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Did Sraffa 'annihilate' Hayek as some Keynesians say?

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Gast posted on Mon, Sep 10 2012 3:12 AM

I've heard Keynesians claim Sraffa 'destroyed' Hayek's work, do you guys agree?

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Excellent post Guille

Agree.

Guille, I am interested in your take on my earlier post, in particular the last part.

http://mises.org/community/forums/p/31252/489380.aspx#489380

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It's easy to refute an argument if you first misrepresent it. William Keizer

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Read it. Lord Keynes' comment is HOLLOW.

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Oh! here is my (late) rejoinder. You have answers, you have Kontradictions, you have one of the most older fallacies of all times in history of economics, and much more. Again thanks for the comments guys :D

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Guillermo,

Wow, your blog posts are really top-notch!

"Quis custodiet ipsos custodes, qui custodes custodient? Was that right for 'Who watches the watcher who watches the watchmen?' ? Probably not. Still...your move, my lord." Mr Vimes in THUD!
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Keep 'em coming, Guille. Top notch.

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It's easy to refute an argument if you first misrepresent it. William Keizer

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Smiling Dave:
Of course, to explain everything based on a low interest rate, one has to have a definition of "low". And their definition was "lower than it should be". Which of course requires a new definition of what an interest rate "should be".  The easy way, that avoids all attacks from Saffra and Lord Keynes and everyone else, is to say "whatever it would have been had the central bank not printed all that money".

So that we have no need of finding out what the "real" rate is. Suffice to say that it is certainly higher than the one that comes into being after mountains of money printing, and that's enough to explain the ABCT.

They are saying that depending on the givens of a particular case, Jaguar or jalopy, you get a different number, and thus there is no one unique number at all. And the rebuttal is that there is a  unique number for a given particular situation. [Even though it may be impossible to actually calculate, it's there]. And that number is, given a specific banker and a specific given person on a specific day and all the specific details of the specific loan, the rate that would have been set by that specific banker if there was no central bank printing money.

Indeed. That's always been my understanding: that the "natural rate of interest" is merely whatever the rate (or rates - makes no difference) would be absent changes in the money supply. The rate will tend to be lower given a monetary expansion than it would have been absent that monetary expansion, thus changing the way in which resources are allocated relative how they would have been allocated absent the monetary expansion. And so of course the natural rate of interest cannot be identified in cases of changes in the money supply, since it's a counterfactual - i.e. it didn't exist by definition. And in cases where there is no change in the money supply, the natural rate of interest is the actual rate of interest.

apiarius delendus est, ursus esuriens continendus est
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