Introduction to Economics – Part 6 – Murray N Rothbard

Part 6.

Introduction to Economics: A Private Seminar with Murray N. Rothbard

What causes business cycles? Keynesians say the cycles happen because the free market economy does not spend enough. Thus, pump spending in. Additionally, Keynesians say that animal spirits cause these cycles. Government must fix things. Nobody could understand Keynes’ General Theory. What was simply obscure was wrongly considered deep.

Keynes linked national income with employment, by assuming wage rates are fixed downward. Although Keynes wrote of balanced budgets, there were only deficits.

Part six of seven from Introduction to Economics: A Private Seminar with Murray N. Rothbard.

This lecture as a Podcast: http://enemyofthestate.podomatic.com/

Sourced from: https://mises.org/library/introduction-economics-part-6

Source: Introduction to Economics – Part 6 – Murray N Rothbard – YouTube

http://www.readrothbard.com/introduction-to-economics-part-6-murray-n-rothbard

TRANSCRIPT

00:00
and a half years of other things in the
00:02
car light so to kind of look for
00:06
explanations and the major the dominant
00:11
and the 20th century course dominant
00:13
lines when they want something but then
00:15
the more had something within capitalism
00:17
causes this causes question area period
00:20
with this money supply increases prices
00:24
increases maybe productive activity
00:27
everybody’s happy
00:28
I almost think that the collapse of
00:29
bankruptcies unemployment crisis tool
00:31
that’s the turtle of thing governments
00:34
are step in and are in a nap usually
00:37
it’s one of the indictments of free
00:39
market capitalism of the course of
00:41
business cycle the and mostly I would
00:52
say most economists that I still hold
00:53
this one for or other the Keynesian fair
00:58
range we might go into this under what
01:02
happens is the market economy doesn’t
01:05
spend enough recessions
01:09
they afford spends too much in inflation
01:12
Xin therefore he has to have something
01:14
outside the system which which corrected
01:17
us of course that’s gold top US
01:19
government so what we’re going out on
01:22
the machine which comes in and corrects
01:23
everything if people spend too much
01:25
absorb
01:26
cuz they have a great painting trade
01:27
which I love but they go to stop off
01:29
excess purchasing power I give the body
01:33
the better feet long
01:36
and people I don’t spend enough you pump
01:40
spending in order they get the juices
01:43
going
01:44
so that’s the government I say step
01:49
seven the corrector of the Keynesian
01:53
theory violently painted no serious
01:56
business I can say why this understand
01:58
her response ends up at one point he
02:02
said investment increases because of
02:05
animal spirits and then it decreases
02:08
analyst birthing has collapsed so any
02:11
races up Syrian business I recently said
02:13
we don’t know what caused the business
02:15
like we do not remember spoiled like
02:16
inflation for that we’re spending the
02:18
president of coal miner is spending
02:19
therefore government since y’all this
02:21
job is almost upon spending in and to
02:23
top it up and so I like the way I have a
02:27
metaphor I like to use explain the
02:29
Keynesian not recipe the government sort
02:32
of like the wheel McClarty kind of means
02:34
my car coming around this tight world
02:36
close light or a narrow ledge one side
02:38
is this pressing the other side of the
02:41
other abyss of the quagmire that
02:43
mountain cliff or whatever in place and
02:47
even though the Keynesian at least non
02:50
left Ascanius moderately MIT the free
02:53
market works very well than my closest
02:55
appears we aren’t talking about before
02:56
them supplying the met intersecting and
02:58
clearing the market all that’s great
03:00
except my crow’s feet markets good micro
03:02
macro chaos there’s nothing there’s only
03:05
full of writing process of the macro
03:07
severe there’s nothing which will keep
03:09
economy an even keel and therefore we
03:12
need government to adjustment come in
03:14
fix everything up the go into that this
03:23
is every macro textbook is expected us
03:26
upon yourself
03:28
as millions of words were written by
03:31
lots of equations of the essence of a
03:33
very something
03:34
20s is a little stuff we put into the
03:36
core
03:37
let’s play some well one thing even
03:42
kings of general theory King Mary I went
03:45
to college of six years after a theory
03:48
come out
03:48
nobody understood what I was saying
03:50
nobody seem very peculiar when I want a
03:55
g7 the key to my thought of the savings
03:57
always equal isn’t always always keep
04:00
two papers lady said a key my phone
04:02
Steve he’s always different from the
04:03
customer we hadn’t even funny but he
04:05
grapple with us
04:06
so since Kaizen we could already
04:09
establish our invitation with a big shot
04:11
as a distinguished intellectual an
04:12
economist therefore he couldn’t be more
04:15
than the serve every must be something
04:18
that must be something people in the
04:20
jargon the creative most sort of phrases
04:22
marginal propensity to consume
04:23
multiplier all that and the older
04:28
economists do tell the guys pull up
04:30
prunes and forgotten the younger
04:32
economists were emerging out of grant
04:34
and graduate school professors said AHA
04:36
this is it they started figuring out the
04:38
master of mint
04:41
sure sure of market max was right
04:44
read the the introduction of Samuelson’s
04:47
famous I think was foundation economic
04:53
analysis I believe also the first
04:55
edition of economics textbook he said
04:57
what wait you joy what a wonderful thing
04:59
to be under 35 I think Jonathan theory
05:01
came after he was young enough to
05:03
appreciate there’s great revelations
05:04
it’s great truths emerge upon the world
05:06
so it took about I would say about ten
05:11
eat well more than ten fifteen years
05:13
became he’s figuring out what he was
05:14
saying in front to try to rationalize
05:16
this and make it consistent as soon as
05:19
they did in that again the old Keynesian
05:20
theory began to collapse around the
05:22
edges it was fairly clear done that when
05:24
he said it’s still arguing what Kings
05:26
really meant they’re conservative that
05:28
Kings didn’t really mean with the
05:30
Keynesian
05:30
meant I person anything he didn’t mean
05:33
it if you meant anything at all
05:34
Keynesian but the only person make me
05:37
don’t make any sense whatsoever on this
05:39
mission wash look all right no no no
05:43
Katie and I ran to the general see her
05:44
you don’t find a diagram in at just all
05:46
this phone Burbage incoherent very
05:49
interesting the writer qua right
06:21
many right the will take us Keynesian
06:26
cross instead of having pry something y
06:29
axes in one of the XX is something
06:31
different happens now you’ve got dollars
06:33
both niceties each one being that’s what
06:37
I’m spending yes same stuff like moths
06:54
statistician discovered a little bit
06:55
before that Kane needed it concepts in
06:58
order to develop the theory you’re gonna
06:59
be you can believe in gross national
07:01
product not maintain Z if you can’t be
07:02
things are not believe your essential
07:04
products actually kind of approach so
07:09
the axes have the same key thing of
07:12
billions of dollars or whatever being
07:13
Frank same business so since the
07:22
auntie’s are identical you’re going to
07:23
have three five degree angle which is
07:26
also like that
07:28
so this is 100 100 coordinates or under
07:33
– whatever going up so this is 45 degree
07:37
line that becomes national income blue
07:41
stands for Prada liver casein feet while
07:52
all right let’s say next one coming
07:53
let’s say people receive people spent
07:58
person gets ten thousand dollars a year
08:00
it’s been maybe us maybe more somewhere
08:03
running around there there’s no
08:08
particular law you can think of so we
08:10
collaborate spending any kind of
08:11
something else anyone know they spend
08:13
less on statement a strike in theory but
08:18
my walk them all here I grow equilibrium
08:20
so city is giving ones an expenditures
08:25
out of income that will be on this to
08:28
have a certain function they couldn’t
08:47
pull it over by the board already take
08:48
it for investment some more for
08:50
investment they made apply so this is
08:54
not some government to say the very
08:56
least means you’re looking through thick
08:57
of expansion functioning if for example
09:00
people received when if you’re on five
09:02
hundred billion dollars I probably spent
09:03
around five everything at all maybe less
09:05
maybe more let’s say less but whatever
09:08
there’s no reason to ceiling we spending
09:11
a lot much more than income and you keep
09:13
going low left for some point so much
09:15
less today
09:15
right that’s much more likely to be
09:18
something like someone’s own around here
09:22
there’s no there’s no reason if you look
09:25
at it sort of rationally no reason to
09:27
think there’s any kind of point their
09:31
office the sure he said well if it comes
09:50
higher than this thing I’ve been dinars
09:55
that comes higher than this people who
09:58
spend less and the to keep going here
10:05
they come keeps going up grants a blank
10:10
on the money that came a phrase lease
10:13
out of the economy so disappears Mon
10:17
Keynesian music using certain topics
10:20
like a leaky bathtubs got money pouring
10:21
in whole bunch of money leased out their
10:25
words not therefore that on a fuel leak
10:27
on lease the the UM the sleek it who
10:36
paints called saving saving is the thing
10:38
that sneaks out possibly set you make
10:43
out is to say people just pile of money
10:44
out before it actually comes out for
10:46
days
10:47
it’s haven’t there they have the power
10:49
bills of a gold coin that’s keep in
10:51
there on the floorboards but having more
10:57
to keep going so you have this concept
10:58
of the leakage and then you have the
11:03
economy is down here you have let’s say
11:06
a hundred billion dollar Aisling
11:07
spent too much money where they get
11:09
money from but he have a situation
11:11
consider yourself
11:12
people are getting proceeding in payment
11:15
hundred million dollars they spent 200
11:17
but where the hell they get the money
11:18
okay was he from under those floorboards
11:21
some from heaven again I say blank out
11:24
right so the the only such they have the
11:32
Keynesianism work that means he’s buyer
11:34
I was this they said well King was
11:37
taking about two different things he was
11:39
looking at a time dimension and he said
11:41
it’s almost let’s say it’s actually come
11:44
inside
11:44
five minutes billionaire so if you look
11:50
at a time dimension they one year one
11:54
where you want to call it some time
11:55
periods that you’re watching in common
12:01
the five hundred billion it’s this the
12:08
rest of the week South as it was piled
12:10
on the horns it’s on the floorboards or
12:12
whatever so that means that since
12:15
expenditure equals Inca the same what’s
12:22
the same as follows I spend 30 cents for
12:29
a newspaper I told I have both parties
12:33
benefit us if you don’t cut fat in
12:35
newspapers talk about the money okay
12:36
here’s me I spend my expenditure
12:39
Smalley’s equal to 30 cents and then
12:42
lose dealer’s income in a gross sense of
12:46
money coming into his pocket so these
12:48
sets small why I saw expenditure every
12:54
time I really like spend any money
12:56
my expenditure is my my definition to be
12:58
cool too and then common and determines
13:00
of expenditure the money there
13:03
but we’ll give the money so I spend the
13:06
30 cents he gets it my 30 cents times
13:09
exactly equal to study simply guess it’s
13:10
simply drops it down a greater than
13:12
railing or something’s greater greater
13:15
so they so therefore expenditure is
13:18
identical income and also the term thing
13:21
so this was the act of force if you
13:24
looking money income okay so fine family
13:30
it was they aggregate to a holy time
13:32
excessive every person in economy spends
13:34
money over a certain time thirty-year so
13:37
this is called capital e to sum of all
13:40
the small knees I capitalized some of
13:43
almost all wise and therefore capital
13:47
we’ve got the benefit determinant all
13:53
right I mean all that’s I think is true
13:56
I don’t want to get you that’s actually
13:57
that’s my goodness standard so
13:58
statistical purposes right so people
14:03
spend during the year five billion
14:05
dollars but we have any kind of expect
14:08
for what happens to the form that
14:10
becomes income in other words
14:13
expenditure in the active force one
14:16
opinion 100 million leave their way
14:23
right so this means of year to the next
14:25
year it kind of forms but in other words
14:29
the only thing makes sense I was paint
14:31
saying on one page that’s what we think
14:33
moving on the next page there’s always a
14:34
difference in account its what kind of a
14:36
different time to mention and we the
14:38
saying was this you’d expenditure
14:40
determines next year’s income this month
14:42
expenditures from the next month Bangkok
14:47
Bath’s they tell us find my recipe
14:50
Hutton weeks away somewhere so the next
14:54
year it comes only 400 and then they
15:00
have a free will decision by the masses
15:02
how much he spent left or right when you
15:04
spend you look at this function of
15:06
income according to the 2002 they
15:08
postulate proven what this partially
15:11
excited good like this isn’t that
15:13
announced tweets 50 so spending please
15:17
fifty year three it comes these fifty
15:22
just here and the young couple here so
15:25
you get back in between hundreds of
15:27
equilibrium at 300 EUR 500 income
15:36
speaking Spanish will get these papers
15:39
they are equilibrium excellent Keynesian
16:14
toy some people spent they spent to
16:16
other than 50 penny we really got the
16:18
money probably taken out of the leak
16:19
whatever with leaky bathtubs but taking
16:22
out of hoards and take it out of the
16:24
mattress they spend you’re saying why
16:35
isn’t Spencer looking at function of
16:37
income good question I will try to
16:43
explain how he gets to this they teach
16:45
spend garbage so the next year I mean
17:06
next year’s to it comes equal to
17:10
expenditure was look at right here
17:13
expenditure spa ny7 okay out of that you
17:22
make your freewill decision have a bunch
17:24
suspect so you’re getting down this is
17:28
now 250
17:31
come here people spend 280 you’re so
17:36
high and then kind of less so they take
17:37
it more than some more out on the floor
17:39
boards out leaking out of the coolest
17:41
whatever it is and it set the center and
17:44
finally either four or five you get
17:46
between hundred again where this is
17:48
meantime the best we know that this is
17:50
me over there you are equilibrium what’s
17:54
not only each part as long as the insane
17:56
in
17:57
some people will not do this in practice
17:59
I’ll have a statistic that shows that
18:01
income national income once we have
18:03
opinion people spent five million next
18:05
year change here let’s apply the man you
18:16
know how things change the prices of eco
18:18
green rice to change the ether and
18:19
supply change of the magic you have only
18:21
one function
18:22
expenditure on the every Alamos as an
18:25
interesting point I’ve been thinking
18:27
time service second function you’re
18:29
never gonna happen
18:30
actually I should say the same forever
18:33
all right so I wash widgets even though
18:39
they have to prove I’m gonna put a
18:41
couple take that proof that improvements
18:43
stable functions its function should be
18:46
in some sense stable okay all set
18:47
equivalents flat black both meet are
18:50
self-evident is true
19:34
because there’s a fixed function to
19:36
determine function why do the terms much
19:39
we’ll see why the thing but if this on
19:41
the right is true I don’t ever get out
19:47
of here you know what’s is there
19:50
well can’t you see much change in the
19:51
functions they do it’s a very very
19:53
peculiar
19:54
you only have one function one of the
19:55
dependent thing supplying a man of two
19:58
things going on supply of a man talk
20:00
about intersection something once thing
20:01
going on it’s a very are kind of concept
20:04
to me and the other thing is that whilst
20:07
it may well be true that because it
20:09
would be talking about this is in
20:10
collection of danger that in fact you’ve
20:12
got the time he laid in but nevertheless
20:14
that the moment I spend a buck on
20:16
something yeah the other person receives
20:18
it so there’s no delay in heaviness in
20:20
the transaction well it’s it’s it’s cool
20:23
Robert Sounion today being a drama some
20:26
carnage things argue is a king’s he
20:28
didn’t funny when he cuts out of sight
20:30
periods abstract days they defiantly get
20:34
income we can’t spend until tomorrow so
20:37
he’s gone in terms of the day they take
20:39
its day one day to who’s operate
20:41
ridiculous buzzing it’s not an abstract
20:43
thing we never see doesn’t happen we
20:45
worldly spending might make any move all
20:47
the time that reason along this thing is
20:51
sort of shot anyway if we assume that
20:53
strike five carries everybody gets a lot
20:56
of money doesn’t spend as little next
20:57
time right next time carry so because
21:00
they one day two days three months week
21:03
one week two years
21:15
Melissa still remain anonymous
21:54
Rutgers pushing Schumpeter for long
21:57
reasons anyway so let’s assume is the
22:07
correct from it let’s assume there is an
22:09
equilibrium but you don’t really care
22:14
that’s mighty theory of us makes us
22:19
follow reason we’re the Keynesian
22:22
production production so that if some
22:39
fact we do whatever the higher the
22:41
national income of a moral production in
22:43
my production of the higher employment
22:44
lower actually come a lower production
22:47
and lower employment I see your
22:49
unemployment problems below an actual
22:51
income if you look at that you look at
22:53
this things seems to be totally obvious
22:55
cooking garbage actually income is going
22:58
up forego tenfold and last I would hear
23:00
something one montañés the same there’s
23:02
no difference in employment watch
23:04
something point how they can do a
23:05
national
23:06
what’s going on here even production and
23:10
hardly have a lot more correlation about
23:11
suspending so a couple of hidden
23:14
assumptions here clinker took until 1950
23:21
the whole series of equations for
23:24
freckle Mugen yani distinguish its onion
23:26
America and Keynesian to come out figure
23:29
out how Kings gets to this thing where
23:30
employment depends of national income
23:32
where the lower leg swing having more
23:36
unemployment and the hidden assumption
23:39
the other collector on the armored one
23:41
of beginnings of this of like at least
23:43
the year the retreat from Keynesian is
23:45
among the high theorists they looked at
23:48
this thing and finally one stood the
23:50
only equation and I offered together
23:51
they come to God he’s assuming Richard
23:53
wage rates down worker such that which
23:57
is Britain innovations which was fairly
23:59
accurate a sense that that wait rates
24:02
can only go up they can’t fall
24:04
I can’t they almost of institutional
24:06
meets this night unions government
24:08
minimum wage low unemployment insurance
24:10
all these things keep what you some
24:12
falling wage rates are fixed downward
24:15
aha Mellie how it makes me sets out some
24:18
of the stuff namely that if actually on
24:23
opinion has a big deflation let’s say
24:26
the money supply was cut in half and
24:30
prices and wages were cut in half or
24:32
less everybody should be more or less in
24:34
the same position should be a big
24:35
problem
24:36
yeah first transition period but if wage
24:40
rates remain the same they were lending
24:42
money in prices everything else was
24:43
double a for hair real cloth because
24:45
unemployment functional wage rates so
24:48
that if if the demand for labor so to
24:54
speak is cut in half and we traced a
24:58
then you have green honey on plan
25:00
the free market nothing you will need
25:02
they allege me to feed market for the
25:04
steering wheel means because wage rates
25:05
are rigid downward by exogenous Union
25:08
and government forces so it’s a great
25:11
different if case of the massive ring
25:13
beginning more than a pre difference in
25:14
our course kind of story we own this
25:17
unemployment rests on the government all
25:19
on free market fifteen years to realize
25:22
this is a hidden assumption even though
25:24
they weren’t very happy about this can
25:26
do just under he have some kind of one
25:29
month a coral coral okay so rigid wage
25:34
rates downward become a key is this the
25:36
unemployment promise and and it became
25:43
that pretty evident that the whole
25:46
Keynesian trick was to create some of
25:50
the precedent by creating inflation by
25:52
creating increasing my supply by
25:54
increasing twice and since the trick
25:55
unions and the workers and accepting a
25:58
lower real wage rates while the money
25:59
regulate something the same but the
26:02
essence of political Keynesianism so
26:03
Mike this trickery is it’s duplicity on
26:06
a mammoth scale if people claim they
26:08
love the working classes and each other
26:10
deflating twice as higher the wage rate
26:12
so the real wage rates the terms of
26:14
purchasing power growth then so the home
26:16
sale important problem is that the song
26:17
they’re very tricky it’s rather about
26:19
fashion oh yes that’s the that’s
26:24
supposed to license
26:25
paint yes underneath a little camouflage
26:29
continue long theory here howdy yep how
26:37
does he yep Lee well first like one of
26:39
the things that happens I said that the
26:41
Keynesian in the 1930 said well
26:42
economy’s mired here finish separate
26:45
cetera mammoth government spending to
26:47
what increase
26:55
take you on this thing come expenditure
27:03
there’s someone here there’s a full full
27:05
employment law magic full employment
27:07
line just somewhere I’d say this is the
27:11
line I wish I love climate swipe down to
27:14
keep increasing international action
27:15
okay if Spencer is such the intersection
27:20
point below the full employment line
27:21
have criminal impressive
27:22
there’s no way the food market can
27:24
probably get out of it there’s
27:25
expenditure function then they should
27:28
have five of them but you’ll say
27:29
five-minute do you know what national
27:30
income is the key is full employment we
27:33
started three mother they are four
27:34
therefore what they’re for the
27:35
government but gone out of the machine
27:37
steps and spends 200 extra billion to
27:40
raise these another function going just
27:42
hit a full employment line see that’s
27:45
fine tune the system government spends
27:53
200 billion dollars in spending since
27:57
the raise of thing to look to I’m magic
28:00
full employment line is wrong you’re in
28:05
a depression you assume it must be to
28:06
the right oblique or that where we are
28:08
now she’s pumping a lot of spending if
28:11
on the other hand the Keynesian possible
28:15
not very strong on a placement couldn’t
28:17
really or a keen on analyzing it there’s
28:20
that pressure but at the intersection
28:34
point is a six hundred million that
28:37
means that there’s inflation
28:39
this causes inflation can the right the
28:41
phone for the line of inflation
28:43
let’s look for five million depression
28:44
is permanent so just about my mired in
28:47
this is Evo expenditure
28:49
something collaborator as a microsphere
28:51
asks if a government on a machine comes
28:54
in pumps in spending or takes it out
28:56
stop stop our excess purchasing power
28:58
and that’s what destroys it burns it
29:01
knows so ok where does the company from
29:07
essentially that’s blank out government
29:11
spends it creates by deficits and it has
29:17
also an inflation that has certain
29:19
losses the original canteens were kind
29:21
of cute about this they said well they
29:23
said we have a business cycle something
29:25
like this old fuddy-duddy reactionaries
29:27
your favorite balanced budget well your
29:29
favorite balanced budget to just what I
29:30
live into the terms of the cuts of OB
29:32
you believe the bouncy bugs on the
29:35
entire cycle and it’s four years of
29:38
depression they spent money we have
29:41
deficits then it’s four years and we
29:43
have surpluses stop deficits so
29:46
or eight their ten-year period we have a
29:48
balanced budget right this is cool
29:50
there’s a poll the concept of a balanced
29:52
budget
29:58
nobody know Katie and textbooks right
30:01
I’ve added because obviously there ain’t
30:03
no balanced budget deficit or slightly
30:06
less big deficit so the concept of a
30:09
surplus is going awesome nothing goes
30:11
like where did you serve awesome we
30:12
don’t check it fine I like yourself like
30:13
you’re checking by slightly reducing the
30:15
deficit they arrived at this flat
30:30
function of two things actually
30:31
supported some might of the expenditure
30:34
function is flat therefore has an
30:35
intersection at one point and the
30:38
staples you can even talk about on first
30:41
place the first thing an application is
30:42
came about 1945 and Simon cuz
30:45
my favorite economist so the
30:48
establishment statistician he said well
30:50
gee you know if you look at over time
30:51
about 150 year period consumption
30:55
doesn’t go like this a national income
30:56
increases the expense you’re more or
31:00
less the same proportion then that’s
31:01
what come it always was therefore
31:03
expenditure function Rises secondly in
31:06
the long run
31:07
Katie said yeah you’re right over a long
31:09
period expenditure keeps rising to meet
31:12
income and therefore you don’t have a
31:14
summer hundred year depression it’s only
31:16
20 years the first big concession of
31:18
changes okay yeah maybe we can get out
31:21
of this after 20 years anyway how they
31:25
get to this thing like it’s this
31:26
expenditure function almost biggest
31:36
single collection of the fallacies okay
31:44
allegedly fine expenditures they might
31:46
have this fault
31:47
well expenditure consistent two kinds of
31:49
expenditure and on Cavalera consumption
32:02
consumer goods something about 97 the
32:04
best 95 a deeper purpose and investment
32:11
Kano theory invest investment free
32:13
floating animal spirits it’s free well
32:16
best moves between Wallace it’s fallen
32:18
Obama list cookie it’s one of our booms
32:21
and busts there’s nobody terminal
32:24
investment consumption however there are
32:26
exceptions fixed undetermined like so
32:32
intersecting
32:34
another one of their an obligatory
32:36
assumption yeah well we’re going back
32:37
beyond they don’t very something
32:39
expenditure function they don’t talk
32:40
about expand construction from a
32:41
consumption function but this is
32:43
essentially what they’re saying saying
32:45
the dispenser function which can be
32:46
broken down into two parts investment
32:50
which is shuttle Endeavour news though
32:52
is that a function that’s pretty well
32:53
and consumption determined passive
32:57
consumers are determined passive jerks
32:59
and and they have this kind of function
33:03
it’s stable consumption function if
33:05
supply and demand the famous phrase for
33:08
microeconomics the famous phrase we can
33:11
use consumption function let’s sort of
33:12
get you at least the test so assumption
33:18
functions this plantation stays Y the
33:20
finest they bring Z pushes back and by
33:24
the way see what happens then is
33:25
investment is free will
33:27
assumption passive determined and what
33:29
this is free long or government
33:31
government expansion very free well they
33:32
they got think of free will at the end
33:34
yank some government then stuffs in you
33:37
see supply to the efficient expenditure
33:41
confess today for government spending in
33:43
our re investments they say the same
33:44
thing as investment because free will
33:47
assume errs have passing the term
33:48
investors a free world of both home and
33:50
so on dependable dermis real own
33:53
rationalize and that steps in and
33:55
corrects these okay so let me get this
34:09
consumption functions the sequence all
34:14
the stability and almost shaken of the
34:17
consumption I mean Iran is a key in this
34:20
thing that has to
34:37
in there this is for people in other
35:18
words something like people who make I
35:29
say you can also say nigger microphone
35:31
and then come with maybe 15 million
35:32
dollars a year doesn’t spend them on
35:33
house option he spent like maybe 10
35:34
minutes suction forty minute he’s savior
35:36
and invests right so you have then much
35:40
lower consumption rate such a proportion
35:44
of the line people you find lower-income
35:51
people spend more than they take in so
35:53
somebody makes it sound on here he
35:54
spends six thousand you have this kind
35:57
of a function if you’re dealing with
35:59
income classes within the same period of
36:03
say a year therefore they said so yes
36:06
assumption part and some of the many
36:08
things wrong with this one is these are
36:12
not feeling the national income and
36:13
dealing with groups of people within the
36:16
same
36:17
great time in there Italian for the
36:19
thing as true that rich person might
36:22
spend might spend less consume less the
36:24
poor person doesn’t mean in a bit both
36:26
everybody’s Richard everybody will spend
36:29
consume less than before two totally
36:32
different things
36:32
this whole thing gives you one point
36:35
notice Greg doesn’t give me the whole
36:37
graph so that’s one big problem comes
36:40
down with the damn thing
36:41
secondly the Milton frequent flyer
36:44
actually little Friedman was probably
36:46
the biggest contribution economics the
36:48
so-called moment I mean cause permanent
36:50
consumption function instead what people
36:53
don’t don’t spend money they consider
36:57
how much to consume other income they
36:59
don’t only consider that current kind
37:00
they consider what their income was two
37:01
years ago a movie two years than that
37:04
suppose he had a best-selling author
37:06
example are big losses let’s say he
37:08
writes a top novel would be five years
37:10
he gets 1 million dollars one year is
37:13
not going to spend a little bit that
37:15
year ok 0 he’s going he’s got allocate
37:18
over five year period so that because
37:22
every loss as sweat here I’ll be
37:26
spending way ball is see me wiggle think
37:28
on the other hand you catch them here
37:29
when he’s making zero on spending final
37:31
down wrong here and here somewhere
37:33
is it distorted because if you take a
37:36
five-year period
37:38
they take these same income groups and
37:39
take their I come over a five year
37:40
period you had a very different
37:42
statistic so if we couldn’t Leslie did
37:44
that I find that lo and behold that can
37:48
you do that everything changes and so
37:51
this split did study thing shifts from
37:53
this to something like that so the
37:58
people who really have low incomes for
38:01
five years spend less if you really
38:06
before you don’t have too many involved
38:08
in the floorboards and you don’t get
38:11
permanent credit either I mean you can
38:12
get some credit from friends neighbors
38:15
or snorky
38:18
pretty soon watching his act I gotta
38:19
keep getting some incomes this whole
38:20
thing I mean stocks rankings and
38:22
so-called permanent income you get
38:24
assumption functions like this much more
38:25
intelligent and there’s no intersection
38:27
point detection point watches that can’t
38:30
get and wipe down on that basis alone
38:35
and plus the fabulously retained and
38:40
national income changes so that’s that
38:43
takes care of it can some of the
38:44
flattest what about the stability kind
38:46
of the instability why should be stable
38:48
they get back from this they take 30
38:53
years or so you take national income
38:57
this is another big this is like what
39:01
Kate is like I may look like a walking
39:02
mathematical fallacy this little policy
39:05
take this is over different years take
39:09
incomes next one coming consumption and
39:11
plot them okay and you get something
39:17
like around the same amount I wasn’t a
39:24
deviation to variation around the
39:26
correlations braces meaning if I got a
39:28
hang in your clock and actually come up
39:30
saving or invest
39:32
you get a much bigger marry conclusion
39:39
was that assumption is a very stable
39:41
function may come to pretty small
39:43
variance around the course of festive
39:45
another statement the great Bob pretty
39:48
well Paul Murphy a little because the
39:52
correlation is the variant variance
39:54
around with a much greater the trick
39:57
here of a gimmick involve is take
40:00
something a car later with 95 percent of
40:02
herself
40:02
you got a very high correlation it looks
40:06
very stinky wasn’t meeting me at hand
40:09
thing if the other hand Carling
40:10
something with five percent of something
40:11
getting a lot of variance looks like
40:13
it’s unsafe that in the cooker has the
40:15
key in the Keynesian function they
40:18
correlate something we might even some
40:19
of the stuff looks stable currently five
40:21
to seven times out of silence on stake
40:23
so my my little satiric things I have a
40:27
cousin state reducing this a reductio ad
40:32
absurdum is following once investment
40:36
cost consumption those are the only
40:38
things that which make up people to
40:48
income of Brooklyn the plus I think I’ve
40:53
every every other place except for these
40:57
called V for every money so any car like
41:03
the two things we correlate then
41:06
actually from a little income except
41:07
this is about 99% of that how you find
41:09
out of that I know in this be Carly I’m
41:14
actually come with everything except
41:16
Brooklyn you got a very do something
41:17
like that
41:18
very my college loans no variations and
41:21
discipline if I over thirty year forty
41:24
years whatever
41:25
Carly
41:29
all right so you can hear from include
41:34
the Brooklyn as the key the multiplier
41:46
that he finds by the multipliers xx this
41:50
is the famous multiple Keynesian
41:51
multiplier
41:52
the solution was you be increased
41:54
investment and government spending
41:55
remember the same as the bestest
41:56
honorary investments has increased
41:58
mentioning on my twenties fold this was
42:00
the original heavy days literally came
42:02
Xena
42:03
so why he we have much more talisman on
42:06
Brooklyn you have a hundredfold increase
42:08
and gives ten dollars everything better
42:10
than Brooklyn have a two trillion dollar
42:12
increasing education and this is a
42:16
multiplier of a punch line it’s just me
42:26
you’re stepping on my voice the Brooklyn
42:31
Bala called free will free will people
42:33
follow must be lying
42:34
everybody else is a schnook without
42:36
their that surpassing the terminal and
42:40
personally that you said conclusions of
42:41
all things is the work or multiply much
42:43
more powerful morning cause everybody
42:50
else except
43:10
give me money
43:33
and the Kings cannot read bumpers this
43:36
is a rotten one buck deer on occasion is
43:52
one big gigantic scam yeah the question
44:03
then becomes the government supposed to
44:04
pump in deficits during the recession
44:07
and taking out some pop-up Virginie
44:10
carburetor boom first place probably
44:14
raise your deficits well came tune them
44:15
sausage does make me different just have
44:17
a deficit it came pretty clear there
44:19
people are sort of sunny thank you for
44:21
the may see certain amount of difference
44:22
here you a few if you borrow money from
44:26
Bob the government Wallace might install
44:29
the public it’s true the government will
44:33
spend a hundred many of them it might be
44:35
offset by hundred million dollars the
44:36
blood spent must that made these other
44:38
people they could have their own of
44:40
course this would be the terminal
44:41
passive and certain worrying there your
44:45
least potentially reducing the public
44:47
spending like
44:48
spending more therefore the thing to do
44:50
with your so the moderate Keynesian or
44:51
sending Kenya’s to have a government
44:52
just simply have deficits my mom pretty
44:56
more money be sure to have new spending
44:59
raising the whole expenditure function
45:03
so that’s that sort of a modification
45:08
you know that sometimes these surpluses
45:10
then booms that there were half let’s
45:12
wash is that been Keynesian separated
45:15
into Canada’s several categories most
45:18
people think he is or liberals without
45:19
not necessarily truth my fam the people
45:22
who brought us the for administration
45:23
this administration analogy most of the
45:25
Reagan administration are Keynesian I
45:27
could certainly can’t say it’s a
45:31
different that’s up it’s a different
45:33
aspect of the same bunker so how does
45:34
this work well let’s say New Hampshire
45:38
into the less than full employment line
45:40
your Europe two hundred and you suppose
45:43
these three hundred so the deserter
45:44
autumn is you want a government deficit
45:46
one hundred billion dollars right
45:57
you

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