Keynes v Hayek, again! [updated]

If anyone's counting then this is the third time I've posted this. 

It's a rap song.  That I've posted three times.  That's how good it is.

And I do have an excuse for posting it again.  The Daily Kos blog has posted a superb “Cliff Notes” analysis of just what’s going on in the rap (and yes, I did just use the words “Daily Kos” and “superb” in the same sentence). [Hat tip Berend]

As they say,

    The rap is dense with economics and in-jokes. It almost requires an under-grad degree to get everything.
    “If you don’t know a liquidity trap from a malinvestment, if you think the Austrian School is where you learn to shred moguls, [their] Cliff Note’s version might help.”

Check it out, yoh! 

Oh and by the way, there’s a poll on the site to see who wins the rap.  Currently, Hayek is miles ahead.  :-)

NB: Check out Jeffrey Tucker’s analysis too at the Mises Institute’s site, if you haven’t already.  He fills in the few gaps that the Daily Kos analysis leaves.

UPDATE:  Matthew Lynn at Bloomberg savages Keynes for laying waste to Britain’s economy.

    “The U.K. has produced notable economists over the years, but John Maynard Keynes, the guru of government intervention, was one of truly global significance.
    So it may be fitting that the U.K. will also become the deathbed of Keynesian economics.
    “Britain has been following the mainstream prescriptions of his followers more than any developed nation. It has cut interest rates, pumped up government spending, printed money like crazy, and nationalized almost half the banking industry. . .
    “The U.K. has been in Keynes overdrive for the past 18 months. The budget deficit is already more than 12 percent of gross domestic product, on a par with Greece. And while the Greeks are cutting spending, the British deficit is widening. Figures for January showed another fiscal blowout. At the same time, interest rates have been slashed to 0.5 percent. And the pound has slumped in value, which is supposed to boost demand for British goods, and help close the trade gap”

The result?

“The results have been miserable. . .  Stimulating the economy isn’t working. In fact, it’s only making it worse.”

Or as Hayek didn’t say (at least not until he rapped):

You provide them with cover to sell us a free lunch
Then all that we’re left with is debt, and a bunch
If you’re living high on that cheap credit hog
Don’t look for cure from the hair of the dog

Real savings come first if you want to invest
The market coordinates time with interest . . .

Your focus on spending is pushing on thread
In the long run, my friend, it’s your theory that’s dead . .
Your so-called “stimulus” will make things worse
It’s just more of the same, more incentives perverse

More evidence here in what in any honest world would be Keynes’s epitaph: Deathbed of Keynesian Economics Will Be in U.K.