Hayek Versus Keynes: The Crucial Difference

By -
And in the same post noted just below, Kuehn puts his finger right on the crucial difference between Hayek and Keynes: For Keynes but not for Hayek, "those expectations of future profits are compared to an interest rate that is determined by liquidity preference and not the supply and demand of loanable funds."

Just so!

And they were both partially correct: the interest rate is influenced by both of these factors. So here is where we must get empirical: To the extent that the interest rate is determined by liquidity preference, to that extent Keynes was correct. To the extent the interest rate is determined by the supply and demand for loanable funds, Hayek was correct.

As Olivia Newton-John would have put it:

I've been patient, I've been good
Tried to keep my data off the table
It's gettin' hard this holdin' back
If you know what I mean

I'm sure you'll understand my point of view
We know the scene theoretically
You gotta know that you're bringin' out
The data miner in me

Let's get empirical, empirical
I wanna get empirical
Let's get into empirical
Let me hear your data talk, your data talk
Let me hear your data talk

Comments

  1. Bob Murphy11:05 PM

    That poor woman. She's giving it her all, even has a bunch of boy toys dancing up there with her, and that is just the WHITEST crowd ever. That's how I felt teaching principles classes.

    ReplyDelete
    Replies
    1. Daniel7:33 AM

      You feel like you have a bunch of boy toys dancing with you?

      Delete

Post a Comment

Popular posts from this blog

Libertarians, My Libertarians!

By -
Cruel to be kind means that I love you . Because, while I think you are mistaken, your hearts are in the right place -- yes, even you, Silas --  unlike some people . This Breitbart fellow (discussed in the link above), by all appearances, deliberately doctored a video of Shirley Sherrod to make her remarks appear virulently racist, when they had, in fact, the opposite import. I heard that at a recent Austrian conference, some folks were talking about "Callahan's conservative turn." While that description is not entirely inaccurate, I must say that a lot of these people who today call themselves conservative give me the heebie-jeebies.
Read more

"Pre-Galilean" Foolishness

By -
 I am currently reading The Master and His Emissary , which appears to be an excellent book. ("Appears" because I don't know the neuroscience literature well enough to say for sure, yet.) But then on page 186 I find: "Asking cognition, however, to give a perspective on the relationship between cognition and affect is like asking astronomer in the pre-Galilean geocentric world, whether, in his opinion, the sun moves round the earth of the earth around the sun. To ask a question alone would be enough to label one as mad." OK, this is garbage. First of all, it should be pre-Copernican, not pre-Galilean. But much worse is that people have seriously been considering heliocentrism for many centuries before Copernicus. Aristarchus had proposed a heliocentric model in the 4th-century BC. It had generally been considered wrong, but not "mad." (And wrong for scientific reasons: Why, for instance, did we not observe stellar parallax?) And when Copernicus propose...
Read more