nimble

Keynes claims that interest rates are cyclical, which I guess means that he believes that there is no beginning or end to an interest rate. His book is horribly muddled and poorly worded, but from what I can decifer, he believes interest rates are determined by entrepreneurs expectations of demand (investment), which has to do with the level of consumers' income and employment, and that the level of income and employment will determine how much people can save (savings) and where the savings supply and investment demand meet is where the interest rate will be. He also states that interest rates will always be less than or equal to the marginal efficiency of capital. Basically, interest rates will equal how much more output per extra unit of capital that is bought as investment for a business. Example, if I can make 6% more money by purchasing a new factory, than I would not borrow at a rate of interest any higher than 6%, or else I could have just gotten more money by putting my money into the money market rather than building a factory. *Please note: I am not defending Keynes, I am an Austrian Economist, so I obviously differ greatly with him, but I just wanted to discuss the ideas I read in his book.

You know what bugs me more, or maybe I guess it is just funny. Savage says, "God bless you" a ton of times to Peikoff, who is obviously an atheist. Did anyone else think that is funny?

It's okay, that isn't a stupid question. The rate of interest is very complex. It is determined by many factors such as how long you borrow/lend, how good your credit rating is (risk), and a few other factors. Banks always lend at a higher rate of interest than they borrow, and that does account for its profits, so you are right there. The main reason you get such a lower interest rate when you give your money to the bank rather than when you borrow from the bank is because most people are short term savers, but long term borrowers. Because you don't usually keep your money in the bank for long when saving, the bank gives you a low rate of interest because short term interest rates are always much lower than long term ones. And when banks make loans, they are usually long term loans, which need a higher interest rate. Yes, the bank won't give you more money simply because it happened to make more money off the investment than it intended. Whatever interest rate you agreed to in the beginning when you gave the bank your money, thats what you will get. So I think you are understanding it. This is where you make a little mistake, but its probably just because you haven't studied economics before. In macro-economics, the banks are counted on the savings side of the interest rate calculations, and the businesses that buy new capital equipment (machines, raw material, etc) are on the investment side, and where the supply of savings meets the demand of investment is what the interest rate will be. So when Keynes mentions savings in general, he includes banks and their interest rate discrepancies. But, I like that you took the time to figure all that out without knowing that much about econ, that is very impressive. I don't think there are laughable errors. I don't like arrogance, and I think anyone who is seeking the truth should not be laughed at.

You are right about his lack of ability to write. That book had to be the single hardest book to comprehend, even though it rarely dealt with difficult concepts. I found myself rereading several paragraphs just to understand what he was saying. He uses way to many commas.

The thing with Keynes is, he said a lot that makes sense and was a generally smart guy, but he wasn't much of a philosopher and a lot of his statements pushed toward a less free economy. His biggest problem was that he was too influenced by G. E. Moore.

Human actions are rational actions, at least on the margin. Most economists are historians in a sense, and sociologists. Now as far as neo-classical economists go, they tend to be more math oriented, while they try to predict future markets and such, however, it is my and the austrian belief that markets are not entirely unpredictable, but that they are not specifically predictable simply because humans have free will. I don't think any math equations will ever "figure out" what each individual will do to create a specific predicted action. I don't get the last part of your post, I wasn't being condescending...I was just under the assumption that most people in this forum are well read in economics, and are intelligent, so I thought this forum would be a good place to discuss the book. Anyway, if you would like to discuss theories of interest, then I would feel honored if you deign to reply.

I don't doubt that parts aren't "original," economics is the study of rational human action. Most of economic theory is just rehashed things applied to different areas. Economics is merely observation of human actions, so if two people witness the same behavior, which they should, then they should come to the same conclusion. But that isn't the point. The book does make many errors, specifically about the role of government in an economy. But the point I raised was has any one read it, and what did they think about it's critique of classical theory of interest.

I have been reading Keynes's General Theory, because I thought it was a must read, if I am ever to be taken serious in the academic world as an economist. Plus it helps if I ever need to debate the book, it can't hurt to read it. Anyway to my point, after reading it, I have to agree that alot of his criticisms of classical theory are very true, which makes me think he was a slightly better economist than I gave him credit for. However, I think he errs in assuming that government can solve alot of the problems he finds. Anyway, the most interesting thing I learned from the book was that classical theory of interest rates seems to be horribly wrong. That an increase in the rate of interest does not necessarily mean that people will save more. He claims that classical economists isolate too many factors. If the rate of interest increases it also means that the marginal rate of capital efficiency goes up (meaning capital is not as efficient, and that entreprenuers will be less likely to borrow and direct production). This means that employment will fall, which means average income will fall, and people will be less likely to save because they don't have the spare money. There is alot more, but if anyone would like to discuss the book, I'd like to talk it over with an intelligent person.

The idea of some sort of commodity being used as money is not uncommon, and historically has been the founding currency of every economy. Soon after the commodity gets too burdensome to use in everyday transactions, banks and markets create fiduciary media, which REPRESENTS the commodity with a slip of paper, which can be redeemed in that commodity. And eventually the government of that economy will eventually see the potential power it can gain by regulating that money, and so they procede to do that, and after a long series of regulations, it usually ends up where the government controls a central bank and they issue legal tender in fiat (not backed by anything) currency. So to answer your question, modern societies were built on commodity currencies, but might evolve into fiduciary media. And if we value freedom we should keep governments out of our money supply and let the market go where it wants. Also, your question seems to stem from most people's misconception that money has to be in big quantities. The beauty of money is that no matter what quantity you have of that money in the economy, it doesn't change the amount of REAL (actual) goods and services you have in that economy. For example, lets say a small town economy has 1000 units of currency, and they make 2000 equal value goods. Each good will sell for .5 units of currency, notice that the small amount of currency doesn' matter to the economy. Now lets say that same economy has 1000000 units of currency, all that happens is that the prices rise in relation to the goods, so that each good now costs 500 units of currency. Now that may seem pricey but really its not because money is no longer scarce.

So, when might this happen? Also, for the person who said that Objectivism holds knowledge to be a form of awareness rather than a form of belief--I liked that idea, although you left it very vague. Could you please point me toward an Objectivist definition of knowledge. I know Rand probably defined it in some essay somewhere. And, if she didn't that would just be weird. Maybe Peikoff gave a definition.

I apologize, it was a genuine error to use that. I didn't realize that Objectivists had a different definition of knowledge. When I think of knowledge, I think of it as defined as "justified, true belief." Again I apologize. *Please be aware that my area of expertise is economics, not epistemology. You will have to direct me to an Objectivist definition of knowledge sometime.

I didn't think about that. Thank you.

Huh?

Yes, TOC is much crappier than ARI. Mainly because their members aren't really Objectivists and they are broke. But Ayn Rand has mentioned or "uttered" those principles. I agree with you that those aren't the most basic principles underlying her ethics. And that the person who wrote this article didn't do all the research he should have. I bet he only read AS, but he did read it correctly when he read, "I swear--by my life and my love of it--that I will never live for the sake of another man, nor ask another man to live for mine." That is the equivalent of his P1 and P2.

It merely denotes premises so that you may break your essay up into sections that cover each part, and so that the reader will always know specifically what sentence or phrase you are refering to. I don't think it is necessary, but it is common in philosophical writings, and to get published it is often required that you adhere to popular trends to appeal to the readership. And if the basis of Objectivist ethics is never sacrifice, those two premises do logically follow, although they can be summed up more simply by your words of "never sacrifice." If it is immoral for me to ever sacrifice, and ethics is objective, then it is also immoral for you to sacrifice, which would lead us to the conclusion that neither you nor I can sacrifice, or his P1 and P2. But if you don't like it. I'm not that fond of the article, you could just erase the thread and I wouldn't complain a bit. I'd rather not argue semantics over an article that I don't even find to be that convincing. I just thought it was a bit more stimulating than the usual anti-Objectivist arguments.

Well, I agree with you there, but the essay wasn't an attempt to refute Rand's ethics. In fact, I think its a TOC creation. It was a critique of her defense of egoism, not that egoism was in itself wrong. I didn't say I agreed with the essay, I just found it interesting.

I for one would like to see this. There have been many threads where I have wanted to argue a particular belief of mine, but have been restricted by the rules of the forum from advocating any belief that Ayn Rand did not specify as a tenet of Objectivism. I don't think that I would be rude in any of my arguments, and maybe if the argument were allowed to continue, I might actually be persuaded otherwise, or might point out a flaw in someone else's belief. I think this could be very beneficial. Plus I believe that Objectivism needs to be much more intellectually debatable in academics to ever encounter a large subscription to the Objectivist beliefs. If it is true that the truth always prevails in an argument, there should never be a reason not to debate, if you believe you are right in your belief system.

Oh and as far as using your credit card for everything and paying it off every month, I find it easiest to charge everything, then pay my credit card bill online, with an online check. This makes it so you can easily see your monthly expenses and so that you only have to worry about one bill per month.

Well, books are nice, but only with a minimum wage job your money should be elsewhere. It isn't hard to manage money if you have reason and common sense. Your first goal should be to get a better paying job and establish credit. Work at a clothing store or some form of retail, those usually pay more than minimum wages (about $7/hour). Or apply at a local hardware store, Home Depot pays $10/hour for starting wages. Then you need to get a student credit card. You don't need any prior credit history to get one, and they are useful. Treat your new credit card as if it were your DEBIT card. Use it to purchase everything you can with it each month, and then pay the balance off in full. This takes discipline but within a year you will have over a 700 credit rating if you do this. From there you will be able to get a car on your own, and schooling shouldn't ever be a big problem. Federal loans are subsidized and are more than leinent on your credit situation, and they can be deferred until after you graduate. So paying for schooling shouldn't be too much of a problem. Lastly, MAKE A BUDGET. Even if you just roughly figure out your income and your expenses, and determine if you can make ends meet, that is a start. If you don't make enough to pay your bills, you need a better or second job. If you have enough to pay your bills and allow for some spending, you save the rest. If you accumulate enough money, then go and buy some books on investing, but until then take small steps and keep your goals in mind. Nimble

I read this and wondered exactly what others thought. It really isn't so much a critique of her ethics but rather a critique of her defense of those ethics. But anyway, it was one of the better essays I've ever read that critiqued Rand. Most are just ignorant people who make dumb attacks because they don't like her and it's fashionable to make Ayn Rand jokes and oversimplify her philosophy, then attack it. Critique

If we are speculating what god might be, I would say at least attack a version that is defensible, like mine. The version of a god that is portrayed in this thread is as arbitrary as the god I described in my post, so I should ask...are you familiar with the concept of arbitrary? My ideas of what a possible god might be are at least coherent. I just thought it was a bit dumb to start off with a concept of god with flawed attributes and definitions, then proceed to attack it. I am sorry that I decided to toss out an idea of a being that one might consider god, whose attributes are a little more defensible. I mean really, what is more pointless, me throwing around ideas in my head about god or a group of atheists asserting their atheism for the rest of the group? I hope you don't take this as a harsh response, but I felt as if you were being a bit rude considering that I did put a disclaimer that it was just an idea and not anything more.

I loved encylopedia brown as a kid.

First, I want to thank you for replying and addressing the issues. Second, I want to thank you for replying with a good argument. Third, I want to clear up, that I am not in entire agreement with the Rothbardian stance on banking, I just didn't like that you dismissed his essays without addressing a single point. That was my only reason for replying in the manner that I did. Point taken. I don't think he thinks profits are bad, he is a laissez faire economist, but any thing we think, he thinks, is just pure speculation, so I won't go any further on this point. I think profits are good, and that's all I can really say. Actually it is illegal to hoard money in the US, and to withhold large sums of money you don't intend to spend. I think the sum is 10,000 dollars. So technically, we don't freely choose to put our money in banks. And as for free banking, my guess is that less people would participate in fractional reserve banking because the notes would be slightly less valuable then the actual amount of their face value on the free market. But I could be wrong, there is no telling how free willed individuals would value those notes. Valid critique. The social usefulness remark, I think was intended to show that given a free choice, rational actors/society as a whole would not participate in things that are of no benefit to the society as a whole. First, Rothbard is an economist, not a philosopher, and I don't know a single economist who doesn't use social usefulness as a criterion for determining whether a commodity or service will do well in markets or not. If they serve no purpose, or lead to unfair redistributions in wealth, most markets would not be able to sustain such activities. Edit: Added a sentence to make a response make sense.

Show me some examples, that show his philosophy makes THIS PARTICULAR ARGUMENT false. You are evading the point. And it is getting annoying.

I disagree with lots of people, even you, but if you said "circles have no corners" I would have to agree with you. Rand even mentions that an argument should be addressed and not dismissed because of the arguer. Any one who would do otherwise, is just participating in evasion.