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8 May 2010

Derek Thomson

So, the talk is that quantitative easing only stoked stock market trading in the UK and didn’t make it down to the man on the street.  The increased access to credit, as demanded QE’s Keynesian view, never made it out of the banking sector.  So, growth never happened.  We weren’t able to spend our way out of a recession, but at least we (for the moment, at least) have been shielded from the inflationary effects of cheap money.

The current talk is, particularly if the EU also embark on a programme of QE to protect the Euro, that we are heading for a double-dip recession and, right now, we’re in the infamous dead cat bounce.

Anyway, the point of this post?  Just to point out this really rather excellent video (the Keynes’ General Theory as the Gideon Bible analogy is particularly sweet) that sums up the Keynesian view vs. the Hayek view.  For the record, I’m in the latter camp.  Current economic policy is in the former.

For my students specifically: watch out for the context of construction investment around the 4:40 mark…

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