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Help! This Keynsian guy says government CAN AND DOES create wealth..refutations?

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Sam29 posted on Thu, Jan 13 2011 5:39 PM

 

He is explaining how he thinks governments CAN CREATE WEALTH:
 
 
"the government, by way of the fed, is the largest controlling bank with regard to the currency
from there, it's basic lending theory. and the multiplier effect, and retention requirements, etc.
banks can create wealth by, without minting money, lending stores of money to people who will be able to use those within the economy
if that money is converted to hard corporate resources before the market can react to the injection, the government has created wealth.
101.
but that's bad austrianism.
george mason U hates that shit.
because they live in the land of the ideal, and not the real.
my entire reading of the book was basically finding basic, stupid shit like this that would be a guide to the average lay libertarian's economic misconceptions.
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It's just common sense.

Common sense would suggest that you and I could only guess. We can only know after the fact by observing his actions.

A and B go to court because A stole a loaf of bread from B. The court awards B $10,000. A refuses to pay. Now what?

Nothing, anything beyond the agreed upon price between the two parties is irrelevent to our discussion.

Did you miss the part about not being a one-off payment?  (If you think $3.00 is fair, buy the milk; if you don't, don't. But if you only have $1.00 on you, and the milk-seller agrees to give you think milk now and take remaining $2.00 next week, and next week you  refuse to pay up, then what?)

It dosent matter whether its a one time payment or installments. A price was agreed on and that price reflects the two parties subjective values. Anything beyond that  is irrelevent.

The behaviours of imaginary people we're making up?

I bought a sandwich today.  Prior to me buying the sandwitch you have no information about my value scales. After I purchased the sandwich you do. I value the sandwich more than the $7 it cost me. The owners of the sandwich shop valued the $7 more than the sandwich. Our subjective values were translated into an objective price.

To clarify something that may be confusing the issue. Can government create wealth is the question. I am approaching this question from a strickly economic perspective. Which means I am limiting my consideration to only economic goods.  Economic goods have exchange values which are prices. By comparing the prices of what was lost versus what was gained is the only way, in my opinion to answer the original question.

 

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