaches to economy: The don't take the real world in account. At least from my point of view Keynes and The New Deal, that was the debut of carrying out these economic ideas in real life, acknowledged that the world is not perfect, and wanted to use economy to improve things. Even if the measures taken sometimes didn't work so well, I don't think you can blame Keynes for every bad thing that has happened since. With the financial deregulations and Reganomics and Thatcher from the '80s and onwards the favorite economists of the establishment was in fact Friedman and Hayek, the latter was, you've guessed it, from the Austrian School. And we still suffer the consequences. I have this feeling with the Austrian Economics, that if you say to them: "The world is not perfect, what will you do?", they will answer: "The world should be perfect." So there's absolutely nothing you can use Austrian Economics for in this imperfect world, where power, both economic, political and military distorts the market. Perhaps their preferred measures against inflation could be useful, but I'm not sure if this requires Austrian School measures or just common sense. Federico Hernando Cardoso managed to stop inflation in Brazil in the 90es, and I don't believe he saw he's actions as particularly coming from the Austrian School. It seems Milei is doing more or less the same in Argentina right now: Not the shock therapy he claims himself, but a good chunk of down writing the currency, followed by slow adjustment to narrow the gap between the official peso value and the market price. It worked for FDC and his Plano Real, but he was lucky the markets didn't speculate too much against the Real. Brazil did still have a big industry and was by far Latin America's biggest economy, so maybe Brazil was considered "too big to fail", by the finance markets. We will have to see, if Milei can carry this through. It could be very tough, because Argentina is somewhat a dwarf, when it comes to industrial power.
PERFECT! Like I said, I respect Austrian Economics ideas, but Austrian Economics bros are incredibly uninformed, biased and arrogante. The same they critizice, but in reverse
@@thomaspetersen-kp2ffThere's a lot of misconceptions in what you wrote. We live in a Keynesian world today. Reagan and Thatcher had little affect in changing the river's course. Austrian economics is very much in line with common sense and the world as it would be generally free of widescale distortions caused by governments. We lived in such a world, broadly speaking, up until WW1 and the creation of the Federal Reserve System. Also, Javier Milei is very much in line with Austrian Economics.
@@kingkoi6542 you might wanna do some reading on how tribals had taken wives and at what age. Anyway, I don't know who you refer to and I don't want a chief or a pedophile in power either
I actually still don't know what Austrian Economics is from this guest except his red-flag triggering fallacious reasoning : "because I said so," the other side is "wrong/propaganda/actors." It doesn't make it ok in the end just because he says "I could be wrong, you asked for my opinion." He needed to provide evidence to things, not just more metaphors. If you truly are logical and divorced from irrational thinking, you try not to have fallacies in your arguments as well. Philosophy also doesn't exactly have the "physics" ability to prove things either, but a good philosopher can help you understand what is going on in your failure to learn how to learn. I used the word fallacy here and we know that word thanks to philosophy. But the guest used fallacies to try to undermine "propaganda" of Keynsian theory. When you say things like "government is a gun to the head" it's going to sound kooky to most people for good reasons. We'll say hold up, you need traffic cops. They sometimes need guns to chase bank robbers, to follow that analogy. You need someone to inspect foods to make sure they are safe. You need to protect workers from hazardous conditions or exploitation because "market forces" don't account for a lot of things that can go wrong for people. He acts like the government is some outside force. But the government is us. We run for office, we vote for who we like. We decide, we keep ourselves safe too. There is no reason not to have the same thing when it comes to money, finance, economics, etc. Just like you need cops on the beat to ensure public safety, we need cops on the beat ensuring safety with money as well. Lex sort of tried to bring this up but it was a little ham-handed and he never got an adequate response except some chuckles and side jokes. Again, this is a dodge. To be fair, he at least went over some historical context with England and going off the gold to pay off their war debt. I would have liked to hear more reasoning about that. WHat else they should have done, what options were available. I'm not a Keynsian or any advocate for any kind of economic "theory." But whatever you're arguing, it's not enough simply to not like things. You have to provide a practical alternative to whatever it is you don't like. Glittering generalities, side jokes, and talking about Krugman for an hour, wont cut it. Maybe for the common dullards it will, but not the smart people paying attention. If Austrian economics is simply trying to use reason to understand economics while minimizing the dogma of any one style of government, maybe lead with that. But he leads with Austrian economics is not Keynsian economics.
I would respond even though I’m not sure this speaker did the best job explaining it, one thing he is correct about is that there is basis very little any economist can do to prove their theories. An economy is way to vast a subject for an experiment, even on a micro level any given market is subject to thousands of outside factors which act as variables muddying the waters for what factors truly impacted a given outcome the most. What we can do is interpret as best we can which factors contribute the most to a given outcome. To that end there are billions of examples which seem to show a correlation between government regulations and slowing of markets. That’s not to say there should be no regulations, but that there seems to be better outcomes the less interference there is in a market. Even the Keynesians acknowledge deadweight loss caused by government mandated price controls, when you zoom out there seems to be a similar principle by markets which are over regulated or government owned. I hope this makes some sense as a response. Personally I don’t think classical economics is completely correct but it seems to be closer then Keynesian economics.
@@sleazypolar our dollar has lost 99% of the purchase power it had 100 years ago. That's hyperinflation, just over a century. The economic example of a boiled frog.
Im not sure Ammous would agree with this, but my takeaway is that people make the mistake of believing that currency is wealth. It cannot and never will be.
Currency is wealth in the most general sense because it's issued by sovereign states with millions of productive people who can produce goods and services and will exchange them for said currency. The USD is the reserve currency of the world not because of 'petrodollar' or the United states navy or even the massive nuclear arsenal but because there is about 350 million AMericans with massive mineral wealthy continent to themselves which no one can invade. Why should the government limit itself to a ridiculous gold standard when everyone knows the true wealth of a state is it's human, natural and industrial resources? Austrians are brain dead fools with a medieval conception of wealth and don't understand the first thing about why we are wealthy now and would not be nearly so using something as medieval as a gold standard. Gold standards are for people who don't trust each other and can't work together apparently still looking for the nationalism we now almost all have and will die for. This guy is a dumb as the rest of them.
Im pretty dumb, and was never trained in economics, but realising that real wealth is what is being traded on each side of the monetary transaction is one of the few 'ah ha' moments i have had in understanding economics.
@@garethbarry3825 Currency is a promise and ultimately you got to be pretty paranoid fool to think all transactions can be settled be 'real wealth'. The entire point of fiat money is because we got a bit better at civilization and understood that the promise of the thing wasn't just as good as the real thing but better as more people could make more promises than any volume of gold would allow. All we really needed was better means to evaluate who we are interacting with and if you still don't know the banking license your local bank got gave them the right to create money for you ( not money they had from someone else) based on the fact that you signed that you would pay it back and their belief that you could. That is MUCH simpler than mining a scarce resources and explains not just a little of the boom times we have experienced the last century.
I think it’s what you’re getting at, but in economic terms money is the universal medium of exchange. As opposed to consumption goods which are acquired for their own sake.
@@garethbarry3825 Don't shorthanded yourself, please. . Your post clearly shows that you are very intelligent --- especially so if you indeed have not taken courses on the subject.
No serious debate can begin with my school of thought is the definitive: the first lesson in Economics is the existence of trade-offs and value judgements, in their totality, a set of value-judgements on what are acceptable tradeoffs (inflation vs growth) make up a school of thought.
It's surprising how a (former?) university professor has failed to maintain the discipline of using objective non-emotive speech to strong-man opposing arguments to the extent that this speaker has.
Context of cultural differences is an important note here. It’s okay to comment on weight in the Philippines; in fact it’s not at all taboo. Fat shaming is common. Not saying it is right but making a point that perhaps trash talk is integral in the speakers culture.
There were a few obvious things that should have been included in this discussion… 1) what is money? 2) Austrians believe that savings, production and supply create economic growth, whereas, Keynesian’s believe consumption and demand create growth 3) more in depth with how governments respond in crisis using different real world examples (08’ , ZIRP era, Covid, etc)
Thank you for this. It is necessary first to understand this before even trying to understand what President Trump is trying to do with his economic plans.
At ~37:00, Lex asks essentially 'is there any circumstance that government control is justified?'. Wouldn't the answer be 'Yes, to enforce contracts,' which is the judicial branch being available for those who may be a victim of fraud because the other party didn't uphold their end of the contract?
yes, I think his question originally was about control in the economy. I think Government protection from external force and of individual of rights is implied as necessary.
It should be yes, but these crazy people really believe in "the market" as if it's a separate entity and not a conglomerate of people One side of his mouth talks about people making decisions instead of the metrics. Out of the other side of his mouth he talks about the "market" taking care of itself. Unbelievable. He does the same thing he's criticizing the Keynesians for doing. Guardrails are needed because people are greedy and will do whatever they can to cheat the system for their own advantage. Saying government isn't needed is a fantasy world that doesn't exist. What the hell is wrong with economists? Why must they all adhere to a "system" when clearly no system is the answer all the time. Every situation is different and calls for a different solution. Adhering to one system no matter what is stupid and is a recipe for disaster. And yet they all do it.
Since government is violence, government can be justified (at least in theory) in cases where violence itself is justified. Example: using violence for self defence is justified. So having a police for exactly that (protecting people from getting attacked) is justified. At least in theory, practice might reveal some downsides to it and we may decide government police might not be th best solution. But at least it's justifiable.
The problem is governments will highjack the system to benefit themselves and those closest to the government. We all know that more money equals more "justice" so this system is contributing to the wealth gap. Insurance and smart contracts can do most of this
I can agree with the first part of the argument about economics is not science. By now I believe most people are aware of it. However, the second part of the argument that government is bad/violent and private power (corporations) is good is ludicrous and frankly extremely aggressive. I agree we need more options including government, corporations and other entities (non existent yet) to shape and compete in the market.
The thing is that the goivernment are given monopoly over certaint thing or in other words we don't get to choose. If you get rid of all the laws and take away the privileges of the gouvernment the gouvernment almost becomse a company minus the private part.
I don't think asking for more than 50 billion dollars to the IMF is very keynesian thing to do when your country has a serious issue with foreing currency savings. Owing USD to the IMF is super inflationary, is not due to spending...
Great exchange. Regarding Saifedean's assertion that you can't experiment with economics, aren't we able to observe the results of various policies around the world, specifically with regard to centralized versus market-based policies? USSR, Venezuela, Cuba, etc. etc. Would also be good to look at broken markets, for example US Health Care, to seek a clinical explanation of how we got to 2x expenditure for a generally inferior product. I'd like to know why a fairly unregulated/unsubsidized market like Lasic surgery ( a "luxury" delivers a great value, while other medical service defined as a human right (all other health care) is completely out of control.
I think his point is that these aren't proper scientific experiments because there are too many uncontrolled (and unaccountable) variables. It's another way of saying "economics isn't a hard science".
@@Theviewerdude only partially true. A lab controlled experiment is only the best or highest form of data. It’s not always better, it can have a bad design etc.
Ppl are shitting on this guy in the comments because he's given into frustration and just started insulting keynesian economists. I believe in austrian economics too and I guess it's kind of hard to explain and idk if I can do better but for anyone still on the fence/confused why austrians think inflation is bad read on (sorry in advance for the wall of text and it sounding condicending): Only goods and services are valuable. Money is only valuable because it can buy goods and services, otherwise it's JUST PAPER. Printing more money so governments can buy goods/services without increasing taxes causes the new money to eventually distribute through the economy and now more money is being used to trade real goods and services, so the price of everything rises (aka inflation). Inflation makes our currency a less effective way to save up and build wealth. Since many ppl save in our currency anyway, inflation causes larger wealth inequality which is why austrian economist view it as immoral.
Borrowing is usually cheaper than saving. Austrians never talk about deflation which is way more harmful than inflation (moderate). If the price of things are slowly going up you're less likely to wait to buy them, this brings about more spending and a growing economy (hence the Federal Reserve goal of a 2% inflation rate). On the other hand if the price of things are going down your less likely to buy it, while waiting for it to get cheaper. This on a macro level can bring an economy to a halt (Great Depression). Saving money is foolish on a macro level for an economy. If I get a job but need a car to get there, borrowing to get the car now is a smart move. However saving to get a car is foolish, since I can't get to work and therefore save nothing cause I lose my job. Borrowing is the engine for an economy, saving is it's death.
@@maphezdlin - But there's been deflation in the cost of a lot of products. Both in dollars and the amount of time needed to work to buy them. In 1983 I bought a microwave oven for about $1,600 in today's dollars. Today I can buy one as good or better for about $200. We're lucky that technology and innovation have been able to progress faster than the government and the Fed inflated the currency. Not the same thing as monetary deflation. But with an inflating currency, we would really be hurting without that progress.
@@CharlesWT-TX I agree, only central bank printers benefit from inflation. Deflation is better for the vast majority of society, buying power increases but that's somehow bad? Lol, sure. Inflation benefits paper holders because it's paid back with cheaper dollars. We must pay it back with productivity, they just print it. If course they want it to continue.
If money is intrinsically worthless (I agree), then why would you want to make it deflationary and cause people to hoard it? Wouldn't it be better for the economy if people stored their wealth in capital instead of in money? If I put money in a bank, that money can be used to build houses. If I store money in a BTC wallet....nothing. It doesn't generate any economic production. Isn't that like putting the cart before the horse? Money (gold, BTC, etc.) is a means to an end, not an end in itself. I would also dispute (HEAVILY) that inflation always causes wealth inequality. Inflation benefits debtors, and hurts people who hoard money. In many cases, this can be redistributive. For example: If inflation goes up, people who took mortgages on their homes will see their wealth increase relative to their lenders' wealth. Small homeowners get richer, Wall Street and banks get poorer. Yes, inflation is bad for people who have large amounts of cash. But, if you have large amounts of cash, then you are not poor, you are rich.
@@violent_bebop9687 Deflation is bad. It is equivalent to rent-seeking. It rewards economically non-productive agents, and punishes everybody else. If you think that deflation is good, then I recommend you consider the example of the San Francisco real estate market. There, you have a growing economy chasing a finite amount of real estate. And, what happened? Poverty and homelessness skyrocketed, while those who were rich, or who had bought into the market early, benefitted at everybody else's expense. If I happen to have a lot of money, and then deflation sets in, I might decide that "heck, I don't need to work anymore, because I can live off my cash savings indefinitely". So, I've just removed myself from the economy. I spend money, but I do not produce. Deflation reduces employment and reduces productivity. How does that help the overall economy?
The level of spending can't be higher or lower than the level of aggregate output, because the level of aggregate output is the value of that output as determined by what is spent or paid for it. What is possible is that the level of spending can be increasing because the quantity of available output is decreasing; the demand of spenders for the output has increased beyond the supply of the output. That causes the bidding to increase, and as a consequence both the level of spending and the level of aggregate output as determined by the instantaneous exchange price multiplied by the volume of sales both increase. At the same time the available output is reduced. The level of spending is always the same as the level of aggregate output! QED
A warning: this discussion is extremely outdated and does not reflect current research on business cycle theory. I have not read a single pure Keynesian paper over the last few years even though I mostly read business cycle theory. Rather, current empirics and theory is made using e.g. DSGE-models, which are derived from microeconomic foundations (decisions on the margin) and either in the direction of new-keynesian theory or real business cycle theory (the latter is what Ammous seems to be advocating). Current research (in both camps) realizes that all economic problems can't be fixed by printing money or lowering the interest rate. Standard real business cycle theory argue that money is neutral, even in the short run, and that policymaking is unable to improve welfare by attempting to stabilize economic activity / inflation (as fluctuations around the steady state of the economy is already optimal, as Ammous also argued in the beginning of the interview). However, standard new-keynesian theory argues that nominal and real frictions in the economy (monopolistic competition and nominal frictions, e.g., in prices and wages) cause suboptimal movements around the steady state, yielding space for fiscal and monetary policy to improve welfare. Consider this example: a negative demand shock hits the economy. Aggregate demand falls and the output level is below the natural rate of output, meaning it is below the optimal output level. Real business cycle theory states that by the dynamics of falling wages (and other product inputs), the marginal costs fall and the firms can keep producing at the optimal level, no need for policymaking to get involved. New-keynesian theory suggests that if nominal rigidities exist, wages wont fall immediately, but rather, it will take time for them to adjust (some empirical results show as long adjustment periods as 2-3 years, more relevant ones show around 6-12 months). Given this rigidity, policymaking may alleviate the macroeconomic impact by stimulating the economy. Now, add more complexity to the mix by considering expectations, financial frictions long-run scarring effects etc., and you will be far away from the discussion in this interview. Another example. Ammous mentions that Keynesian theory can't explain stagflation. This is, again, not true. Current NK-theory, as all other theory, realize that such events may occur. In standard models this situation is modelled as cost-push shock, e.g., oil prices rising in the 70s-80s, yielding higher input prices for firms (higher marginal costs) and hence both higher inflation (inflation is partly determined by a function of marginal costs) and lower output. These models then support an increase in the interest rate, so as to dampen the inflationary effect, because inflation is the main target for central banks. Furthermore, current research goes way beyond the simple arguments used in this interview. Expectations, as an example, play a central role in all policymaking theory. Even behavioral macro is growing. And actually, behavioral theory seems to justify output and inflation stabilization even more than current standard theory. Now, of course policymaking today can be both successful and unsuccessful, not all problems can be solved with lower interest rates and nor can all variables be forecasted perfectly. So, it becomes a question of: how often do policymakers get things right vs wrong, and is there a net positive effect on welfare? This question can vary greatly between different countries and scenarios, meaning that a very careful analysis is required (not whatever the arguments presented int his interview would suggest). Lastly, I don't mean this as a criticism of typical real business cycle theory, which certainly has some strong points, but rather to show that the arguments presented in this interview is very outdated from a research point-of-view. Again, nobody uses pure Keynesian theory anymore, neither do they use pure Austrian economics.
"However, standard new-keynesian theory argues that (...), yielding space for fiscal and monetary policy to improve welfare." Which funnily resonates with the central statement of Ammous: (improved) Keynesean economics in the end seeks to justify government intervention.
Austrian economics is classical economics by another name. It was tried here in the late 1800's and failed miserably. It was also proven wrong by not only John Maynard Keynes but the Second New Deal. If you read what these guys actually believe, they've have us back to the Robber Baron era of the late 1800's where we had virtually no middle class, a very few rich and most everyone was poor. We also had major economic depressions every ten years or less. Depressions so severe, many Americans died of starvation. As for the libertarian aspect of it, economic libertarianism is nothing more than Social Darwinism. It's based on greed when Adam Smith said that greed wasn't good. Enlightened self-interest works and it's what we practiced until the 80's. I'm a capitalist through and through but the plain fact is, unregulated or laissez-faire capitalism concentrates all wealth in the hands of a few. That's a recipe for revolution and most don't know but we almost had one until Franklin Roosevelt was elected to his first term. Laissez-faire capitalism will destroy itself and if we go back to that more than we alredy have, it could very well destroy our way of life and standard of living not to mention the country. The economics that grew out of the New Deal created the largest sustained period of high economic growth in the 20th Century. That ended with Reagan and since then, we've been following right-wing economics again which has seen the middle class stagnate and decline, the working poor get poorer and all the gains GDP as well as trade go strictly to the top 1-2%. We've also had miserable gains in GDP since Reagan whereas before, we had great gains that went to everyone. Most workers (employees) are not making anymore now when adjusted for inflation than they were in 1979 thanks to guys like this. Austrian economics is economic freedom for a few while the rest end up as wage slaves with no bargaining power. Paul Krugman won the Nobel based on trade theory. His Nobel was voted on by his peers in the profession. What's this guy accomplished?
Everything you said is wrong but thanks for the input. You are right Paul Krugman won a Nobel prize and that is what he thinks: ua-cam.com/video/CgAUW_zcN9k/v-deo.html
Not even remotely. Classical economics was based on an objective, cost of production theory of value. Austrian economics is based on the subjective, "marginalist" theory of value. It's more accurate to say that Marxian economics is just classical economics than what you said.
I agree that we as humans dont need an incentive to consume, but I think it is a misrepresentation of the original argument. We dont need a reason to consume, but if there is deflation, it incentivises us to NOT consume. The default state is wanting to consume, and the reaction to an incentive is not consuming. However, in Keynesian politics we want to make sure that there is no such states that incentivises us to NOT consume.
I have been employed by Fortune 500 companies for over 35 years. I have also been a locally elected official. The difference is government has an underlying purpose of public good. A large corporation does not. A corporation will cut you and your family without a second thought, absolute amorality, I have seen it with my own eyes. I am 64 years old, an ex-Reagan follower, I saw Reagan in person, I was a one time free market fundamentalist, I was wrong. It took me years to appreciate the superiority of good government. I appreciate this guest's opinion but I don't agree.
The root cause is people not thinking even 1 step ahead, to how individuals might respond to a change (eg, in law, or pricing). Not thinking ahead is a way of implicitly treating a dynamic system (both society and individuals) as if they were static and unable to adapt.
The market can't support multiple power plants in one area; when the private power plant fails, the market can't correct fast enough. It's in very few people's interest to hitch essential utilities up to the vagaries of capital markets.
Nonsense. There are tons of industries where if a major provider fails, it's not so fast that a competitor can fill the gap in supply to meet demand. Yet the world continues turning. Food distribution is one that's right in our faces...
@@Theviewerdude That's very industry-dependent. Contrast with the shortage in computer chips. The more technological capabilities and initial capital investment you need, the longer it will take for newcomer to set up shop. The market mechanism is much better with things that can be set up quickly and much worse if you need to plan 10 years in advance (say, building a nuclear power plant).
@@Theviewerdude Yet another idiot posting nonsense. He is talking about utilities. As for food distrution, why do where has a supply chain crisis? Because of industries end up being controled by 3 or 4 companies. You are welcome for the free education...
there's always this nirvana fallacy backed by wild hypotheticals. As if the bar for free market was guaranteeing paradise without any roadbump. Somehow government int3ervention is never held to such high standard. Also, why would a private power plant in an area where there is no other power source falter? You need to explain that - and not only explain that, but also prove that it regularly happens in such numbers that we actually need to recognize that as a problem. Otherwise, such hypotheticals are as valid as "what if gravity started working backwards".
And the power plant monopoly example is extremely stupid. In some lines of business (like say, the energy sector) the barrier of entry is really high, and it takes lots of time and resources to start get business running (like starting a power plant). In such economy, a monopoly can charge higher prices than fair markets, and if there is competition arising they can drive them out of business with low prices. The argument that someone can just enter the market and offer service with lower prices works in the small town barbershop example, but not in a larger scale and context the of nation-wide monopolies. These arguments make it hard to take Ammous seriously, when you can clearly see his strong libertarian views behind every argument. He is more of a libertarian than an economist, but uses his position as an academic authority to push his libertarian views.
This is so right, when I think about buying anything, I think about what I need and what i want, not about whether my money will devalue by tomorrow, so it makes sense to invest it in buying myself ice cream today. Keynesian economics only promote speculative spending if anything.
Keynesian economics promotes spending because it devalues everything you have while raising prices. Spending and consumption is not growth, it's a government spending spree at everyone's expense.
"I think about what I need and what i want, not about whether my money will devalue by tomorrow, so it makes sense to invest it in buying myself ice cream today." Well, you won't do as well as a Keynesian.
note: When he says, "You can't experiment on an economy", he means "You can't run a controlled experiment on an economy." Not controlled. Not scientific.
In correct. Controlled experiment is just the highest order of scientific evidence. A lack of controlled experiments does not mean something is not scientific, it means the ability to draw scientific conclusions is limited or reduced. Controlled experiments can be poorly designed or run incorrectly and thus be of lower value then other forms of evidence. Natural experiments are still experiments and valid scientific evidence but of usually of lower quality then controlled experiments.
Even tough he sounds very sure of himself, please keep in mind he MIGHT be wrong. If you don’t have formal economics education, please, this is very important, don’t overestimate your knowledge and just accept his word for what it is. Now, if you want to get a sense of macroeconomics (basicaly Keynesian economics), I strongly urge you to read a good textbook, or at least gloss over it. A good one is Macroeconomics by prof. O. Blanchard. You might be surprised to find out…that this man doesn’t really paint an accurate picture. Remeber, where there is theatricality, usualy it is at the expense of expertise. Its up to you, as allways✌️
The only example he gave against Keynesian economics was stagflation which makes no sense. Since economies moved to floating exchange rates in the 80s and 90s this is no longer a problem.
@Ben Supit Floating exchange rates were brought in to end the stagflation following the Nixon Shock. This ended the Bretton Woods system and advanced economies haven't seen stagflation since. Central banks now have the ability to target inflation, whereas previously this was impossible when mandated to control foreign exchange. This is called the 'trilemma of international finance'.
This is a really frustrating segment because it is very obvious that neither side has any interest in truth. This is just about winning an argument. It's unproductive. Neither side of this discussion is willing to actually admit to the underlying motivation behind their house of cards arguments. Neither of these theoretical positions hold water if you question them far enough. Its about who has control. That is the crux of the argument. It's smart people wanting to be in control and making up arguments for why they should have more control than their opponent.
@@olegigoverich7684 Even alien economists use Marginal costs in their analysis. It’s at the root of economics regardless of specialty. There is really no ideological issue here.
@@olegigoverich7684 Did Mises have marginal cost analysis in his work? If he explained some of the research done by various Austrian Economists that would be pretty interesting.
The power plant example is interesting... I am not allowed to go off the grid even if I generate enough solar power and use batteries to store and use the energy. My local power company forces me to cycle the electricity I produce to them and they give it back to me at a reduce rate... absolute BS.
Our government in New Zealand doesnt let people within government water supply collect rain water for human use without getting consents/permits. Pretty much paying them money for nothing and giving them an opportunity to police your water use. Power is similar, they dont allow subdivisions without a grid connection. Most of this is under local government but the police will enforce it.
There can be a demand-side crisis and there can be a supply-side crisis. In the 70ies, there was an oil crisis. Oil got much more scarce, this caused the prices of everything to increase, because you need energy for every good (even if it's only to transport it). So the cake got smaller, however trade unions wouldn't want to accept a smaller piece of the pie (in absolute terms, not in relative terms). So they went on strike and made the pie even smaller. Of course, it is wrong to print more money in such a situation, because you would end up with an accelerating inflation in this case. But the causes are quite different if you have a demand crisis instead of a supply crisis (like a lower supply of oil).
paying my tribute to fashion I thought at first that segregation, poverty, lack of education were to be blamed. But moving up the social ladder I found that the same ratio was prevalent among the white-collar employees and among the students. More impressive still were the results among the professors. Whether I considered a large university or a small college, a famous institution or an obscure one, I found that the same fraction σ of the professors are stupid. So bewildered was I by the results, that I made a special point to extend my research to a specially selected group, to a real élite, the Nobel laureates. The result confirmed Nature’s supreme powers: σ fraction of the Nobel laureates are stupid.
You seem to have decent intelligence, in some aspects of intelligence, but youth seems to make you think it's more important than it is. Most Nobel laureates have an IQ below 130; not surprising.
Especially once they step outside of their speciality. This is not call them morons, but the majority of their knowledge and thinking lanes are devoted to that speciality and just don't have the tools beyond that.
Keynesian economics failed dramatically after WW2 in the U.S. where 13 million people who were serving overseas were to return home. The Federal budget deficit had been above 50% in the last years of the war and Keynesians argued that slashing the deficit would produce a large downturn in the economy. Despite that the government slashed the deficit and the economy started to boom instead of dropping. It is wonder that anyone would take Keynesian economics seriously after that real world demonstration of its failure.
Can't give you his exact reasoning, but the general austrian position is that Breton Woods was less bad than what we have now. but still a failed system. When it comes to monopolies, Austrians only recognize actual monopolies (a truly single entity control over a market) which only happens in stateful societies. The so called natural monopolies are usually just "dominant players". What we traditionally call monopolies are not really that bad as long as their competition is not prohibited by law. I'd recommend to check out the Austrian view on the history of Standard Oil. It's a really clear example of the reasoning.
@@vulgoalias4050And that is insane. It's clearly been shown that when there are only a handful of monopolies controlling a market, prices go up. See Amazon and Walmart These companies get control of the market and then raise prices. They essentially control the price of goods because of their market share Completely wrong understanding of monopolies
@@namaste758 That opens up opportunities for other people/companies to enter the market and provide their goods/services at a lower price. You are not thinking it through (enough?).
@@namaste758 and then, eventually, someone else undercuts the monopolist with a cheaper priduct/service. Poof! No more monopoly. I don't see tge problem with temporary monopolies.
When Lex asks, "how is government good," Dr. Ammous goes right to the "government is a gun to someone's head" argument. Individuals are capable and often commit atrocities against others, not just organizations or governments. Anarchist trade involves the threat of violence. Look at illegal drugs or illegal prostitution where violence is always possible. Small government is the careful administration of the threat of violence in order to reduce the constant threat of violence.
The main criticism of austrian thought to me is nonsensical. The idea that their arguments are invalid because they arent data driven/mathematical and just theory is a red herring. Principally, there are some axiomatic truths that do not require emprical data to reasonably assume are true, especially when they concern human behavior which fundamentally is what economics is. Im a statistician and the austrian criticisms remind me of the criticisms made towards bayesian theory and the determination of prior probability. Some events in nature give us reasonably informed priors that do not require data driven verification to take seriously. I think the same can be said for austrian arguments. Sure their statements arent verifiable by data but if you step back and think about what they are saying you can definately place a very high theoretical prior probability of them being true.
Lex really enjoyed this conversation and your question regarding asymmetric information. Full disclosure I don’t know much about Austrian economics, but I’d be interested to learn about how the free market solves for asymmetric information in the pharmaceutical industry. As someone who agree with you, that bad-faith actors could benefit from asymmetric information, how would you think the free market would resolve issues like the opioid crisis (as a large scale example) or a drug approval process that ensures safety. Seems like it’s ripe for corruption like the repealing of the Glass-Steagall Act
You're absolutely right, it IS ripe for corruption. Asking a profit driven system to solve cultural, social, or environmental problems is a fool's errand. When profit is the sole motivation, true remedies will not be found.
"The free market" doesn't exist. It is the economics version of the flat frictionless plane you use in physics to isolate and calculate forces individually, before you go on to learn dynamics.
Bad actors are found out rather quickly in free markets and punished accordingly. Great case study happening now: watch how quickly Liver King's positive profit trend quickly halts and he's suddenly underwater on all his business ventures
Odd thought about this: changing the laws around patents could really help. If you limit pharmaceutical patents to 3 or 4 years after FDA approval with no extension (rather than 7 years and a 7 year extension) could really help reduce the cost of pharmaceuticals. As to whether or not the FDA will do it’s due diligence in making sure the drug won’t kill people is a different problem though…
Things like Pharma, Petrochemicals and pollution is why I don't believe in anarchocapitalism despite favoring Austrian economists most of the time. Negative externalities are a thing. If you don't punish companies in certain sectors alleging "voluntary exchanges between suppliers and consumers" you end up with situations like those of oxycodone, thalidomide, forever chemicals of DuPont, etc. Intervention is needed for industries where suppliers have much knowledge about the risks their products have on consumers yet refuse to disclose or acknowledge them. Yeah over time markets can adapt on their own and expel bad products or actors, but you cannot rectify certain kinds of damage.
Great job, Lex, on pushing back. No need to insult Keynesians beyond explaining with simple facts & logic how & why market-driven economics is reality.
Lex shames Ammous at the very first minute. Because he's aware of how weak your ideas are guys. Seriously. "market-driven economics is reality" What kind of statement is that? The kind of statement that only a pseudo-academic douche would say.
It would be really interesting to listen to his possibly legitimate critique of orthodox economic theory if he wouldn’t just constantly bash the other tradition that he is obviously not subscribed to. In other words, bro just talk, bring your arguments and leave the hate at home! This undermines his arguments
Any model you create uses past data entries. If you create a model and try to use it to calculate things that are outside of the range of your data set, you are extrapolating not interpolating. The model cannot be relied upon because it is outside the models range. Past data contains no future data. Forecasting with models is very difficult because of this
That’s like saying it’s impossible to forecast, which isn’t true. There are certain things that are impossible to forecast such as how the economy responded to the pandemic, but we can forecast normal business and economic cycles.
@@neofusionstylx i know that it is hard to believe but most economists have forecast that inflation is coming down with the fed raising interest rates. Only Austrians doubt it. Let's get some popcorn and watch.
@@rlkinnard I studied economics at the University of Chicago, so I lean more fiscally conservative , but these Austrian economists seem like economic 101 students. As in, a lot of what they say makes sense, and alot is accurate, but A huge difference between Chicago and Austrian schools is Chicago uses empirical data and math. Austrians have these set of “logical” arguments that seem to make sense on paper, but they don’t back their assumptions with empirical data. So at the end of the day, we don’t know if their foundations are correct or not, and this guy being anti-data kinda shows what’s wrong with the Austrian school. How do you know your assumptions are correct if you don’t rigorously test it? We’ve seen that a lot of Austrian economics was just wrong the past 15 years. The fed has been doing QE for the past 15 years and inflation has been kept under control until 2021. So something gave, and it’s not just the printer, but a combination of supply shocks coupled with increased consumption demand.
@@neofusionstylx Austrians claim that you cannot predict, and yet, I am sure that price inflation was going to start going down 6 months ago when I first posted here, and it will continue going down as the Fed is continuing to tighten the money supply. I am sure that both fresh water and salt water economists would agree with that.
I agree with most subjects discussed. What i dont get it is how are public infraestructure going to work? One thing is free market policy for lucrative business. And security? Roads? And what if a nuclear plant isnt carefull and disposes its byproducts on the ocean?
It’s all good and perfect if you disregard all of externalities in a world filled with complex human societies, according to them. There has to be some balance
John Maynard Keynes was an outstanding intellectual leader of the first half of the 20th century. I am not an historian, though I have tried not to be ignorant of the past. I see numerous references to Keynesianism that even a casual scholar would know are false, and I find the level of ignorance concerning the accomplishments of the great man distressing. Not only is this unfair, but it produces a readiness to receive an untrue picture of the economic blunders and deliberate falsifications that have led the United States into the danger of default on its public debt and widespread domestic impoverishment. I shall with great brevity describe the lies about what Keynes advocated as a scholar. 1) He recommended government borrowing and spending but only as a last resort in a time of total economic stagnation. 2) When times return to normal that borrowing is to be repaid by taxation. 3. The wealthy never willingly share the tax burden and have vilified and misrepresented Keynes. 4. Keynes warned the world about the Versailles Treaty, but was ignored. 5. Keynes tried at Bretton Woods to have the US agree to sharing control over monetary policy in the west, but the US ignored him. 6. Keynes made significant contributions to the mathematics of probability, and was recognized for it by Bertrand Russell. I am sure that Keynes did much more deserving of great praise, but I make no claim to completeness.
Lex starts to actually answer his own questions. He says Econ can’t possibly validate so many different variables. That’s exactly why Keynes is wrong. Because Keynes needs a central planner and a central planner takes away the individuals freedom to make choices that are best for themselves.
Its strange that the guest says he himself used to be a keynesian, yet now his is an avowed mortal enemy of them. It would be interesting to hear from him what he thinks of his former self, does he think he was all these terrible things he accuses the keynesians now of? Good that Lex constantly pointed out the dangers of being excessively certain of oneself, though the guest did not seem to understand this
@@mrborn2drink the difference is one set of theories is artificial, the other is not. This is the same reason why the more you think about current leftist politics, the more it crumbles. It's fake. It treats human beings as simple nodes in a group. Just like current economics it treats individuals as abstract concepts and that doesn't work and never will. So there is a side back to the right when allowed to think and speak freely. It is for these reasons that the left is so intent on not just silencing dissenters, but demonizing them. They are the ideology... im not exactly sure how letting people live their lives based on a real economic system is even an ideology at all.
He spends a legitimate segway at the beginning talking about how diamonds have little intrinsic value (all fine, except that it detracts slightly from the diamond/water metaphor he was trying to get across). Then spends the rest of the clip implying that leaving the Gold Standard was some sort tragedy, without once addressing where gold gets its magical intrinsic value. Also, the idea that high inflation and high unemployment coexisting in an economy somehow disproves Keynesian Economics?!? This is surely the silliest strawman that I have seen on the internet in a little while. There is plenty about Keynesian Economics and a huge amount about Krugman to critique, in my opinion, but this chap is equipped to do neither.
The guest uses the language of coercion and forcing people to do things. This is deliberate. He wants us to believe this so he can push his ideology. Make no mistake. This isn’t economics, it’s ideology. We don’t have perfect democracies. However, with the size of the population and the history of our development we need some public services and these do require central planning and we now need to deal with climate change which requires cooperation and detailed planning. The markets still have a role. Libertarianism or anarchy (with a small ‘a’) work in smaller simpler societies and could work in the future. However, right now we need a degree of central planning. Also, the guy goes on about how we can’t have experiments, justifying his approach that we should rely on HIS theory. In economics, due to complexity, the data is unreliable, but it does provide very useful evidence on which helps us make decisions.
The problem with Keynesian Economics is that it does not F-ing work as a model to predict or influence actual economies. “Stimulus” for consumer spending is fundamentally flawed and only results in more poor economic decisions / bad investments. Real monetary policy must stabilize the Unit of Measure of Economic Value = The Dollar to keep commodity prices stable since they are not swinging in price rapidly via supply/demand. Gold is way to sensitive and intertwined and scarce to be used as the basis for valuing The Dollar anymore, and attempting that would destroy the market for Gold. There would be chaos and failures in Engineering if the Meter or Second fluctuated in value, and the Dollar is no different. The chaos in our global economy (Boom/Bust) will stabilize if the Fed stabilizes The Dollar against an Index of Commodities.
This is the first and only conversation where I’ve heard Lex consistently interrupt his guest and tell him “that’s just your theory “ or “that’s just one explanation.” Perplexed why he feels such a strong desire to defend a monetary system that has proven, thru data, to have devalued its own currencies to the point of collapse.
I noticed that as well. When we shed light at some hard facts about how goverments are plain right immoral the way most of them are, it's hard to come up with a satisfactory counter to maintain neutrality. I don't criticize Lex to do it, he's dancing the dance
The issue is not at all so simple, there are a lot of things that are off here in the guests argument. Simply stating that the "government" is printing too much money is not completely accurate--we have different types of "monies," and most money is actually created by banks to finance the economy more organically. The distinction between "savings" and "investment" must also be held in stark contrast. It looks like the guest believes that hoarding money in a mattress is a good thing, but then muddles the concept with "investment" which is totally different. Both crypto and gold enthusiasts seems to believe that the best or only way to save is to hoard the medium of exchange in a mattress--when one can in reality exchange dollars for gold bullion, stocks, bonds etc. as a store of value. Also, 19th century history shows that the gold standard was always just a psychological trick for people to trust paper money, when, indeed, much money was always backed by debt--even during the gold standard. During the 1870s it was actually the big bankers that wanted only gold to be money while the poor farmers wanted for gold and silver to be money--which was the essentially the quantitative easing of its day.
@@Interstellar111 - I can get your point of gold on the 19th century being a 'psychological' trick into believing it couldn't create inflation. Governments and powerful people will always try and find a way to devaluate it's currency in detriment of the other parties involved, why wouldn't anyone? When you have laws that coerce people into adhering at a certain currency you end up having a situation where you can't know for sure that every party belonging to that system is actively looking forward to it's benefit. When you have a coercive relation, the currency is 'potato' the currency is 'potato'; Governments may create a 'govCoin' with 0 'pre-defined' inflation (unlike bitcoin, that has this inflation set on it's algorithm) and still, if the government has the ability coerce big masses of people into using them, anyone with the keys can find a way to create inflation. Bitcoin on the other hand, everyone in there wants it's price to hold value, or increase if possible. You never really want it to decrease, unless you want in. So, when you have an asset like bitcoin, it's always gaining value, the community can choose to 'devaluate' so they may extract value selling to other people, the price would go down as would any inflation, but this would mean an appeal of at least 50% of the network. Way different than what, a few bureaucrats who knows jack about the needs of people? How could one ever know. Now, I understand, I get it, every currency will have it's "owner", who will ultimately be able to steer in a lot of influence over it, even maliciously. That's also a thing of beauty when you think about bitcoin (not any other crypto); The way it was created, nobody really controls it, I know lot's of powerful players in the arena but their influence is quite limited. It is truly the one digital asset, and event I'd add, that was created and born with the same idea of the internet, and this resilience will certainly be tested in the coming years I'm sure of it
Why? Thomas Sowell is not an economist. He is not associated with any economics department, He can't do quantitative ecnomic studies, He does not publish in peer-reviewed economic journals (or any journals), Nor does not debate leading economists. He can't even read economic journals and does even know statistics. Having a law degree does not make you a lawyer.
No! Thomas Sowell, Freidman and the Chicago School of Economics is socialism disguised as capitalism. Sowell has interesting socialogical ideas but him and Friedman are just more gatekeepers when it comes to economics.
The other common complaint against completely free-markets is that so-called 'negative externalities' such as environmental impact is not adequately priced into the supply.
Been seeing alot of economist of Lex Podcast in the past year and would love to have Peter Schiff on, Peter's way of analogies and explaining the problems with government spending and the flaws of the FED is something that's very relative today
OMG... Lex and Michael Malice are neighbors in Austin? Fantastic! Can you imagine this scenario... Lex walks over to Michael's house at 2am and asks: "Could I borrow a cup of diamonds?" Michael replies: "Diamonds? Wouldn't you prefer a nice cup of water?" VIVA MISES!
I have a B.S. in Economics, and I can verify that econ classes are more akin to religion than education. One train of thought is acceptable and taught (Keynesianism). To the extent we were taught any Austrian concepts, they were framed as “outdated” or “irrelevant” in today’s economy.
That's because it is outmoded, and keynsian economics is not the economics being taught today. Ludwig von mises was a crackpot. We teach uncle milty aka milton Friedman. This idiot believes that we should go on the gold standard which is wrong.
It’s true, you learn about John Maynard Keynes out the wazoo, but I only found out about Milton Friedman and Hayek through UA-cam. I did however learn about the production possibilities curve, comparative and absolute advantage, and how price ceiling and floors cause surpluses and shortage, so it wasn’t all left wing.
@@robfromvan I found microeconomics to be useful since it’s basically dealing with the basics of supply and demand curves, but macro was 99% garbage and interventionist propaganda. Econometrics had some interesting and useful statistical techniques, but I thought the usefulness of their application to economics was overstated.
Its funny no country puts Austrian Economics to work. If Ammous is right then every country would be falling apart since no one practices Austrian economics. If Kyenesian is so bad we should be living in a 3rd world country right now. Hmmmm.
They are falling apart..also under a Kyenesian model is much easier for governments to murder people as it encourages using fake money. Versus the hard money standards of Austrian theories
Well, I have to say, I think this is the rock bottom worst. Not Lex's fault, this guy has nothing to offer in terms of insight, just ad-hominem attacks on Keynesians and a thorough misrepresentation of them. The "central planning" straw man was almost humorous.
@@robinhoode3875 I had the opposite view. Sorry this is so long, but here's a comment copied for convenience: The key tenets of Keynes are that inadequate overall demand can lead to prolonged periods of high unemployment ("inadequate" having a specific meaning but many possible causes that must be evaluated), and that government intervention, under the right circumstances (not just any old time), can stabilize the economy. This guy calls this malarky, misrepresents the history and assumptions of the theory, and ignores the fact that this has been proven to be correct multiple times, not least of which were the 2008 crisis and the pandemic. And, re 2008, countries that imposed austerity did far worse in recovery than those that used government stimulus, and re the pandemic, the US correctly injected stimulus (if a little too much), and has fared better than almost anywhere else. Ammous seems to be driven by an emotional repulsion of the idea that government should play any role in the economy, and I still don't understand what "his" school has to offer. For comparison with a realistic and compassionate view of the world based on actual information, see Lex's interview with Krugman.
I always thought Keynesian economics was flawed when it begins, "All things being equal..." as the premise to the theory. Whenever has anything ever been equal? Especially in economics!
I may be confused here, but at 23:00 he seems to argue that Keynesian economics doesn’t model stagflation…which it can. Again, maybe I’m misunderstanding but this seems incorrect.
You are perfectly correct. There is undoubtedly plenty to be criticised about Keynesian Economics, but this chap doesn’t understand it in the first place. Worth noting that he doesn’t actually have an Economics degree.
Keynesian’s are terrified of stagflation. They think intervention is needed before, during, and after stagflation. Austrians, on the other hand, see stagflation as a time of cleansing out the weaker and negligent actors in the economy. Keynesian economics does not allow for this cleansing. It simply puts a band aid on the wound and kicks the can down the road via inflationary policies
@@charlesw852 Ad hominem but no specifics about rhe subject. You should be at least slightly more logical than the Ancient Romams, who knew argumenutm ad hominem as a logical fallacy.
He's good at parity marketing to promote himself. Pick the strongest person or company and denigrate them loudly in the hope someone will recognize you. Pathetic.
This is a great interview, Lex. I would have pushed back on the guest on one point, though. When he said it’s never ok to use coercion, I would have asked about those who lack the capacity to consent (minors, mentally ill, drunks, etc). If my 1-year old son tries to eat a razor blade he found, I sure as hell can use coercion to stop him. So if that kind of coercion is good, then what about other kinds of coercion? There are limits to the non-aggression principle, which means there are limits on a completely free society. Libertarianism doesn’t mean no government. It means limited government.
The child is not a full human, you have to make the decision for him. That is not coercion unless you think people are children and the government has to decide for them.
From someone who has a master's in Economics. This is false. You start off your journey with Austrian and free market economics. That's the basis every theory tries to prove or disprove. In fact most of the top schools Harvard, Princeton etc teach mostly Austrian economics.
@@segwaysegments I'll concur with you (BA in Econ). I don't know what universities this bozo has attended or taught at, but his characterization of the teaching is laughably wrong. Yes, if you take only 200-level courses, you get fed the basics. But that's not the end of the story. It's like saying public schools feed kids a wrong version of history because the 2nd graders act out the first Thanksgiving.
Basic microeconomic courses are very pro market and neoclassical based. Most intermediate and advanced level courses are more "moderate" but still neoclassical based. The macroeconomics courses content depends on where you study.
It is not just that Krugman is wrong. He is a paid (in one way or another) mouthpiece for the banking cartel that took over in 1913. Income tax and ever increasing inflation are the benefits. Feel free to track housing or the stock market going back to 1913. Buying these things are way to short the US dollar... which lost value vs actual assets every year since then.
Why are some economists so certain on their theories? Economics is basically the study of mass psychology and technology, and a number of random factors, which amounts to so many moving parts that it can only be a descriptive study, far from scientific.
Real economists, you know, with PhDs and scientific training (not this clown) are not that arrogant. We recognize the complexity of the system, although we do have some good success stories with theory and empirics.
@@Guizambaldi his PhD is from Columbia, he’s a published author on the topic, and worked as an assistant professor at the Lebanese American university.
Having a monolopoly on the money supply and trying to control the economic decisions of millions, or billions of people is just morally wrong. End central banking.
"Inflation and Credit expansion, the preferred method of government open handedness, Do not add to the amount of resources available, they simply make some more prosperous, but only to the extent that they make others poorer" -Ludwig Von Mises "We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power" -Alan Greenspan
The real money are controlled by the government which is controlled by the people and used in real economy. In Crypto the money are controlled by the wales that are not regulated and can do whatever and used in speculation to get more REAL MONEY. I don't see at all how this supposed to be better.
Scientific facts: 1) Every fiat currency throughout history has eventually gone to nothing. 2)The gold in use during the times of those fiat currency collapses never went to nothing, and is still worth something today.
Thomas Sowell when asked about getting rid of the Federal Reserve. He was asked what would he replace it with. “When you get rid of a cancer, what do you replace it with?” The perfect answer.
Some of the craziest shouting matches I have witnessed is in the Economics department between the keynsians and the monitarist. It's an exercise in religion. Brilliant viewing, but careful not to get drawn in.
Economics is not a science, you’re right it’s a religion based off of beliefs they work tirelessly to “prove”. But they’re all equally dogmatic and narrow minded and this guest is just as guilty as any of them.
"It's an exercise in religion". Yes, one of the most interesting talks I have heard was by an economics professor at the University I attended who started by saying that of all the different disciplines offered his was the most similar to a religion.
Wtf he is talking about?? 😡 Just jamming Keynes in the Garbage bin, as non-sensical? Mr. Ammous can't wittingly be serious when is so absolute. He clearly doenst undesstand how any money in the world came to be if he talks like that!
This is a strawman of the “Keynesian” model. It’s possible in the Keynesian model for aggregate expenditure to be higher than aggregate output in a recession as aggregate output can still fall independently of changes in aggregate expenditure e.g. a supply shock. Even in the cases of Austrian credit cycles where excess demand causes supply shortfalls, this could still be accounted for by mainstream models. This is because they have theory related to nominal and real rigidities, where one side of the economy can impact the other in the business cycle.
It's possible alright. And what are the methods? Either increasing debts and/or inflated money supply since we know that economy is already running debt based. Result? Inflation or pushing off the recession to a worse outcome later.
@@johnrobholmes it’s a possibility for monetary stimulus to have that impact given the right (or wrong) monetary rules and general economic conditions. However that isn’t a universal picture of macroeconomic fluctuations, which can happen for all sorts of reasons.
His explanation was flimsly; instead of supporting how Austrian economics works, he is always in the mood of criticizing Keynes. Although no economic theory is perfect, unless you prove it either by logic or practical example, no one will believe it.
I was thinking the same thing. Critical utilities and infrastructure aren’t like selling different brands of Mac and cheese. He flippantly says competitors can easily crop up if your electricity provider sucks. But starting a utility company is not trivial. You end up with de facto monopolies like that, at which point it might as well be a local government monopoly.
As Hayek said, "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." Lex refutes certainty and admits we don't know what we're doing most of the time and that's precisely the point. Central planning imposes the certainty of foolish economists upon the individual.
edit: I Googled this guy, and he wrote a book promoting Bitcoin right as this interview came out. I regret watching as much of this interview as I did. I'm halfway through this interview and this guy sure seems close minded. He starts off by promoting Bitcoin (whoops), then when Lex asks him why data doesn't support his theory he replies the data isn't meaningful and everyone else interprets it wrong. I feel like he decided his ideology at 19 and for the rest of his life he'll ignore or cherry pick data to show he's correct [a little further in the interview and he's most interested in showing why everyone else is wrong using straw men arguments {I'm sure he'll have no evidence to show he side is correct, and I'm hitting 'COMMENT' right... Now!}]. And if nothing else works, call them 'hucksters.' Adequate reasoning for these flat earth times.
I think the first step to getting away from government controlled taxation is to decentralize how your tax money is spent. At the end of the year(tax season) each tax payer dictates where there tax money is spent. For some it is 100% national security. For others it is 50% infrastructure and 50% public parks...so on. Each year the government agency gets their budget based on the taxpayer contributions. It could be a bit rocky early on as people neglect to fund things they would ultimately want. I for one would be more willing to volunteer to pay some tax if I also got to chose how it is spent. In a libertarian world ran on Bitcoin the government would be reliant on voluntary taxation and this is the only way I see that happening.
why not run it on theo coin? .... what you hope makes as much sense as apple?coca cola/airlines/doctors and so on relying on voluntary payment ... national governments is a provider of a service, charging a price for its services ... taxpayers have a much freedom to avoid a certain national government, as consumers have to avoid apple or google, or going to a doctor....
Top 10% of earners pay close to 90% of the taxes in the US most people pay little to no tax seeing as though much of it is given back to them during tax return season so it might not be a fair representation 🤷🏻
This allows a situation similar to the fall of greece, where people can give themselves money if they choose to give their taxes to social programs and bankrupt the government.
@@manuelmanuel9815 You are obviously correct! But, so is Jacob. Implementing kind of change in Jacob’s idea would take a revolution. And, that revolt is happening in small increments now. As more people pay the price of governments deficit economics, and they develop the skills to apply the technology that already exists for that change to take place the revolution will pick up steam! People are catching on to the power of decentralized economics in the form of cryptocurrency, but that technology is a decade out from mainstream use at present. The few people that do understand and use have already caused a stir and got governments attention. And, it will ultimately be the Trojan horse that wrenches control of governments from autocrats and politically connected plutocrats back to the individual. Nothing success like freedom! Most people know that, they just feel powerless to take it back once it’s lost. I’m just not one of them! I’m just sayin..
Your $2000 in taxes nor the collection of all the taxes of people earning below $100k will not matter nor match anything of corp or top earner taxes. Instead you will get less funding to the things you want. Voluntary taxes will just mean even less money for public works and you paying more “taxes” to giant corporations to use their utilities. These lines of thought at based on the idea that the rich did nothing nor know nothing on how to make money nor manipulate systems. It’s a nice tale to tell yourself to comfort yourself to sleep, but it is not reality and you will get rolled hard if this takes place. It’s similar to competitive gamers swearing they deserve a higher rank. Meanwhile higher ranked players consistently take accounts for lowest tier to highest.
Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.
In particular, amid inflation, investors should exercise caution when it comes to their exposure and new purchases. It is only feasible to get such high yields during a recession with the guidance of a qualified specialist or reliable counsel.
True, initially I wasn't quite impressed with my gains, opposed to my previous performances, I was doing so badly, figured I needed to diversify into better assets, I touched base with a portfolio-advisor and that same year, I pulled a net gain of $550k...that's like 7times more than I average on my own.
@@williamDonaldson432 This aligns perfectly with my desire to organise my finances prior to retirement. Could you provide me with access to your advisor?
This aligns perfectly with my desire to organise my finances prior to retirement. Could you provide me with access to your advisor?
Annette Marie Holt is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
as a Venezuela who lives in Argentina. whenever someone says that things about the hijacking of the Economic studies by the propagandist i deeply feel it... in my heart, my stomach and my pocket
@C. V. EClass how do you know?
@C. V. EClassyes, exactly. how do you know?
Same from Zimbabwe.
Milei 2023
Oof doble wammi. Suerte ahi en argentina, tuve la suerte que mi padre se mudo de Buenos Aires a los eeuu
"There is no central planning without coercion."
Best quote ever.
There is no cooperation without coercion. Grow up.
@@AndrewPasq What? Of course there is. I buy a pizza and eat, the shop sells a pizza and makes profit.
What do you call that?
@@juliantheapostate8295 Commys can't understand free exchange 🤣 or people who willfully produce.
@@AndrewPasq LOL that is the dumbest thing I have heard/read in quite a while.
@@AndrewPasq Uncle Joe couldn't have said it better.
“Imagine how much harder physics would be if electrons had feelings!” ~ Richard Feynman
THANK YOU for this priceless wisdom.
Electrones are a part of what creates feelings.....and we have noe clue as to how. If we had, we could have created a robot able to laugh when told a new joke.
Yeah, that's why you need probability distribution to find their position, like a husband trying to know his wife's feelings
This quote deserves 10k likes
Lex responding with, "I don't know that anything that involves human nature deserves this level of certainty" is likely the most astute way to approach economic theories. I'm sure he would enjoy a conversation with Dan Ariely.
My biggest problem with Keynesian economists is that they never advocate for their theories in good times. In good times interest rates are supposed to go up and the printing of money is supposed to stop. It never does.
Austrian economists seem to overlook the power fake money has had to create real goods - this means people everywhere have been able to acquire physical assets, which will persist regardless of inflation's effects. Prior to fake money, people had a lot less access to goods and services. It's no coincidence that post-Keynes there has been an economic explosion. I say this as someone who thinks the Fed is destroying the country...
The economists do advocate for it during good times. Politicians are unwilling to put the brakes on a good economy.
Yeah because people like their Social Security/Medicaid, and they also like their tax cuts
Von Mises Austrian Economics all the way.
"Inflation and Credit expansion, the preferred method of government open handedness, Do not add to the amount of resources available, they simply make some more prosperous, but only to the extent that they make others poorer"
-Ludwig Von Mises
"We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power"
-Alan Greenspan
"We don't know what the hell we're doing on basically anything," as close to an absolute truth as you can get.
I think it's dumb to say that letting arbitrary entities literally counterfeit money is anything but a crime, still. Seems pretty easy and straightforward to me
We are basically a beautiful mess!
I don't know who "we" are, are they the same people as "they" who rule the world in the dark.
At least I know what the hell I'm doing, unfortunately I also get affected when you are lost.
The person is morron and doesn't understand what he's taking about.
Charlie Munger once said “show me the incentive and I’ll show you the outcome.” Governments have every incentive to push Keynesian economics because it justifies their growth and desire for ever increasing control of the economy. All the money and research goes there accordingly.
They can mismanage all they want and then print money to patch up the mistakes they made and in order to enhance their re-election. That’s the incentive in a nutshell.
So what socialism?
Yh it’s the problem of self sustaining government agencies, rational agents will always find justification to continue their employment (since the skills aren’t very transferable), even if there is no demand for their role
Yet another clown that has zero idea about economics. Where do you people come from? You do know that Adam Smith has an entire chapter on the need to regulate business and that he uses the "invisible hand" phrase once in his 800 page Wealth of Nations and used it as something to be avoided, correct? Of course you don't. Bet you feel pretty stupid right about now...lol
@@alfredjovanovic2106 It is the problem of business needed to be bailed out by tax payer money, seeking rents from governments, and killng competitation. Bet you feel pretty stupid right about now...
This is the first video I've seen of Lex and I have to say he, as opposed to most interviewers, actually has a lot of critical questions and digs deeper to try and catch him off balance, but in a relaxed and intrigued way.
The problem is he's an idiot who has no problems whatsoever with using the violent coercive power of the government to force individual choices. He's a sweetheart apart from that, I guess?
The amazing thing, his questions are right on, no matter the topic. You can "binge" him over a weekend and never hear the same topic twice.
@@friendlyone2706 yeah, obviously when he’s got someone in the computing field on his questions are precise and very good because that’s Lex’s own field of study. But even in this economics discussion, where Lex clearly is not totally familiar with the terms used, he still provides great questions. Unlike other podcasts where they might try and keep the conversation always flowing for easy listening, Lex isn’t afraid to ask people to repeat themselves, nor is he afraid to think for a while on a question. Combined with his genuine curiosity and intellect and he can have a decent discussion with anyone from any field.
If only he could actually pull guests.
Yes, he's doing a great job of being friendly yet as probing as deeply as possible and exploring posssible problems or contradictions in what the interviewee is saying. A rare skill indeed.
Lex Friedman is the most balanced interviewer in this genre. I can’t think of another who is more reserved with his own opinions, but still demands his guests “show their work.” It’s an impressive display of humility.
It reminds me a lot of John Stossel back in his heyday. He had that way of asking guests questions. I think Lex has definitely taken it a step up.
Except that he makes me soporific
yes, but he is sooo wrong too often like here.
It’s a shame he never really gets this guy to defend his position other than what boils down to something like “all government is bad because tax is theft”
@@simperingham the guy defended it quite well and illustrated how printing up money based on nothing and depending on inflation is the cause of the problems.
The problem is modern economy has so much inertia and is so complex, you can get away with terrible policies and actually claim to be the saviour. The input and output are not connected directly. Output of the first order is also typically much different from that of the higher orders.
@@ericpeters0n can you be more precise with the question?
Very good observation, it is the same in big R&D companies e.g. pharma. Very few people are actually crucial but you have hundreds of department that exists mostly due to regulatory pressure and their contribution is extremely hard to calculate.
@@ericpeters0n "Trickle down economics" is a pejorative term used by dishonest people. It's not a real thing.
The problem with modern economies is that is has ZERO empirical support. It is just religion with numbers.
@@RaquelSantos-hj1mq it’s actually a very real thing lmao it’s just not the most voter friendly mode of raising the middle class
I already know Krugman is wrong. I just enjoy hearing people explain it.
Krugman contradicts his own textbook.
I agree but this guy sucked, just a bunch of conclusions and complaints
is milton friedman also wrong then too? lol...
@@gregoryclark2221 yes
So, inflation went up? Go check the WSJ and look it up; watch and learn.
Krugman has been consistently wrong on so much, it’s actually quite impressive.
So you are saying that when the fed raised interest rates, the economy did not slow and inflation did not come down. You are drinking the Austrian cool aid.
@@rlkinnardif you notice a sign of good direction when they reveresed coyrse on their policies, imagine what would have happened if they would have left the interest rates to be dictated by the market and never have messeed with them in the first place. 🤔
I would encurage you to read Hazlitt's Economics in One Lesson to understand a bit the part of the economy we never see because it's not left alone to happen as it should.
@@mariusceterchi5269 The Fed produces the quantity of money in conjunction with the banks; the market produces the interest rates. Something has to produce the quantity of money.
China is allowing excessive savings which produces the economy of thrift. Watch and see that Hazlitt is wrong as this can happen. Sometimes an economy can go off the rails for a long time, and Xi seems to have a Austrian bias.
@@mariusceterchi5269 Oh, by stimulating the economy the US economy produced 14 million jobs under biden. How many jobs would have been produced without stimulus? And how do you know that?
@@rlkinnardYeah you really suffer from a major lack of understanding in economics. The government cannot "create jobs". Any money spent on the government comes from the taxpayers pocket. Loans are just pushing the taxes to a later date. Printing more money results in inflation which is the worst taxation of them all. The government cannot "create" jobs. They can only move them from the profitable private sector to the unprofitable government sector. You have not stopped to think how many jobs would have been created had the average American not suffered the brutal and vicious effects of inflation.
As the previous comments said, you need to read "Economics In One Lesson". If you have read it, read it again.
It may be missed by some that when he says “inflation” he’s generally speaking not referring to price, but to money supply.
The definition of inflation has changed 3x in our lifetime alone.
then he doesn't understand the definition of inflation
The many varying measures of inflation is the cause of so much confusion in economics. CPI, ppi, monetary inflation. I hope for a day when it has a uniform meaning.
@@randoroo2540 Welcome to the messy world of data and measurement. No single measure will be perfect when you try and capture "the change in the general price level". But what IS clear is the definition or concept of inflation, that is general price changes.... NOT money supply as this guy claims. Money supply is well... money supply lol although that comes with it's own measurement issues.
@@drdoob246 you don’t understand inflation. Inflating the money supply inflates prices, there’s just a delay between inflation of the money supply and price inflation. Price inflation doesn’t happen without money inflation.
Lex Fridman, please have on both a Keynesian and an Austrian economist at the same time on your show and have them debate. Preferably have Paul Krugman and Saifedean or some other Austrian economist
Krugman won't do it, Bob Murphy's been trying to debate Krugman for years... It would be a massacre.
LOFL, Krugman gets his ass handed to him every time.
Russ Roberts has or had a podcast that was very good. He also gets really heated whenever he talks about Krugman
@@crushervenEconTalk. Highly recommended.
Debates, particularly these on highly complex matters, tend to turn to an exchange of non-sequitur answers, flowery soundbites or scholarly nitpicking; that's not to say that we should not have debates, these can be useful as well, let's just make sure their scope is properly defined and the facilitator is well prepared and forceful enough to prevent participants to get away with nonsense (all without showing bias! i.e. a tough job).
BTW, Lex Friedman does a fantastic job in the alternative format. He is a great Candide as he prompts his guest with _apparently_ naïve questions, fostering slow, calm responses and restating the guest's key point in a simple but explicit fashion. Lex' great abilities and preparedness in this format give no indication that he'd be successful as a debate moderator.
I went to Indiana University and both my macro and micro profs did a good job of presenting a couple different perspectives. They started with scarcity and didn't advocate for printing to solve problems and focused on human behavior.
My micro economics professor was good (never took macro). But I'll always remember a gov't professor, while talking about the effects of hurricane sandy, said something like "but rebuilding will stimulate the economy." I can't stand that way of thinking
Did you have Peter Olson?
@Dalton Finney I can't remember. Micro was a Russian gentleman and macro was a guy who had curly hair and his attire hadn't changed since the early 2000s 😀
@@crusherven This is an opportunity cost fallacy. One of the key arguments in favor of Austrian economics. Hazlit’s, economics in one lesson, has a chapter dedicated to this fallacy. It’s a silly argument, because we should all be plundering, rioting and warmongering if following that professor’s logic (also had some of those bozos myself)
All of my economics professors did a good job of staying objective and presenting multiple opinions. My micro professor taught us the diamond and water paradox too lol
How amazing is this discussion!?! Having contrarian perspectives from people who are well versed in the dissenting opinion is probably the most valuable commodity that exists in the public square today. I sincerely hope that this type of dialogue continues and flourishes unencumbered. Lex, you are the best. I hope that I get to roll with you someday in Austin.
It's actually sad that being an Austrian economist (or as he said, economist) is the dissenting opinion these days.
Unfortunately we are in the middle of experiencing what happens when you play Keynesian games and continue to kick the proverbial can down the road. Eventually the piper needs to be paid...
@@kutark That’s definitely an interesting perspective. But will the Fed ever run out of money to print? They’ll just continue to print. The most important leverage is the Greenback’s “privilege!” All’s at stake if a catastrophic foreign policy blunder destroys that privilege.
I think the problem will come from outside rather than inside. Don’t you think?
But he isn't well-versed in the opposing theory, or at least he does not demonstrate that he is by way of steel-manning (or even dispassionately enunciating) the theory he opposes. Instead he begins from the tendentious premise that it is wrong and evilly-motivated.
@@AANasseh The end result of endless currency printing is closer than you think.
a bitcoin guy saying nobel prize economist is wrong and he is right.
sounds legit./
Second half of the segment was great. Good job Lex on making Mr. Ammous present his case instead of just his conclusion.
Glad I read this. Went down to the comments 20 min in to see if everyone was going to discuss that this guy is all hyperbole, insults, and opinions. Now I'll wait until the end.
@@TheCrouchingZebra literally same lol
@@TheCrouchingZebra Was it worth watching till the end? I cut bait around half way through.
@@mmg486 no this guy is a bad interview. Can't articulate a single point despite having taught before
@@TheCrouchingZebra I mean the guy spends 20 minutes calling everybody that disagrees with him propagandists and frauds, and then fails to present the actual arguments Keynes made. And then Saifedean even fails to explain marginal utility and his own position. How can the last 20 minutes become better?
This guy was just full of opinion pieces, the fact he can't talk about them without insulting them.
Not very professional, I think Lex handled this guy really well 🙂
Keynesian economics may be the devil and Austrian may be economic messiah, but this guest didn't convince me of it. For all his talk of propaganda and hucksters he sounded an awful lot like a huckster chucking propaganda. "Let me tell you why the other side is bad, dumb, idiots and hucksters and how my side is the only smart, reasonable choice and will save everything" is textbook propaganda tone. Lex danced around this but I wish he would've just called him on it. His ideas may be good but he spent most of his time just slinging insults at people which is pretty much the antithesis of a reasonable argument. It's basically dog whistling to a base that already agrees with you and does nothing to convince others.
Listen again. Keynesian's claimed for decades stagflation was impossible and could never happen yet it did. This is a CENTRAL PREMISE TO THE ENTIRE THEORY.
Well, stagflation in the seventies was easy to understand: The problem was simply the rising oil prices, that made everything more expensive AND caused unemployment, therefore inflation and rising unemployment at the same time. This just shows the problems will all these theoretical approaches to economy: The don't take the real world in account.
At least from my point of view Keynes and The New Deal, that was the debut of carrying out these economic ideas in real life, acknowledged that the world is not perfect, and wanted to use economy to improve things. Even if the measures taken sometimes didn't work so well, I don't think you can blame Keynes for every bad thing that has happened since. With the financial deregulations and Reganomics and Thatcher from the '80s and onwards the favorite economists of the establishment was in fact Friedman and Hayek, the latter was, you've guessed it, from the Austrian School. And we still suffer the consequences.
I have this feeling with the Austrian Economics, that if you say to them: "The world is not perfect, what will you do?", they will answer: "The world should be perfect." So there's absolutely nothing you can use Austrian Economics for in this imperfect world, where power, both economic, political and military distorts the market.
Perhaps their preferred measures against inflation could be useful, but I'm not sure if this requires Austrian School measures or just common sense. Federico Hernando Cardoso managed to stop inflation in Brazil in the 90es, and I don't believe he saw he's actions as particularly coming from the Austrian School. It seems Milei is doing more or less the same in Argentina right now: Not the shock therapy he claims himself, but a good chunk of down writing the currency, followed by slow adjustment to narrow the gap between the official peso value and the market price. It worked for FDC and his Plano Real, but he was lucky the markets didn't speculate too much against the Real. Brazil did still have a big industry and was by far Latin America's biggest economy, so maybe Brazil was considered "too big to fail", by the finance markets. We will have to see, if Milei can carry this through. It could be very tough, because Argentina is somewhat a dwarf, when it comes to industrial power.
PERFECT! Like I said, I respect Austrian Economics ideas, but Austrian Economics bros are incredibly uninformed, biased and arrogante. The same they critizice, but in reverse
@@thomaspetersen-kp2ffyou should read more Austrian economics because they address what you brought up and your assumptions may be wrong.
@@thomaspetersen-kp2ffThere's a lot of misconceptions in what you wrote. We live in a Keynesian world today. Reagan and Thatcher had little affect in changing the river's course. Austrian economics is very much in line with common sense and the world as it would be generally free of widescale distortions caused by governments. We lived in such a world, broadly speaking, up until WW1 and the creation of the Federal Reserve System. Also, Javier Milei is very much in line with Austrian Economics.
Glad to see people calling out central bank economic aggression.
@Brandon Lee lol. these people would go back to where the tribe chief decides who gets what from the loot.
🤡
@@Llkc60 I would take a tribe chief over a child loving politician lol
@@kingkoi6542 you might wanna do some reading on how tribals had taken wives and at what age.
Anyway, I don't know who you refer to and I don't want a chief or a pedophile in power either
@@Llkc60 at least tribal chiefs gave a damn about their tribe...
I actually still don't know what Austrian Economics is from this guest except his red-flag triggering fallacious reasoning : "because I said so," the other side is "wrong/propaganda/actors." It doesn't make it ok in the end just because he says "I could be wrong, you asked for my opinion." He needed to provide evidence to things, not just more metaphors. If you truly are logical and divorced from irrational thinking, you try not to have fallacies in your arguments as well. Philosophy also doesn't exactly have the "physics" ability to prove things either, but a good philosopher can help you understand what is going on in your failure to learn how to learn. I used the word fallacy here and we know that word thanks to philosophy. But the guest used fallacies to try to undermine "propaganda" of Keynsian theory.
When you say things like "government is a gun to the head" it's going to sound kooky to most people for good reasons. We'll say hold up, you need traffic cops. They sometimes need guns to chase bank robbers, to follow that analogy. You need someone to inspect foods to make sure they are safe. You need to protect workers from hazardous conditions or exploitation because "market forces" don't account for a lot of things that can go wrong for people. He acts like the government is some outside force. But the government is us. We run for office, we vote for who we like. We decide, we keep ourselves safe too. There is no reason not to have the same thing when it comes to money, finance, economics, etc. Just like you need cops on the beat to ensure public safety, we need cops on the beat ensuring safety with money as well. Lex sort of tried to bring this up but it was a little ham-handed and he never got an adequate response except some chuckles and side jokes. Again, this is a dodge. To be fair, he at least went over some historical context with England and going off the gold to pay off their war debt. I would have liked to hear more reasoning about that. WHat else they should have done, what options were available.
I'm not a Keynsian or any advocate for any kind of economic "theory." But whatever you're arguing, it's not enough simply to not like things. You have to provide a practical alternative to whatever it is you don't like. Glittering generalities, side jokes, and talking about Krugman for an hour, wont cut it. Maybe for the common dullards it will, but not the smart people paying attention. If Austrian economics is simply trying to use reason to understand economics while minimizing the dogma of any one style of government, maybe lead with that. But he leads with Austrian economics is not Keynsian economics.
I would respond even though I’m not sure this speaker did the best job explaining it, one thing he is correct about is that there is basis very little any economist can do to prove their theories. An economy is way to vast a subject for an experiment, even on a micro level any given market is subject to thousands of outside factors which act as variables muddying the waters for what factors truly impacted a given outcome the most. What we can do is interpret as best we can which factors contribute the most to a given outcome. To that end there are billions of examples which seem to show a correlation between government regulations and slowing of markets. That’s not to say there should be no regulations, but that there seems to be better outcomes the less interference there is in a market. Even the Keynesians acknowledge deadweight loss caused by government mandated price controls, when you zoom out there seems to be a similar principle by markets which are over regulated or government owned.
I hope this makes some sense as a response. Personally I don’t think classical economics is completely correct but it seems to be closer then Keynesian economics.
After all, Krugman predicted 9 of the last 5 recessions.
Austrians have predicted imminent hyper inflation for over 100 years .... annyyyyy day now.
@@sleazypolar You didn't get the joke. (Lol!). Read his submission again.
I predicted that comment, and the followed up comments.
@@sleazypolar our dollar has lost 99% of the purchase power it had 100 years ago. That's hyperinflation, just over a century. The economic example of a boiled frog.
@@cuatro336 So what?
Im not sure Ammous would agree with this, but my takeaway is that people make the mistake of believing that currency is wealth. It cannot and never will be.
Currency is wealth in the most general sense because it's issued by sovereign states with millions of productive people who can produce goods and services and will exchange them for said currency. The USD is the reserve currency of the world not because of 'petrodollar' or the United states navy or even the massive nuclear arsenal but because there is about 350 million AMericans with massive mineral wealthy continent to themselves which no one can invade. Why should the government limit itself to a ridiculous gold standard when everyone knows the true wealth of a state is it's human, natural and industrial resources?
Austrians are brain dead fools with a medieval conception of wealth and don't understand the first thing about why we are wealthy now and would not be nearly so using something as medieval as a gold standard. Gold standards are for people who don't trust each other and can't work together apparently still looking for the nationalism we now almost all have and will die for. This guy is a dumb as the rest of them.
Im pretty dumb, and was never trained in economics, but realising that real wealth is what is being traded on each side of the monetary transaction is one of the few 'ah ha' moments i have had in understanding economics.
@@garethbarry3825 Currency is a promise and ultimately you got to be pretty paranoid fool to think all transactions can be settled be 'real wealth'. The entire point of fiat money is because we got a bit better at civilization and understood that the promise of the thing wasn't just as good as the real thing but better as more people could make more promises than any volume of gold would allow. All we really needed was better means to evaluate who we are interacting with and if you still don't know the banking license your local bank got gave them the right to create money for you ( not money they had from someone else) based on the fact that you signed that you would pay it back and their belief that you could. That is MUCH simpler than mining a scarce resources and explains not just a little of the boom times we have experienced the last century.
I think it’s what you’re getting at, but in economic terms money is the universal medium of exchange. As opposed to consumption goods which are acquired for their own sake.
@@garethbarry3825
Don't shorthanded yourself, please. .
Your post clearly shows that you are very intelligent --- especially so if you indeed have not taken courses on the subject.
No serious debate can begin with my school of thought is the definitive: the first lesson in Economics is the existence of trade-offs and value judgements, in their totality, a set of value-judgements on what are acceptable tradeoffs (inflation vs growth) make up a school of thought.
It's surprising how a (former?) university professor has failed to maintain the discipline of using objective non-emotive speech to strong-man opposing arguments to the extent that this speaker has.
Very true.
Saifedean is extremely attached to his points of view. And, no matter how “true” they might be, if you’re attached to them, you’ll always be wrong.
It's hard not to get emotional about the largest fraud scheme in human history. Still, I agree
@@lucask3 Do you see what you just did?
Context of cultural differences is an important note here.
It’s okay to comment on weight in the Philippines; in fact it’s not at all taboo. Fat shaming is common.
Not saying it is right but making a point that perhaps trash talk is integral in the speakers culture.
There were a few obvious things that should have been included in this discussion… 1) what is money?
2) Austrians believe that savings, production and supply create economic growth, whereas, Keynesian’s believe consumption and demand create growth
3) more in depth with how governments respond in crisis using different real world examples (08’ , ZIRP era, Covid, etc)
Watch the full podcast...
Thank you for this. It is necessary first to understand this before even trying to understand what President Trump is trying to do with his economic plans.
At ~37:00, Lex asks essentially 'is there any circumstance that government control is justified?'. Wouldn't the answer be 'Yes, to enforce contracts,' which is the judicial branch being available for those who may be a victim of fraud because the other party didn't uphold their end of the contract?
yes, I think his question originally was about control in the economy. I think Government protection from external force and of individual of rights is implied as necessary.
It should be yes, but these crazy people really believe in "the market" as if it's a separate entity and not a conglomerate of people
One side of his mouth talks about people making decisions instead of the metrics. Out of the other side of his mouth he talks about the "market" taking care of itself. Unbelievable. He does the same thing he's criticizing the Keynesians for doing.
Guardrails are needed because people are greedy and will do whatever they can to cheat the system for their own advantage. Saying government isn't needed is a fantasy world that doesn't exist. What the hell is wrong with economists? Why must they all adhere to a "system" when clearly no system is the answer all the time. Every situation is different and calls for a different solution. Adhering to one system no matter what is stupid and is a recipe for disaster. And yet they all do it.
Since government is violence, government can be justified (at least in theory) in cases where violence itself is justified.
Example: using violence for self defence is justified. So having a police for exactly that (protecting people from getting attacked) is justified. At least in theory, practice might reveal some downsides to it and we may decide government police might not be th best solution. But at least it's justifiable.
The problem is governments will highjack the system to benefit themselves and those closest to the government.
We all know that more money equals more "justice" so this system is contributing to the wealth gap.
Insurance and smart contracts can do most of this
One of the best interviews Lex, could not turn it off.
I can agree with the first part of the argument about economics is not science. By now I believe most people are aware of it.
However, the second part of the argument that government is bad/violent and private power (corporations) is good is ludicrous and frankly extremely aggressive.
I agree we need more options including government, corporations and other entities (non existent yet) to shape and compete in the market.
The thing is that the goivernment are given monopoly over certaint thing or in other words we don't get to choose. If you get rid of all the laws and take away the privileges of the gouvernment the gouvernment almost becomse a company minus the private part.
In Argentina we've been suffering the consequences of keynesian policies for years (one of the highest inflations in the world)
Socialism doesn't work. Keynes enables socialist policies.
I don't think asking for more than 50 billion dollars to the IMF is very keynesian thing to do when your country has a serious issue with foreing currency savings. Owing USD to the IMF is super inflationary, is not due to spending...
@@toletoles Inflation was well over 20% from 2010 until 2017, that is, before the loan and with proclaimed fans of Keynes as ministers.
@@toletoles Keynes is considered the intellectual founding father of the International Monetary Fund and the World Bank
@@KevHalen Considered by whom?
Great exchange. Regarding Saifedean's assertion that you can't experiment with economics, aren't we able to observe the results of various policies around the world, specifically with regard to centralized versus market-based policies? USSR, Venezuela, Cuba, etc. etc. Would also be good to look at broken markets, for example US Health Care, to seek a clinical explanation of how we got to 2x expenditure for a generally inferior product. I'd like to know why a fairly unregulated/unsubsidized market like Lasic surgery ( a "luxury" delivers a great value, while other medical service defined as a human right (all other health care) is completely out of control.
Haiti is even poorer than Cuba, but no one blames Haiti's bad economy on communists.
I think his point is that these aren't proper scientific experiments because there are too many uncontrolled (and unaccountable) variables. It's another way of saying "economics isn't a hard science".
I interpreted him to mean exploring the counterfactuals is impossible as reality can only play out once.
You can observe but you cannot establish causation in the same manner you can for a controlled laboratory experiment.
@@Theviewerdude only partially true. A lab controlled experiment is only the best or highest form of data. It’s not always better, it can have a bad design etc.
Ppl are shitting on this guy in the comments because he's given into frustration and just started insulting keynesian economists. I believe in austrian economics too and I guess it's kind of hard to explain and idk if I can do better but for anyone still on the fence/confused why austrians think inflation is bad read on (sorry in advance for the wall of text and it sounding condicending): Only goods and services are valuable. Money is only valuable because it can buy goods and services, otherwise it's JUST PAPER. Printing more money so governments can buy goods/services without increasing taxes causes the new money to eventually distribute through the economy and now more money is being used to trade real goods and services, so the price of everything rises (aka inflation). Inflation makes our currency a less effective way to save up and build wealth. Since many ppl save in our currency anyway, inflation causes larger wealth inequality which is why austrian economist view it as immoral.
Borrowing is usually cheaper than saving. Austrians never talk about deflation which is way more harmful than inflation (moderate). If the price of things are slowly going up you're less likely to wait to buy them, this brings about more spending and a growing economy (hence the Federal Reserve goal of a 2% inflation rate). On the other hand if the price of things are going down your less likely to buy it, while waiting for it to get cheaper. This on a macro level can bring an economy to a halt (Great Depression). Saving money is foolish on a macro level for an economy. If I get a job but need a car to get there, borrowing to get the car now is a smart move. However saving to get a car is foolish, since I can't get to work and therefore save nothing cause I lose my job. Borrowing is the engine for an economy, saving is it's death.
@@maphezdlin - But there's been deflation in the cost of a lot of products. Both in dollars and the amount of time needed to work to buy them.
In 1983 I bought a microwave oven for about $1,600 in today's dollars. Today I can buy one as good or better for about $200.
We're lucky that technology and innovation have been able to progress faster than the government and the Fed inflated the currency. Not the same thing as monetary deflation. But with an inflating currency, we would really be hurting without that progress.
@@CharlesWT-TX I agree, only central bank printers benefit from inflation. Deflation is better for the vast majority of society, buying power increases but that's somehow bad? Lol, sure. Inflation benefits paper holders because it's paid back with cheaper dollars.
We must pay it back with productivity, they just print it. If course they want it to continue.
If money is intrinsically worthless (I agree), then why would you want to make it deflationary and cause people to hoard it? Wouldn't it be better for the economy if people stored their wealth in capital instead of in money?
If I put money in a bank, that money can be used to build houses. If I store money in a BTC wallet....nothing. It doesn't generate any economic production. Isn't that like putting the cart before the horse? Money (gold, BTC, etc.) is a means to an end, not an end in itself.
I would also dispute (HEAVILY) that inflation always causes wealth inequality. Inflation benefits debtors, and hurts people who hoard money. In many cases, this can be redistributive. For example: If inflation goes up, people who took mortgages on their homes will see their wealth increase relative to their lenders' wealth. Small homeowners get richer, Wall Street and banks get poorer. Yes, inflation is bad for people who have large amounts of cash. But, if you have large amounts of cash, then you are not poor, you are rich.
@@violent_bebop9687 Deflation is bad. It is equivalent to rent-seeking. It rewards economically non-productive agents, and punishes everybody else. If you think that deflation is good, then I recommend you consider the example of the San Francisco real estate market. There, you have a growing economy chasing a finite amount of real estate. And, what happened? Poverty and homelessness skyrocketed, while those who were rich, or who had bought into the market early, benefitted at everybody else's expense.
If I happen to have a lot of money, and then deflation sets in, I might decide that "heck, I don't need to work anymore, because I can live off my cash savings indefinitely". So, I've just removed myself from the economy. I spend money, but I do not produce. Deflation reduces employment and reduces productivity. How does that help the overall economy?
The level of spending can't be higher or lower than the level of aggregate output, because the level of aggregate output is the value of that output as determined by what is spent or paid for it. What is possible is that the level of spending can be increasing because the quantity of available output is decreasing; the demand of spenders for the output has increased beyond the supply of the output. That causes the bidding to increase, and as a consequence both the level of spending and the level of aggregate output as determined by the instantaneous exchange price multiplied by the volume of sales both increase. At the same time the available output is reduced. The level of spending is always the same as the level of aggregate output! QED
A warning: this discussion is extremely outdated and does not reflect current research on business cycle theory. I have not read a single pure Keynesian paper over the last few years even though I mostly read business cycle theory. Rather, current empirics and theory is made using e.g. DSGE-models, which are derived from microeconomic foundations (decisions on the margin) and either in the direction of new-keynesian theory or real business cycle theory (the latter is what Ammous seems to be advocating). Current research (in both camps) realizes that all economic problems can't be fixed by printing money or lowering the interest rate.
Standard real business cycle theory argue that money is neutral, even in the short run, and that policymaking is unable to improve welfare by attempting to stabilize economic activity / inflation (as fluctuations around the steady state of the economy is already optimal, as Ammous also argued in the beginning of the interview). However, standard new-keynesian theory argues that nominal and real frictions in the economy (monopolistic competition and nominal frictions, e.g., in prices and wages) cause suboptimal movements around the steady state, yielding space for fiscal and monetary policy to improve welfare. Consider this example: a negative demand shock hits the economy. Aggregate demand falls and the output level is below the natural rate of output, meaning it is below the optimal output level. Real business cycle theory states that by the dynamics of falling wages (and other product inputs), the marginal costs fall and the firms can keep producing at the optimal level, no need for policymaking to get involved. New-keynesian theory suggests that if nominal rigidities exist, wages wont fall immediately, but rather, it will take time for them to adjust (some empirical results show as long adjustment periods as 2-3 years, more relevant ones show around 6-12 months). Given this rigidity, policymaking may alleviate the macroeconomic impact by stimulating the economy. Now, add more complexity to the mix by considering expectations, financial frictions long-run scarring effects etc., and you will be far away from the discussion in this interview.
Another example. Ammous mentions that Keynesian theory can't explain stagflation. This is, again, not true. Current NK-theory, as all other theory, realize that such events may occur. In standard models this situation is modelled as cost-push shock, e.g., oil prices rising in the 70s-80s, yielding higher input prices for firms (higher marginal costs) and hence both higher inflation (inflation is partly determined by a function of marginal costs) and lower output. These models then support an increase in the interest rate, so as to dampen the inflationary effect, because inflation is the main target for central banks.
Furthermore, current research goes way beyond the simple arguments used in this interview. Expectations, as an example, play a central role in all policymaking theory. Even behavioral macro is growing. And actually, behavioral theory seems to justify output and inflation stabilization even more than current standard theory.
Now, of course policymaking today can be both successful and unsuccessful, not all problems can be solved with lower interest rates and nor can all variables be forecasted perfectly. So, it becomes a question of: how often do policymakers get things right vs wrong, and is there a net positive effect on welfare? This question can vary greatly between different countries and scenarios, meaning that a very careful analysis is required (not whatever the arguments presented int his interview would suggest).
Lastly, I don't mean this as a criticism of typical real business cycle theory, which certainly has some strong points, but rather to show that the arguments presented in this interview is very outdated from a research point-of-view. Again, nobody uses pure Keynesian theory anymore, neither do they use pure Austrian economics.
"However, standard new-keynesian theory argues that (...), yielding space for fiscal and monetary policy to improve welfare."
Which funnily resonates with the central statement of Ammous: (improved) Keynesean economics in the end seeks to justify government intervention.
Austrian economics is classical economics by another name. It was tried here in the late 1800's and failed miserably. It was also proven wrong by not only John Maynard Keynes but the Second New Deal. If you read what these guys actually believe, they've have us back to the Robber Baron era of the late 1800's where we had virtually no middle class, a very few rich and most everyone was poor. We also had major economic depressions every ten years or less. Depressions so severe, many Americans died of starvation. As for the libertarian aspect of it, economic libertarianism is nothing more than Social Darwinism.
It's based on greed when Adam Smith said that greed wasn't good. Enlightened self-interest works and it's what we practiced until the 80's. I'm a capitalist through and through but the plain fact is, unregulated or laissez-faire capitalism concentrates all wealth in the hands of a few. That's a recipe for revolution and most don't know but we almost had one until Franklin Roosevelt was elected to his first term. Laissez-faire capitalism will destroy itself and if we go back to that more than we alredy have, it could very well destroy our way of life and standard of living not to mention the country.
The economics that grew out of the New Deal created the largest sustained period of high economic growth in the 20th Century. That ended with Reagan and since then, we've been following right-wing economics again which has seen the middle class stagnate and decline, the working poor get poorer and all the gains GDP as well as trade go strictly to the top 1-2%. We've also had miserable gains in GDP since Reagan whereas before, we had great gains that went to everyone. Most workers (employees) are not making anymore now when adjusted for inflation than they were in 1979 thanks to guys like this.
Austrian economics is economic freedom for a few while the rest end up as wage slaves with no bargaining power.
Paul Krugman won the Nobel based on trade theory. His Nobel was voted on by his peers in the profession. What's this guy accomplished?
Everything you said is wrong but thanks for the input. You are right Paul Krugman won a Nobel prize and that is what he thinks:
ua-cam.com/video/CgAUW_zcN9k/v-deo.html
Austrians imagine a currency that is somehow immune from inflation and deflation….they live in delusion
@@JM-lf1sl They have an agenda. An agenda that's for the few at the expense of everyone else. They just don't talk about that...
Not even remotely. Classical economics was based on an objective, cost of production theory of value. Austrian economics is based on the subjective, "marginalist" theory of value. It's more accurate to say that Marxian economics is just classical economics than what you said.
@@Manuel-qu3tc Austrian economics is based on fairy tales and magical thinking. Not grounded in any material analysis.
I agree that we as humans dont need an incentive to consume, but I think it is a misrepresentation of the original argument. We dont need a reason to consume, but if there is deflation, it incentivises us to NOT consume. The default state is wanting to consume, and the reaction to an incentive is not consuming. However, in Keynesian politics we want to make sure that there is no such states that incentivises us to NOT consume.
I was so lucky to have profs who were not Keynsians when I was reading for my degree in economics.
They are an endangered species now
Michel Knowles`s brother is a real phenomena.
I have been employed by Fortune 500 companies for over 35 years. I have also been a locally elected official. The difference is government has an underlying purpose of public good. A large corporation does not. A corporation will cut you and your family without a second thought, absolute amorality, I have seen it with my own eyes. I am 64 years old, an ex-Reagan follower, I saw Reagan in person, I was a one time free market fundamentalist, I was wrong. It took me years to appreciate the superiority of good government. I appreciate this guest's opinion but I don't agree.
The root cause is people not thinking even 1 step ahead, to how individuals might respond to a change (eg, in law, or pricing). Not thinking ahead is a way of implicitly treating a dynamic system (both society and individuals) as if they were static and unable to adapt.
Disagree. They (gov) do not care
The market can't support multiple power plants in one area; when the private power plant fails, the market can't correct fast enough. It's in very few people's interest to hitch essential utilities up to the vagaries of capital markets.
Nonsense. There are tons of industries where if a major provider fails, it's not so fast that a competitor can fill the gap in supply to meet demand. Yet the world continues turning.
Food distribution is one that's right in our faces...
@@Theviewerdude That's very industry-dependent. Contrast with the shortage in computer chips. The more technological capabilities and initial capital investment you need, the longer it will take for newcomer to set up shop. The market mechanism is much better with things that can be set up quickly and much worse if you need to plan 10 years in advance (say, building a nuclear power plant).
@@Theviewerdude there’s hundreds if not thousands of avenues of foods distribution. It’s not comparable.
@@Theviewerdude Yet another idiot posting nonsense. He is talking about utilities. As for food distrution, why do where has a supply chain crisis? Because of industries end up being controled by 3 or 4 companies. You are welcome for the free education...
there's always this nirvana fallacy backed by wild hypotheticals. As if the bar for free market was guaranteeing paradise without any roadbump. Somehow government int3ervention is never held to such high standard.
Also, why would a private power plant in an area where there is no other power source falter? You need to explain that - and not only explain that, but also prove that it regularly happens in such numbers that we actually need to recognize that as a problem.
Otherwise, such hypotheticals are as valid as "what if gravity started working backwards".
And the power plant monopoly example is extremely stupid. In some lines of business (like say, the energy sector) the barrier of entry is really high, and it takes lots of time and resources to start get business running (like starting a power plant). In such economy, a monopoly can charge higher prices than fair markets, and if there is competition arising they can drive them out of business with low prices. The argument that someone can just enter the market and offer service with lower prices works in the small town barbershop example, but not in a larger scale and context the of nation-wide monopolies. These arguments make it hard to take Ammous seriously, when you can clearly see his strong libertarian views behind every argument. He is more of a libertarian than an economist, but uses his position as an academic authority to push his libertarian views.
This is so right, when I think about buying anything, I think about what I need and what i want, not about whether my money will devalue by tomorrow, so it makes sense to invest it in buying myself ice cream today. Keynesian economics only promote speculative spending if anything.
Keynesian economics promotes spending because it devalues everything you have while raising prices. Spending and consumption is not growth, it's a government spending spree at everyone's expense.
"I think about what I need and what i want, not about whether my money will devalue by tomorrow, so it makes sense to invest it in buying myself ice cream today." Well, you won't do as well as a Keynesian.
note: When he says, "You can't experiment on an economy", he means "You can't run a controlled experiment on an economy." Not controlled. Not scientific.
In correct. Controlled experiment is just the highest order of scientific evidence. A lack of controlled experiments does not mean something is not scientific, it means the ability to draw scientific conclusions is limited or reduced. Controlled experiments can be poorly designed or run incorrectly and thus be of lower value then other forms of evidence. Natural experiments are still experiments and valid scientific evidence but of usually of lower quality then controlled experiments.
Except you can… just look up “randomized controlled economics experiment”
You actually can, thats what abhijit and Duflo's recent nobel prize research was about. Introducing randomized control trials in economics.
Even tough he sounds very sure of himself, please keep in mind he MIGHT be wrong. If you don’t have formal economics education, please, this is very important, don’t overestimate your knowledge and just accept his word for what it is. Now, if you want to get a sense of macroeconomics (basicaly Keynesian economics), I strongly urge you to read a good textbook, or at least gloss over it. A good one is Macroeconomics by prof. O. Blanchard. You might be surprised to find out…that this man doesn’t really paint an accurate picture. Remeber, where there is theatricality, usualy it is at the expense of expertise. Its up to you, as allways✌️
Quote from the great Mark Twain: "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so!"
Another one: "We have the best government money can buy" (;
As a Business School professor (but with a BA in economics!) - i found this conversation to be quite enjoyable. Thank you, Les!
The only example he gave against Keynesian economics was stagflation which makes no sense. Since economies moved to floating exchange rates in the 80s and 90s this is no longer a problem.
@Ben Supit Floating exchange rates were brought in to end the stagflation following the Nixon Shock. This ended the Bretton Woods system and advanced economies haven't seen stagflation since. Central banks now have the ability to target inflation, whereas previously this was impossible when mandated to control foreign exchange. This is called the 'trilemma of international finance'.
This is a really frustrating segment because it is very obvious that neither side has any interest in truth. This is just about winning an argument. It's unproductive.
Neither side of this discussion is willing to actually admit to the underlying motivation behind their house of cards arguments. Neither of these theoretical positions hold water if you question them far enough.
Its about who has control. That is the crux of the argument. It's smart people wanting to be in control and making up arguments for why they should have more control than their opponent.
Literally every economist analyzes marginal costs regardless of specialty. There is no disagreement on this.
Yes. Menger is everyone’s predecessor in economics. Except the Marxists.
He never argued that economists didn’t follow it. He said that it was the roots of Austrian economics.
@@olegigoverich7684 Even alien economists use Marginal costs in their analysis. It’s at the root of economics regardless of specialty. There is really no ideological issue here.
@@alQarafi I agree I’m just saying that he was explaining the roots of the Austrian school.
@@olegigoverich7684 Did Mises have marginal cost analysis in his work? If he explained some of the research done by various Austrian Economists that would be pretty interesting.
The power plant example is interesting... I am not allowed to go off the grid even if I generate enough solar power and use batteries to store and use the energy. My local power company forces me to cycle the electricity I produce to them and they give it back to me at a reduce rate... absolute BS.
Why cannot you just stop buying from your power company?
Our government in New Zealand doesnt let people within government water supply collect rain water for human use without getting consents/permits. Pretty much paying them money for nothing and giving them an opportunity to police your water use.
Power is similar, they dont allow subdivisions without a grid connection. Most of this is under local government but the police will enforce it.
They want you as a debt slave.
That's because your surplus of energy generates a cost for the power company. Store yourself the energy or pay for it by receiving less credits
There can be a demand-side crisis and there can be a supply-side crisis. In the 70ies, there was an oil crisis. Oil got much more scarce, this caused the prices of everything to increase, because you need energy for every good (even if it's only to transport it). So the cake got smaller, however trade unions wouldn't want to accept a smaller piece of the pie (in absolute terms, not in relative terms). So they went on strike and made the pie even smaller. Of course, it is wrong to print more money in such a situation, because you would end up with an accelerating inflation in this case. But the causes are quite different if you have a demand crisis instead of a supply crisis (like a lower supply of oil).
at 27, the best definition of what is Economics i have heard.
Agreed!
Your first time hearing about economics at 27?
paying my tribute to fashion I thought at first that segregation, poverty, lack of education were to be blamed. But moving up the social ladder I found that the same ratio was prevalent among the white-collar employees and among the students. More impressive still were the results among the professors. Whether I considered a large university or a small college, a famous institution or an obscure one, I found that the same fraction σ of the professors are stupid. So bewildered was I by the results, that I made a special point to extend my research to a specially selected group, to a real élite, the Nobel laureates. The result confirmed Nature’s supreme powers: σ fraction of the Nobel laureates are stupid.
You seem to have decent intelligence, in some aspects of intelligence, but youth seems to make you think it's more important than it is. Most Nobel laureates have an IQ below 130; not surprising.
Especially once they step outside of their speciality. This is not call them morons, but the majority of their knowledge and thinking lanes are devoted to that speciality and just don't have the tools beyond that.
🤡
Keynesian economics failed dramatically after WW2 in the U.S. where 13 million people who were serving overseas were to return home.
The Federal budget deficit had been above 50% in the last years of the war and Keynesians argued that slashing the deficit would produce a large downturn in the economy.
Despite that the government slashed the deficit and the economy started to boom instead of dropping. It is wonder that anyone would take Keynesian economics seriously after that real world demonstration of its failure.
Would have liked to have heard his perspective on Breton Woods and regulation of monopolies.
Can't give you his exact reasoning, but the general austrian position is that Breton Woods was less bad than what we have now. but still a failed system. When it comes to monopolies, Austrians only recognize actual monopolies (a truly single entity control over a market) which only happens in stateful societies. The so called natural monopolies are usually just "dominant players". What we traditionally call monopolies are not really that bad as long as their competition is not prohibited by law. I'd recommend to check out the Austrian view on the history of Standard Oil. It's a really clear example of the reasoning.
@@vulgoalias4050And that is insane. It's clearly been shown that when there are only a handful of monopolies controlling a market, prices go up. See Amazon and Walmart
These companies get control of the market and then raise prices. They essentially control the price of goods because of their market share
Completely wrong understanding of monopolies
@@namaste758 That opens up opportunities for other people/companies to enter the market and provide their goods/services at a lower price.
You are not thinking it through (enough?).
@@namaste758 and then, eventually, someone else undercuts the monopolist with a cheaper priduct/service. Poof! No more monopoly.
I don't see tge problem with temporary monopolies.
When Lex asks, "how is government good," Dr. Ammous goes right to the "government is a gun to someone's head" argument. Individuals are capable and often commit atrocities against others, not just organizations or governments. Anarchist trade involves the threat of violence. Look at illegal drugs or illegal prostitution where violence is always possible. Small government is the careful administration of the threat of violence in order to reduce the constant threat of violence.
I believe you mean black market trade NOT Anarchist trade.
The main criticism of austrian thought to me is nonsensical. The idea that their arguments are invalid because they arent data driven/mathematical and just theory is a red herring. Principally, there are some axiomatic truths that do not require emprical data to reasonably assume are true, especially when they concern human behavior which fundamentally is what economics is. Im a statistician and the austrian criticisms remind me of the criticisms made towards bayesian theory and the determination of prior probability. Some events in nature give us reasonably informed priors that do not require data driven verification to take seriously. I think the same can be said for austrian arguments. Sure their statements arent verifiable by data but if you step back and think about what they are saying you can definately place a very high theoretical prior probability of them being true.
Lex really enjoyed this conversation and your question regarding asymmetric information. Full disclosure I don’t know much about Austrian economics, but I’d be interested to learn about how the free market solves for asymmetric information in the pharmaceutical industry. As someone who agree with you, that bad-faith actors could benefit from asymmetric information, how would you think the free market would resolve issues like the opioid crisis (as a large scale example) or a drug approval process that ensures safety. Seems like it’s ripe for corruption like the repealing of the Glass-Steagall Act
You're absolutely right, it IS ripe for corruption. Asking a profit driven system to solve cultural, social, or environmental problems is a fool's errand. When profit is the sole motivation, true remedies will not be found.
"The free market" doesn't exist. It is the economics version of the flat frictionless plane you use in physics to isolate and calculate forces individually, before you go on to learn dynamics.
Bad actors are found out rather quickly in free markets and punished accordingly. Great case study happening now: watch how quickly Liver King's positive profit trend quickly halts and he's suddenly underwater on all his business ventures
Odd thought about this: changing the laws around patents could really help. If you limit pharmaceutical patents to 3 or 4 years after FDA approval with no extension (rather than 7 years and a 7 year extension) could really help reduce the cost of pharmaceuticals. As to whether or not the FDA will do it’s due diligence in making sure the drug won’t kill people is a different problem though…
Things like Pharma, Petrochemicals and pollution is why I don't believe in anarchocapitalism despite favoring Austrian economists most of the time.
Negative externalities are a thing. If you don't punish companies in certain sectors alleging "voluntary exchanges between suppliers and consumers" you end up with situations like those of oxycodone, thalidomide, forever chemicals of DuPont, etc.
Intervention is needed for industries where suppliers have much knowledge about the risks their products have on consumers yet refuse to disclose or acknowledge them. Yeah over time markets can adapt on their own and expel bad products or actors, but you cannot rectify certain kinds of damage.
Great job, Lex, on pushing back. No need to insult Keynesians beyond explaining with simple facts & logic how & why market-driven economics is reality.
Debate is much more than sound reason. This is a group that needs to be shamed.
Lex shames Ammous at the very first minute. Because he's aware of how weak your ideas are guys. Seriously. "market-driven economics is reality" What kind of statement is that? The kind of statement that only a pseudo-academic douche would say.
It would be really interesting to listen to his possibly legitimate critique of orthodox economic theory if he wouldn’t just constantly bash the other tradition that he is obviously not subscribed to.
In other words, bro just talk, bring your arguments and leave the hate at home!
This undermines his arguments
Any model you create uses past data entries. If you create a model and try to use it to calculate things that are outside of the range of your data set, you are extrapolating not interpolating. The model cannot be relied upon because it is outside the models range. Past data contains no future data. Forecasting with models is very difficult because of this
But not impossible, and that is why Newton is Newton
That’s like saying it’s impossible to forecast, which isn’t true. There are certain things that are impossible to forecast such as how the economy responded to the pandemic, but we can forecast normal business and economic cycles.
@@neofusionstylx i know that it is hard to believe but most economists have forecast that inflation is coming down with the fed raising interest rates. Only Austrians doubt it. Let's get some popcorn and watch.
@@rlkinnard I studied economics at the University of Chicago, so I lean more fiscally conservative , but these Austrian economists seem like economic 101 students. As in, a lot of what they say makes sense, and alot is accurate, but A huge difference between Chicago and Austrian schools is Chicago uses empirical data and math. Austrians have these set of “logical” arguments that seem to make sense on paper, but they don’t back their assumptions with empirical data. So at the end of the day, we don’t know if their foundations are correct or not, and this guy being anti-data kinda shows what’s wrong with the Austrian school. How do you know your assumptions are correct if you don’t rigorously test it? We’ve seen that a lot of Austrian economics was just wrong the past 15 years. The fed has been doing QE for the past 15 years and inflation has been kept under control until 2021. So something gave, and it’s not just the printer, but a combination of supply shocks coupled with increased consumption demand.
@@neofusionstylx Austrians claim that you cannot predict, and yet, I am sure that price inflation was going to start going down 6 months ago when I first posted here, and it will continue going down as the Fed is continuing to tighten the money supply. I am sure that both fresh water and salt water economists would agree with that.
I agree with most subjects discussed. What i dont get it is how are public infraestructure going to work? One thing is free market policy for lucrative business. And security? Roads? And what if a nuclear plant isnt carefull and disposes its byproducts on the ocean?
Bingo! Actually, how is a minimally funcional transit system in any urban environment meant to work
It’s all good and perfect if you disregard all of externalities in a world filled with complex human societies, according to them. There has to be some balance
John Maynard Keynes was an outstanding intellectual leader of the first half of the 20th century. I am not an historian, though I have tried not to be ignorant of the past. I see numerous references to Keynesianism that even a casual scholar would know are false, and I find the level of ignorance concerning the accomplishments of the great man distressing. Not only is this unfair, but it produces a readiness to receive an untrue picture of the economic blunders and deliberate falsifications that have led the United States into the danger of default on its public debt and widespread domestic impoverishment. I shall with great brevity describe the lies about what Keynes advocated as a scholar. 1) He recommended government borrowing and spending but only as a last resort in a time of total economic stagnation. 2) When times return to normal that borrowing is to be repaid by taxation. 3. The wealthy never willingly share the tax burden and have vilified and misrepresented Keynes. 4. Keynes warned the world about the Versailles Treaty, but was ignored. 5. Keynes tried at Bretton Woods to have the US agree to sharing control over monetary policy in the west, but the US ignored him. 6. Keynes made significant contributions to the mathematics of probability, and was recognized for it by Bertrand Russell. I am sure that Keynes did much more deserving of great praise, but I make no claim to completeness.
Lex starts to actually answer his own questions. He says Econ can’t possibly validate so many different variables.
That’s exactly why Keynes is wrong. Because Keynes needs a central planner and a central planner takes away the individuals freedom to make choices that are best for themselves.
Its strange that the guest says he himself used to be a keynesian, yet now his is an avowed mortal enemy of them. It would be interesting to hear from him what he thinks of his former self, does he think he was all these terrible things he accuses the keynesians now of?
Good that Lex constantly pointed out the dangers of being excessively certain of oneself, though the guest did not seem to understand this
This dude is playing a character, just the same as Krugman. I've never understood the need of so many economists in public to "pick a team."
@@phillipemery572 For you and your family, FREEDOM or SLAVERY. Pick a team...
@@phillipemery572 He's clearly not. You can't read people at all.
@@phillipemery572 the funny thing is that he is being hyper idiological, while projecting that onto krugman
@@mrborn2drink the difference is one set of theories is artificial, the other is not. This is the same reason why the more you think about current leftist politics, the more it crumbles. It's fake. It treats human beings as simple nodes in a group. Just like current economics it treats individuals as abstract concepts and that doesn't work and never will. So there is a side back to the right when allowed to think and speak freely. It is for these reasons that the left is so intent on not just silencing dissenters, but demonizing them. They are the ideology... im not exactly sure how letting people live their lives based on a real economic system is even an ideology at all.
He spends a legitimate segway at the beginning talking about how diamonds have little intrinsic value (all fine, except that it detracts slightly from the diamond/water metaphor he was trying to get across). Then spends the rest of the clip implying that leaving the Gold Standard was some sort tragedy, without once addressing where gold gets its magical intrinsic value.
Also, the idea that high inflation and high unemployment coexisting in an economy somehow disproves Keynesian Economics?!? This is surely the silliest strawman that I have seen on the internet in a little while.
There is plenty about Keynesian Economics and a huge amount about Krugman to critique, in my opinion, but this chap is equipped to do neither.
Paul Krugman is always wrong.
The guest uses the language of coercion and forcing people to do things. This is deliberate. He wants us to believe this so he can push his ideology. Make no mistake. This isn’t economics, it’s ideology. We don’t have perfect democracies. However, with the size of the population and the history of our development we need some public services and these do require central planning and we now need to deal with climate change which requires cooperation and detailed planning. The markets still have a role. Libertarianism or anarchy (with a small ‘a’) work in smaller simpler societies and could work in the future. However, right now we need a degree of central planning. Also, the guy goes on about how we can’t have experiments, justifying his approach that we should rely on HIS theory. In economics, due to complexity, the data is unreliable, but it does provide very useful evidence on which helps us make decisions.
All he has is theory. If he is right, no one in 150 years have practiced his version of economics. Because it doesn't work.
The problem with Keynesian Economics is that it does not F-ing work as a model to predict or influence actual economies.
“Stimulus” for consumer spending is fundamentally flawed and only results in more poor economic decisions / bad investments.
Real monetary policy must stabilize the Unit of Measure of Economic Value = The Dollar to keep commodity prices stable since they are not swinging in price rapidly via supply/demand. Gold is way to sensitive and intertwined and scarce to be used as the basis for valuing The Dollar anymore, and attempting that would destroy the market for Gold.
There would be chaos and failures in Engineering if the Meter or Second fluctuated in value, and the Dollar is no different. The chaos in our global economy (Boom/Bust) will stabilize if the Fed stabilizes The Dollar against an Index of Commodities.
This is the first and only conversation where I’ve heard Lex consistently interrupt his guest and tell him “that’s just your theory “ or “that’s just one explanation.” Perplexed why he feels such a strong desire to defend a monetary system that has proven, thru data, to have devalued its own currencies to the point of collapse.
I noticed that as well. When we shed light at some hard facts about how goverments are plain right immoral the way most of them are, it's hard to come up with a satisfactory counter to maintain neutrality. I don't criticize Lex to do it, he's dancing the dance
The issue is not at all so simple, there are a lot of things that are off here in the guests argument. Simply stating that the "government" is printing too much money is not completely accurate--we have different types of "monies," and most money is actually created by banks to finance the economy more organically.
The distinction between "savings" and "investment" must also be held in stark contrast. It looks like the guest believes that hoarding money in a mattress is a good thing, but then muddles the concept with "investment" which is totally different. Both crypto and gold enthusiasts seems to believe that the best or only way to save is to hoard the medium of exchange in a mattress--when one can in reality exchange dollars for gold bullion, stocks, bonds etc. as a store of value.
Also, 19th century history shows that the gold standard was always just a psychological trick for people to trust paper money, when, indeed, much money was always backed by debt--even during the gold standard. During the 1870s it was actually the big bankers that wanted only gold to be money while the poor farmers wanted for gold and silver to be money--which was the essentially the quantitative easing of its day.
@@Interstellar111
- I can get your point of gold on the 19th century being a 'psychological' trick into believing it couldn't create inflation. Governments and powerful people will always try and find a way to devaluate it's currency in detriment of the other parties involved, why wouldn't anyone?
When you have laws that coerce people into adhering at a certain currency you end up having a situation where you can't know for sure that every party belonging to that system is actively looking forward to it's benefit. When you have a coercive relation, the currency is 'potato' the currency is 'potato'; Governments may create a 'govCoin' with 0 'pre-defined' inflation (unlike bitcoin, that has this inflation set on it's algorithm) and still, if the government has the ability coerce big masses of people into using them, anyone with the keys can find a way to create inflation.
Bitcoin on the other hand, everyone in there wants it's price to hold value, or increase if possible. You never really want it to decrease, unless you want in. So, when you have an asset like bitcoin, it's always gaining value, the community can choose to 'devaluate' so they may extract value selling to other people, the price would go down as would any inflation, but this would mean an appeal of at least 50% of the network.
Way different than what, a few bureaucrats who knows jack about the needs of people?
How could one ever know.
Now, I understand, I get it, every currency will have it's "owner", who will ultimately be able to steer in a lot of influence over it, even maliciously. That's also a thing of beauty when you think about bitcoin (not any other crypto); The way it was created, nobody really controls it, I know lot's of powerful players in the arena but their influence is quite limited. It is truly the one digital asset, and event I'd add, that was created and born with the same idea of the internet, and this resilience will certainly be tested in the coming years I'm sure of it
How has Keynesian economics been proven to devalue currencies to the point of collapse?
I would love to hear him talk about Thomas Sowell.
I would love to hear from an anti austrian such as Milton Friedman.
I would love to see Lex talk to Thomas Sowell.
Why? Thomas Sowell is not an economist.
He is not associated with any economics department,
He can't do quantitative ecnomic studies,
He does not publish in peer-reviewed economic journals (or any journals),
Nor does not debate leading economists.
He can't even read economic journals and does even know statistics.
Having a law degree does not make you a lawyer.
@@RK-um9tu It's because they are talking about Austrian Economics, and Sowell's book 'Basic Economics' resonates the Austrian Economics's spirit.
No! Thomas Sowell, Freidman and the Chicago School of Economics is socialism disguised as capitalism. Sowell has interesting socialogical ideas but him and Friedman are just more gatekeepers when it comes to economics.
The other common complaint against completely free-markets is that so-called 'negative externalities' such as environmental impact is not adequately priced into the supply.
Been seeing alot of economist of Lex Podcast in the past year and would love to have Peter Schiff on, Peter's way of analogies and explaining the problems with government spending and the flaws of the FED is something that's very relative today
OMG... Lex and Michael Malice are neighbors in Austin? Fantastic! Can you imagine this scenario... Lex walks over to Michael's house at 2am and asks: "Could I borrow a cup of diamonds?" Michael replies: "Diamonds? Wouldn't you prefer a nice cup of water?" VIVA MISES!
Before 1900 America was Austrian and awesome. We haven't been a free market capitalist society for over a century.
When there was slavery, child labour, many more recessions than today, extreme poverty, bathrooms were for the upper class...
I have a B.S. in Economics, and I can verify that econ classes are more akin to religion than education. One train of thought is acceptable and taught (Keynesianism). To the extent we were taught any Austrian concepts, they were framed as “outdated” or “irrelevant” in today’s economy.
That's because it is outmoded, and keynsian economics is not the economics being taught today. Ludwig von mises was a crackpot.
We teach uncle milty aka milton Friedman. This idiot believes that we should go on the gold standard which is wrong.
It’s true, you learn about John Maynard Keynes out the wazoo, but I only found out about Milton Friedman and Hayek through UA-cam. I did however learn about the production possibilities curve, comparative and absolute advantage, and how price ceiling and floors cause surpluses and shortage, so it wasn’t all left wing.
@@robfromvan I found microeconomics to be useful since it’s basically dealing with the basics of supply and demand curves, but macro was 99% garbage and interventionist propaganda. Econometrics had some interesting and useful statistical techniques, but I thought the usefulness of their application to economics was overstated.
Its funny no country puts Austrian Economics to work. If Ammous is right then every country would be falling apart since no one practices Austrian economics. If Kyenesian is so bad we should be living in a 3rd world country right now. Hmmmm.
If they do it they won't have limitless funding
They are falling apart..also under a Kyenesian model is much easier for governments to murder people as it encourages using fake money.
Versus the hard money standards of Austrian theories
I think this one of Lex Friedman's best and most informative interviews! Great show!
Well, I have to say, I think this is the rock bottom worst. Not Lex's fault, this guy has nothing to offer in terms of insight, just ad-hominem attacks on Keynesians and a thorough misrepresentation of them. The "central planning" straw man was almost humorous.
@@koho I found it enlightening. His critiques of Keynesians were spot on.
@@robinhoode3875 I had the opposite view. Sorry this is so long, but here's a comment copied for convenience:
The key tenets of Keynes are that inadequate overall demand can lead to prolonged periods of high unemployment ("inadequate" having a specific meaning but many possible causes that must be evaluated), and that government intervention, under the right circumstances (not just any old time), can stabilize the economy. This guy calls this malarky, misrepresents the history and assumptions of the theory, and ignores the fact that this has been proven to be correct multiple times, not least of which were the 2008 crisis and the pandemic. And, re 2008, countries that imposed austerity did far worse in recovery than those that used government stimulus, and re the pandemic, the US correctly injected stimulus (if a little too much), and has fared better than almost anywhere else. Ammous seems to be driven by an emotional repulsion of the idea that government should play any role in the economy, and I still don't understand what "his" school has to offer. For comparison with a realistic and compassionate view of the world based on actual information, see Lex's interview with Krugman.
Google Cantillon effect. Keynesianism drives economic inequality. What happened in 1971?
Domestic oil production peaked and declined.
No. Any remnant of gold standard was deletef
Around 8:00 some very great points on what money is/represents
I always thought Keynesian economics was flawed when it begins, "All things being equal..." as the premise to the theory. Whenever has anything ever been equal? Especially in economics!
That’s not how Keynesian economics begins
I may be confused here, but at 23:00 he seems to argue that Keynesian economics doesn’t model stagflation…which it can. Again, maybe I’m misunderstanding but this seems incorrect.
He generally has no idea about what Keynes actually thought
You are perfectly correct. There is undoubtedly plenty to be criticised about Keynesian Economics, but this chap doesn’t understand it in the first place.
Worth noting that he doesn’t actually have an Economics degree.
Keynesian’s are terrified of stagflation. They think intervention is needed before, during, and after stagflation. Austrians, on the other hand, see stagflation as a time of cleansing out the weaker and negligent actors in the economy. Keynesian economics does not allow for this cleansing. It simply puts a band aid on the wound and kicks the can down the road via inflationary policies
@@dessertfirstgateauHas Kayenes understood what he said?
@@charlesw852
Ad hominem but no specifics about rhe subject. You should be at least slightly more logical than the Ancient Romams, who knew argumenutm ad hominem as a logical fallacy.
Where is your Nobel? Must have been an Oscar-worthy performance by Dr. Krugman. Always easier to denigrate the person instead of arguing the merits.
Weak appeal to authority. The mainstream agreeing with the mainstream isn't very compelling.
He's good at parity marketing to promote himself. Pick the strongest person or company and denigrate them loudly in the hope someone will recognize you. Pathetic.
In this entire thing neither of you mention the word voluntary once, and I think that would solve many of the semantic issues here.
I spoke to soon literally 1 minute before the video ends they finally say “voluntary”.
This is a great interview, Lex. I would have pushed back on the guest on one point, though. When he said it’s never ok to use coercion, I would have asked about those who lack the capacity to consent (minors, mentally ill, drunks, etc). If my 1-year old son tries to eat a razor blade he found, I sure as hell can use coercion to stop him. So if that kind of coercion is good, then what about other kinds of coercion? There are limits to the non-aggression principle, which means there are limits on a completely free society. Libertarianism doesn’t mean no government. It means limited government.
The child is not a full human, you have to make the decision for him. That is not coercion unless you think people are children and the government has to decide for them.
Very spot on about the university education on economics.
From someone who has a master's in Economics. This is false. You start off your journey with Austrian and free market economics. That's the basis every theory tries to prove or disprove. In fact most of the top schools Harvard, Princeton etc teach mostly Austrian economics.
@@segwaysegments I'll concur with you (BA in Econ). I don't know what universities this bozo has attended or taught at, but his characterization of the teaching is laughably wrong. Yes, if you take only 200-level courses, you get fed the basics. But that's not the end of the story. It's like saying public schools feed kids a wrong version of history because the 2nd graders act out the first Thanksgiving.
@@segwaysegments well said… 💯
Basic microeconomic courses are very pro market and neoclassical based. Most intermediate and advanced level courses are more "moderate" but still neoclassical based. The macroeconomics courses content depends on where you study.
@@phillipemery572 PhD from Columbia University, where he also taught.
It is not just that Krugman is wrong. He is a paid (in one way or another) mouthpiece for the banking cartel that took over in 1913. Income tax and ever increasing inflation are the benefits. Feel free to track housing or the stock market going back to
1913. Buying these things are way to short the US dollar... which lost value vs actual assets every year since then.
Why are some economists so certain on their theories? Economics is basically the study of mass psychology and technology, and a number of random factors, which amounts to so many moving parts that it can only be a descriptive study, far from scientific.
Wrong
@@asherrfacee care to expand on that?
Real economists, you know, with PhDs and scientific training (not this clown) are not that arrogant. We recognize the complexity of the system, although we do have some good success stories with theory and empirics.
@@Guizambaldi his PhD is from Columbia, he’s a published author on the topic, and worked as an assistant professor at the Lebanese American university.
@@asherrfacee His PhD is certainly not in economics.
Having a monolopoly on the money supply and trying to control the economic decisions of millions, or billions of people is just morally wrong. End central banking.
This is what happened in Rome, they started to debase their currency.
"Inflation and Credit expansion, the preferred method of government open handedness, Do not add to the amount of resources available, they simply make some more prosperous, but only to the extent that they make others poorer"
-Ludwig Von Mises
"We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power"
-Alan Greenspan
The real money are controlled by the government which is controlled by the people and used in real economy. In Crypto the money are controlled by the wales that are not regulated and can do whatever and used in speculation to get more REAL MONEY. I don't see at all how this supposed to be better.
Scientific facts:
1) Every fiat currency throughout history has eventually gone to nothing.
2)The gold in use during the times of those fiat currency collapses never went to nothing, and is still worth something today.
Thomas Sowell when asked about getting rid of the Federal Reserve.
He was asked what would he replace it with.
“When you get rid of a cancer, what do you replace it with?”
The perfect answer.
Wow
Yet Sowell will scream about anti-Semitism when you bring up the Jewish influence on the federal reserve.
Some of the craziest shouting matches I have witnessed is in the Economics department between the keynsians and the monitarist. It's an exercise in religion. Brilliant viewing, but careful not to get drawn in.
Economics is not a science, you’re right it’s a religion based off of beliefs they work tirelessly to “prove”. But they’re all equally dogmatic and narrow minded and this guest is just as guilty as any of them.
"It's an exercise in religion".
Yes, one of the most interesting talks I have heard was by an economics professor at the University I attended who started by saying that of all the different disciplines offered his was the most similar to a religion.
Wtf he is talking about?? 😡 Just jamming Keynes in the Garbage bin, as non-sensical?
Mr. Ammous can't wittingly be serious when is so absolute.
He clearly doenst undesstand how any money in the world came to be if he talks like that!
Absolutely EXCELLENT episode!
This is a strawman of the “Keynesian” model. It’s possible in the Keynesian model for aggregate expenditure to be higher than aggregate output in a recession as aggregate output can still fall independently of changes in aggregate expenditure e.g. a supply shock. Even in the cases of Austrian credit cycles where excess demand causes supply shortfalls, this could still be accounted for by mainstream models. This is because they have theory related to nominal and real rigidities, where one side of the economy can impact the other in the business cycle.
It's possible alright. And what are the methods? Either increasing debts and/or inflated money supply since we know that economy is already running debt based. Result? Inflation or pushing off the recession to a worse outcome later.
@@johnrobholmes it’s a possibility for monetary stimulus to have that impact given the right (or wrong) monetary rules and general economic conditions. However that isn’t a universal picture of macroeconomic fluctuations, which can happen for all sorts of reasons.
His explanation was flimsly; instead of supporting how Austrian economics works, he is always in the mood of criticizing Keynes. Although no economic theory is perfect, unless you prove it either by logic or practical example, no one will believe it.
"That is the same thing with power plant, is the same thing with everything" false statement
I was thinking the same thing. Critical utilities and infrastructure aren’t like selling different brands of Mac and cheese. He flippantly says competitors can easily crop up if your electricity provider sucks. But starting a utility company is not trivial. You end up with de facto monopolies like that, at which point it might as well be a local government monopoly.
The existence of the government as a middle man only makes the power plant output unnecessarily expensive.
As Hayek said, "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." Lex refutes certainty and admits we don't know what we're doing most of the time and that's precisely the point. Central planning imposes the certainty of foolish economists upon the individual.
edit: I Googled this guy, and he wrote a book promoting Bitcoin right as this interview came out. I regret watching as much of this interview as I did.
I'm halfway through this interview and this guy sure seems close minded. He starts off by promoting Bitcoin (whoops), then when Lex asks him why data doesn't support his theory he replies the data isn't meaningful and everyone else interprets it wrong. I feel like he decided his ideology at 19 and for the rest of his life he'll ignore or cherry pick data to show he's correct [a little further in the interview and he's most interested in showing why everyone else is wrong using straw men arguments {I'm sure he'll have no evidence to show he side is correct, and I'm hitting 'COMMENT' right... Now!}]. And if nothing else works, call them 'hucksters.' Adequate reasoning for these flat earth times.
Fast talking but otherwise normie libertarian. Late teen years is when most of em read Ayn Rand and had they minds BLOWN
I think the first step to getting away from government controlled taxation is to decentralize how your tax money is spent. At the end of the year(tax season) each tax payer dictates where there tax money is spent. For some it is 100% national security. For others it is 50% infrastructure and 50% public parks...so on.
Each year the government agency gets their budget based on the taxpayer contributions.
It could be a bit rocky early on as people neglect to fund things they would ultimately want.
I for one would be more willing to volunteer to pay some tax if I also got to chose how it is spent.
In a libertarian world ran on Bitcoin the government would be reliant on voluntary taxation and this is the only way I see that happening.
why not run it on theo coin? .... what you hope makes as much sense as apple?coca cola/airlines/doctors and so on relying on voluntary payment ... national governments is a provider of a service, charging a price for its services ... taxpayers have a much freedom to avoid a certain national government, as consumers have to avoid apple or google, or going to a doctor....
Top 10% of earners pay close to 90% of the taxes in the US most people pay little to no tax seeing as though much of it is given back to them during tax return season so it might not be a fair representation 🤷🏻
This allows a situation similar to the fall of greece, where people can give themselves money if they choose to give their taxes to social programs and bankrupt the government.
@@manuelmanuel9815 You are obviously correct! But, so is Jacob. Implementing kind of change in Jacob’s idea would take a revolution. And, that revolt is happening in small increments now. As more people pay the price of governments deficit economics, and they develop the skills to apply the technology that already exists for that change to take place the revolution will pick up steam! People are catching on to the power of decentralized economics in the form of cryptocurrency, but that technology is a decade out from mainstream use at present. The few people that do understand and use have already caused a stir and got governments attention. And, it will ultimately be the Trojan horse that wrenches control of governments from autocrats and politically connected plutocrats back to the individual.
Nothing success like freedom! Most people know that, they just feel powerless to take it back once it’s lost. I’m just not one of them!
I’m just sayin..
Your $2000 in taxes nor the collection of all the taxes of people earning below $100k will not matter nor match anything of corp or top earner taxes. Instead you will get less funding to the things you want. Voluntary taxes will just mean even less money for public works and you paying more “taxes” to giant corporations to use their utilities. These lines of thought at based on the idea that the rich did nothing nor know nothing on how to make money nor manipulate systems. It’s a nice tale to tell yourself to comfort yourself to sleep, but it is not reality and you will get rolled hard if this takes place. It’s similar to competitive gamers swearing they deserve a higher rank. Meanwhile higher ranked players consistently take accounts for lowest tier to highest.