[Peace-discuss] interesting trends
E. Wayne Johnson
ewj at pigs.ag
Sat Oct 4 11:13:34 CDT 2008
Google Trends makes available relative numbers of searches for topics
via its search engine.
Below is a graphical comparison of the searching done on the topics of
Austrian Economics and Keynesian Economics.
Examination of the pattern of searches in 2004 to 2006 for Keynesian
Economics shows the peaks in searching done by
students of economics for their course work and paper-writing. This
periodicity is still evident in 2007 and 2008.
Note that the number of searches for Austrian Economics remarkably
increased beginning in fall 2007 and recently
demonstrated a very remarkable peak in interest. Austrian Economic
theory did predict and continues to predict
the recession/depression that has been caused by faulty Monetary
Policy. More information below.
From Wikipaedia ---
_
Keynesianism:_
Keynes argued that the solution to depression was to stimulate the
economy ("inducement to invest") through some combination of two
approaches :
* a reduction in interest rates.
* Government investment in infrastructure - the injection of income
results in more spending in the general economy, which in turn
stimulates more production and investment involving still more
income and spending and so forth. The initial stimulation starts a
cascade of events, whose total increase in economic activity is a
multiple of the original investment.
_
Austrian Economics:_
The Austrian business cycle theory is the Austrian School's explanation
of the phenomenon of business cycles (or "credit cycles"). Austrian
economists assert that inherently damaging and ineffective central bank
policies are the predominant cause of most business cycles, as they tend
to "artificially" set interest rates too low for too long, resulting in
excessive credit creation, speculative "bubbles" and "artificially" low
savings.
According to the theory, the business cycle unfolds in the following
way. Low interest rates tend to stimulate borrowing from the banking
system. This expansion of credit causes an expansion of the supply of
money, through the money creation process in a fractional reserve
banking system. This in turn leads to an unsustainable "monetary boom"
during which the "artificially stimulated" borrowing seeks out
diminishing investment opportunities. This boom results in widespread
malinvestments, causing capital resources to be misallocated into areas
which would not attract investment if the money supply remained stable.
A correction or "credit crunch" -- commonly called a "recession" or
"bust" -- occurs when credit creation cannot be sustained. Then the
money supply suddenly and sharply contracts when markets finally
"clear", causing resources to be reallocated back towards more efficient
uses.
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