Quite honestly even though I've come around away from ABCT, the elementary school kid who doesn't write about FDR and the New Deal has shown plenty of independence of thought. He'll have plenty of time to learn better macro theory in the future.
Kuehn's paper doesn't refute ABCT. He only addresses the naive Austrian response of "You never heard about 1920!" that comes up every time somebody talks about AD.
The response is naive in macroeconomic debates. But not for elementary school children who often heard nothing more about the Great Depression than FDR+New Deal = Salvation. I maintain that deviating from the only thing you've been told in class shows greater independence of thought even if you eventually turn out to be wrong. There is plenty of time to learn the right answer after elementary school. I doubt elementary school kids have anything but a supremely naive understanding of the Great Depression anyways.
So did the group who wrote about FDR discuss the many things that the Roosevelt administration did to make matters worse based on their flawed concept of "overcompetition" being at the heart of the downturn? Those are the sorts of questions I'd ask.
Kuehn’s paper is consistent with the Rothbardian narrative that the Fed was created by the elite for the elite and to allow them to fund wars without real time taxation of the public. Further, Kuehn demonstrates that the problems of 1920 were caused when the government changed gears after the war in attempting to unwind its massive wartime interference in the market. Those problems of price distortion were repaired fairly quickly without significant government interference by the market actors themselves. The lesson to be learned from the event was that, as always, the market does not and did not fail and that these types of problems are always caused by government interference in the market. Further, these government inflicted problems must be and can be repaired fairly quickly by market actors. The statists that infest the educational system and media do not even want to think about such an analysis and that is why it is rarely publicized.
Roddis, you need to learn basic comprehension skills and logical reasoning. You don't understand Kuehn's paper, and even if your interpretation was correct, it would by no means prove that "the market does not and did not fail and that these types of problems are always caused by government interference in the market."
I understand the paper completely. He's trying to show that what happened in 1920 was consistent with the Keynesian creed so that one cannot say that Keynesianism was disproved by the event and reaction thereto. Nevertheless, he blames the 1920 depression on the government changing gears from its wartime interventions. That's not market failure. Absent proof that the market fails, Keynesianism makes no sense as a cure for something that does not exist.
noiselull:You must have a problem with basic compehension skills. I wrote:1. Kuehn’s paper is consistent with the Rothbardian narrative; 2. Kuehn demonstrates that the problems of 1920 were caused when the government changed gears after the war in attempting to unwind its massive wartime interference in the market; and3. THE LESSON TO BE LEARNED FROM THE EVENT was that [not "Kuehn's paper shows that"], as always, the market does not and did not fail and that these types of problems are always caused by government interference in the market.
For what it's worth (hopefully worth something!) I agree with Roddis's #1, somewhat agree with #2 (government was not the only cause, and the governmental cause I cite is far more Friedman and Keynes than it is Rothbard!), and I strongly disagree with his #3.
Honestly what I present can be thought of as a monetarist narrative that exonerates Keynes.
I don't see how Kuehn's paper is consistent with the "bankster conspiracy" theory.
"I don't see how Kuehn's paper is consistent with the "bankster conspiracy" theory".How is it inconsistent????2. The austerity depression of 1920–21During WorldWar I federal expenditures ballooned and although the new income tax was able to partially finance the war effort, most of the financing was done through federal borrowing and by the highly accommodating monetary policy of the Federal Reserve. The role of the Federal Reserve at this time was expressed unambiguously by the New York Federal Reserve Bank Governor Benjamin Strong, who told a Congressional committee in 1921 that ‘I feel that I, or the bank at least, was their [the Treasury’s] agent and servant in those matters’ and further added that the wartime inflation caused by the low interest rates maintained by the bank were ‘inevitable, unescapable, and necessary’ for prosecuting the war (Strong, 1930).While you are at it, why not take a few moments and prove that the market fails.
I concede. There "bankster conspiracy theory" is just plain wacky.http://www.alternet.org/economy/obamas-failure-punish-banks-should-be-causing-serious-social-unrest?paging=off
Perhaps he should have written about the 1920s credit bubble instead.http://www.dailykos.com/story/2008/01/14/436037/-The-1920s-Credit-Bubble#
Out of curiosity, Daniel Kuehn...where did you find this picture? If you didn't, did you make it up yourself with some meme-generator?
Someone on facebook.
All anonymous comments will be deleted. Consistent pseudonyms are fine.
Daniel Kuehn is a doctoral candidate and adjunct professor in the Economics Department at American University. He has a master's degree in public policy from George Washington University.