I am taking a intro to economics course this semester and I am being taught Keynesian unfortunately. . Just wondering what is the Austrian take on the multiplier effect? It just doesn't sound right to me.
Enter the term into the search box on the Mises website. Also, look up Hazlitt's and Hutt's works on Keynesianism.
-Jon
Freedom of markets is positively correlated with the degree of evolution in any society...
It's a load of nonsense that ignores the truth that before consumption there must be production.
"You don't need a weatherman to know which way the wind blows"
Bob Dylan
Im in class right now learning this crap and then reading on why its wrong! HA!
See De Soto's book Money, Bank Credit, and Economic Cycles p. 558-571 (in the pdf it starts on 588). The entire chapter containing the above pages provides an excellent starting point for further study of Keynesian and Monetarist shortcomings and fallacies. Further reading suggestions are provided in the text and footnotes.
Thank you all for your suggestions
What multiplier effect are we talking about?If you're talking about the money multiplier, then yes, this is actually a valid concept. Money multiplier = 1 / reserve requirement.
The other kind (the one wikipedia calls spending multiplier) is nonsense
I'd suggest learning it first, and by that I mean studying and understanding it. Then see why it's wrong.
Well you have the spending and monetary multiplier.
Spending: Is merely the velocity of money in circulation. It's demand.
Monetary: This is fractional lending at work.