(Probably or not) The Greatest Debate of All Time.............part 1

Hello Dear Readers,


This week in Social, our substitute teacher, who is a brilliant man discussed to us (probably) the greatest debate of all time: Economics and economic intervention. No other topic comes close because of the  magnitude that economics play on our daily lives. I think it is fair to say economics is our lives. I mean since we were kids we were raised and programmed that to have value in life, one's pocket must be full of MONEY. Nowadays everything revolves around money, derivatives, debt and ultimately ECONOMICS. Our social studies teacher brought up a very interesting fact: that governments will not rescind Daylight Savings Time, which is proven to cause health problems because farmers and economies will suffer if they did.

There were two influential figures in this undying battle of economics: J.M. Keynes and F.A. Hayek.
I'll just sum up what each economists stood for because it is far too complex to get in the details, after I'll write a my thoughts for that particular side.

Keynesian Economics

John Maynard Keynes suggested the idea that government should intervene in economy to lessen the extremity of the boom and bust cycles. Governments should do this by regulating private institutions to keep them "honest" and to keep any anomalies from happening. Also, Governments would provide jobs (through contracts to private companies) in times of busts, recessions, depression or whatever you want to call it.

My problem with his theory, is that Government interference only tampers the natural balance of economics. The markets will restore itself like it has always done before. If we mess with it by setting up regulations then we are prolonging the markets' recovery. A key example of this are the bailout/stimulus packages Government gave to banks and other industries. Yes! Let's give more money to the people who were crazy enough to give loans with high interest rates to people who can't pay them. That won't hurt anybody. And what about those "stimulus packages" not only did they fail to serve their purpose they also have the added bonus of Inflation.

It doesn't take a genius to understand, that if you keep printing out billions of dollars worth of paper, the value of that currency will decrease. Soon (to use a cliché), people will need wheelbarrows full of "money" to buy a loaf of bread. Is that what Governments are supposed to do? Because I thought Governments (some of the democratic ones, I suppose) were in place to protect the welfare and security of their citizens.

 (Hayek on Keynesian Economics, there's a script below the video views)

Part 2 is up......