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On Tue, 16 Nov 2010 06:11:38 -0500 Greg McDonald <gregm...@gmail.com> writes: > > I take it you meant deflation is bad and increases unemployment. > Actually, falling prices alone do not hinder production unless > demand > falls off. That was an issue that neoclassical economists were debating eighty years. Economists like Pigou argued that an economic crisis could not be expected to resolve itself until prices (including especially wages) had fallen sufficiently so that people could now afford to start making purchases again (which included capitalists starting to rehire workers again). John Maynard Keynes argued that this scenario was unlikely because falling wages would likely lead to decreased demand. Consequently, Keynes argued for government intervention in the form of a loosening of fiscal and monetary policy (the loosening of monetary policy being by itself insufficient because of Keynes called liquidity trap) in order to boost effective demand. He also made the point that such policies by creating mild inflation in which wage hikes would lag behing price hikes would create the reduction of real wages that people like Pigou had been arguing was necessary for resolving a crisis. Jim Farmelant http://independent.academia.edu/JimFarmelant www.foxymath.com Learn or Review Basic Math > > On the second point, sure, folks such as Bernanke are only seen as > incompetent if one assumes they are actually under orders to > initiate > policies benefitting the american people as a whole and not just > its > ruling class. On the other hand, it did point out the incestuous > relationship between the Fed and goldman sachs, which is a start. > Have to admit though, it was pretty funny. > > G. > > > On Tue, Nov 16, 2010 at 1:07 AM, Gary MacLennan > <gary.maclenn...@gmail.com> wrote: > > > I loved this, but two points occurred to me - falling prices > inhibits > > production do they not and that means increased unemployment. So > inflation > > when it occurs is a bad thing. Secondly the line that Bernanke > has not got > > anything right is simply wrong. He and his predecessor, > Greenspan, got much > > right for the ruling class - namely a vast expansion in their > wealth. That > > was very much mission accomplished. To talk of the Fed getting > nothing > > right disguises the class basis of their very existence. > > > > comradely > > > > Gary > > ________________________________________________ > ____________________________________________________________ Explosive Stock Secrets Learn the Secret art of picking penny stocks before they spike http://thirdpartyoffers.juno.com/TGL3141/4ce2821d3dbbe5c8bem03vuc ________________________________________________ Send list submissions to: Marxism@lists.econ.utah.edu Set your options at: http://lists.econ.utah.edu/mailman/options/marxism/archive%40mail-archive.com
