Fear the Boom and Bust – EconStories – letras

We’ve been going back and forth for a century[Keynes] I want to steer markets[Hayek] I want them set freeThere’s a boom and bust cycle and good reason to fear it[Hayek] Blame low interest rates[Keynes] No… it’s the animal spirits[Keynes Sings:]John Maynard Keynes, wrote the book on modern macroThe man you need when the economy’s off track, [whoa]Depression, recession now your question’s in sessionHave a seat and I’ll school you in one simple lessonBoom, 1929 the big crashWe didn’t bounce back-economy’s in the trashPersistent unemployment, the result of sticky wagesWaiting for recovery? Seriously? That’s outrageous!I had a real plan any fool can understandThe advice, real simple-boost aggregate demand!C, I, G, all together gets to YMake sure the total’s growing, watch the economy flyWe’ve been going back and forth for a century[Keynes] I want to steer markets[Hayek] I want them set freeThere’s a boom and bust cycle and good reason to fear it[Hayek] Blame low interest rates[Keynes] No… it’s the animal spiritsYou see it’s all about spending, hear the register cha-chingCircular flow, the dough is everythingSo if that flow is getting low, doesn’t matter the reasonWe need more government spending, now it’s stimulus seasonSo forget about saving, get it straight out of your headLike I said, in the long run-we’re all deadSavings is destruction, that’s the paradox of thriftDon’t keep money in your pocket, or that growth will never liftbecauseBusiness is driven by the animal spiritsThe bull and the bear, and there’s reason to fear itsEffects on capital investment, income and growthThat’s why the state should fill the gap with stimulus bothThe monetary and the fiscal, they’re equally correctPublic works, digging ditches, war has the same effectEven a broken window helps the glass man have some wealthThe multiplier driving higher the economy’s healthAnd if the Central Bank’s interest rate policy tanksA liquidity trap, that new money’s stuck in the banks!Deficits could be the cure, you been looking forLet the spending soar, now that you know the scoreMy General Theory’s made quite an impression[a revolution] I transformed the econ professionYou know me, modesty, still I’m taking a bowSay it loud, say it proud, we’re all Keynesians nowWe’ve been goin’ back n forth for a century[Keynes] I want to steer markets[Hayek] I want them set freeThere’s a boom and bust cycle and good reason to fear it[Keynes] I made my case, Freddie HListen up, Can you hear it?Hayek singsI’ll begin in broad strokes, just like my friend KeynesHis theory conceals the mechanics of changeThat simple equation, too much aggregationIgnores human action and motivationAnd yet it continues as a justificationFor bailouts and payoffs by pols with machinationsYou provide them with cover to sell us a free lunchThen all that we’re left with is debt, and a bunchIf you’re living high on that cheap credit hogDon’t look for cure from the hair of the dogReal savings come first if you want to investThe market coordinates time with interestYour focus on spending is pushing on threadIn the long run, my friend, it’s your theory that’s deadSo sorry there, buddy, if that sounds like invectivePrepared to get schooled in my Austrian perspectiveWe’ve been going back and forth for a century[Keynes] I want to steer markets[Hayek] I want them set freeThere’s a boom and bust cycle and good reason to fear it[Hayek] Blame low interest rates[Keynes] No… it’s the animal spiritsThe place you should study isn’t the bustIt’s the boom that should make you feel leery, that’s the thrustOf my theory, the capital structure is keyMalinvestments wreck the economyThe boom gets started with an expansion of creditThe Fed sets rates low, are you starting to get it?That new money is confused for real loanable fundsBut it’s just inflation that’s driving the onesWho invest in new projects like housing constructionThe boom plants the seeds for its future destructionThe savings aren’t real, consumption’s up tooAnd the grasping for resources reveals there’s too fewSo the boom turns to bust as the interest rates riseWith the costs of production, price signals were liesThe boom was a binge that’s a matter of factNow its devalued capital that makes up the slackWhether it’s the late twenties or two thousand and fiveBooming bad investments, seems like they’d thriveYou must save to invest, don’t use the printing pressOr a bust will surely follow, an economy depressedYour so-called « stimulus » will make things even worseIt’s just more of the same, more incentives perversedAnd that credit crunch ain’t a liquidity trapJust a broke banking system, I’m done, that’s a wrapWe’ve been goin’ back n forth for a century[Keynes] I want to steer markets[Hayek] I want them set freeThere’s a boom and bust cycle and good reason to fear it[Hayek] Blame low interest rates[Keynes] No it’s the animal spirits