To understand what the heck is going on in the financial world you must understand the two main schools of thought in economics.
Keynesian vs Friedman
Keynesian economics.
Keynesian economics were implemented late in the Great Depression, pulled us out of the Great Depression, created a boom that lasted thru World War II, and led us to the economic expansion that followed thru pretty much 1973.
Basically Keynesians believe capitalism is good but must have rules to prevent abuse. Keynesians believe that the laws of supply and demand alone are not enough to run such a complex system.
Keynesian argue that the private sector’s decisions sometimes lead to inefficient macroeconomic outcomes. ( GREED ) which require active rules, otherwise know as regulation policies, by the government and the central bank . Keynesian noted that the central bank should lean towards private sector, but again, with rules and regulations in place to prevent abuses.
Opposition to Keynesian economics began in the late 60s and the main advocate against Keynesian was Milton Friedman, or as I refer to him, the devil.
Friedman economics.
Milton Friedman (July 31, 1912 – November 16, 2006) was an American economics teacher in Chicago for three decades. He won a nobel prize in economics and exerted his consumption agenda with great influence over the profession of economics. He is the father of consumption economics along with the “free market” theory.The Economist described him as “the most influential economist of the second half of the 20th century…possibly of all of it.”
Friedman economics took over in the mid 70s.
Now you may ask yourself isn’t that about the time wages became stagnant and the middle class started its steady decline? Why yes it is! You can check the figures thru the US Census Bureau. Since the introduction of Friedman economics we have seen a steady decline of the middle class . In 2008 we all witnessed the abuses Keynesian economics warned us against.
Friedman introduced the “voucher” system for education along with the theory of privatization and deregulation in his book Capitalism and Freedom.
His monetary theory was the major influence on how the federal reserve handled the global financial crisis in 2008.
hmmm
SouthernConversations 