Eichengreen-O’Rourke update

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Barry and I have updated our graphs here.

To recall: the red lines show what happen when governments respond to a worldwide economic crisis with monetary and fiscal stimulus. The blue lines show what happens when governments stick to monetary and fiscal orthodoxy. All very purgative and morally satisying no doubt, except that it led directly to the election of Adolf Hitler (something that I have been meaning to blog about for a while, but now I have to prepare for class..)

14 Responses to “Eichengreen-O’Rourke update”

  1. Brian O' Hanlon Says:

    @ Kevin,

    I posted this in the wrong thread, you can delete the other comment if you like.

    You may not have heard the story of Canaris, the master spy, before. I knew they were plotting to over throw the evil dictator. I just didn’t know, that plans had been afoot as early as the Czechoslovia invasion. Obviously, many people knew what they were dealing with, even before Poland was invaded. But it was the problem of Hitler’s mass popularity, after Nevil Chamberlain, had that meeting about Sudetenland, that caused Canaris & co. to back down from that earliest putsche.

    http://www.youtube.com/watch?v=XXgyc_hjC6Y&

  2. Ribbit Says:

    “The blue lines show what happens when governments stick to monetary and fiscal orthodoxy.”

    No. The blue lines show what happened when governments stuck to monetary and fiscal orthodoxy, in the early 30s.

    To insinuate a present perfect tense is to assume that the factors and conditions governing the world economy in 1930 were identical to those of today. This is a bold call to make, even for a Keyensian zealot.

  3. Ribbit Says:

    sorry, that should read “present tense”

  4. Hugh Sheehy Says:

    I wonder if I could disagree with the original poster without being accused of favouring the Nazis……..

    Wasn’t the original post set up to discourage disagreement? If not, why the invocation of the Nazis?

  5. Aidan McGrath Says:

    @Kevin
    I would have thought there were other factors far more important in the election of Adolf Hitler than economic othodoxy following the Wall Street crash. For example the perception that excessive reparations were imposed on Germany following the treaty of Versailles ..
    Is this a case of that post ho.. logical fallacy, which is often quoted here?

  6. Aidan McGrath Says:

    “post hoc ..” not “post ho” apologies to ho

  7. Calan Says:

    -The theory of aggregated production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire.-J.M. Keynes foreword to the German edition of the General Theory.
    http://tmh.floonet.net/articles/foregt.html
    Whether or not ‘monetary and fiscal orthodoxy….led directly to the election of Adolph Hitler’, Hitler did implement what can be regarded as a ‘Keynesian’ economic policy.

  8. yoganmahew Says:

    @Calan
    “Whether or not ‘monetary and fiscal orthodoxy….led directly to the election of Adolph Hitler’, Hitler did implement what can be regarded as a ‘Keynesian’ economic policy.”
    Yeah, it worked out really well for them, didn’t it?
    Autarky, lebensraum, public works projects, war. A theoretically perfect economic sequence – close the economy to prevent leakage, develop new markets, stimulate construction, engage in total production management.

  9. Mokabaybob Says:

    Rothbard is scathing on Keynes. He thought he was an ignoramus on economics; hated his snobby Bloomsbury Socialist set and had a ball lecturing on Keynes love of totalitarianism. The point is that Keynes was a Fascist and helped the United States and Britain (to a lesser extent) adopt a Fascist economic paradigm while cleverly couching the subterfuge in arcane pseudo-scientific terminology. Austrians love to hate Marx and Keynes. They are the “betes noir”.

    In a sense everyone is waiting with baited breath for the collapse of the Keynesian age. A little like waiting for the second tower to collapse on 9/11.

  10. EWI Says:

    Speaking of economists’ graphs, I see that Edward Tufte has just been appointed by Obama to help convey his message on the stimulus

    The point is that Keynes was a Fascist and helped the United States and Britain (to a lesser extent) adopt a Fascist economic paradigm while cleverly couching the subterfuge in arcane pseudo-scientific terminology. Austrians love to hate Marx and Keynes. They are the “betes noir”.

    In a sense everyone is waiting with baited breath for the collapse of the Keynesian age. A little like waiting for the second tower to collapse on 9/11.

    O-kay… A little short on the meds today, are we? Not even a re-read of our Rand helping to lift the pall?

  11. MarcusOC Says:

    @ EWI
    Nice to hear about Tufte, have always enjoyed his work on communication.

    @ Mokabaybob
    Good luck with the anarchism.

  12. Garry Says:

    Interesting article and graphs…

    Its great to see the conclusions….. even if some of the comments here are daft…. it will be a very useful record if the article was updated annually with these conclusions, particularly if a user could see the previous versions of the article, and not just the latest amended article…

    Because I suspect (on nothing more than gut instinct) it would serve as a fantastic resource in a few decades time for historical economists to see how and why economics failed us in the 21′st Century’s Great Depression.

    Between blog posts and more considered articles there will be a huge amount of material in the public domain to draw from…. Or if ye are calling it right well that works too, it can show how economics has advanced :)

  13. Pat Donnelly Says:

    Well done! Great to see that your work, the two of you, is so appreciated. You must be deservedly pleased. Thanks for the update too!

    Tip: have someone you like, take your photo preferably inside, so you won’t need to squint and scowl?

    The stimuli will fail, due to sovereign debt concerns and the collapse will recommence. Except for China and India. We hope to be on their coat-tails. Brisbane’s dams are now 98% full. Up 20% in a week.

    Ribbit & Garry
    Excellent points!

  14. Mark Says:

    All i can say is

    “cum hoc ergo propter hoc”

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