Keynesian inflation – what other kinds are there?

The chart was put together by Ken Rogoff at Harvard to show the effect of the Federal Reserve in the United States on inflation. Yet the same picture could be shown in every democratic country since 1775 (although in Australia you’d have to start in 1788).

It is not central banks that have been the problem but Keynesian economics. It is why inflation begins to take hold during World War II and then takes off in the middle of the 1960s when the first crop of macro grads from the 1940s finally reached positions of power and authority and could put their theories into practice. Nothing much at all happened for fifty years after the Fed was introduced, but then came deficit finance and the world has never been the same.

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99 Responses to Keynesian inflation – what other kinds are there?

  1. Sinclair Davidson

    You’ll see a much nicer pattern if you drew a line through 1937.

  2. Steve Kates

    Do you mean start with the publication of The General Theory? I actually don’t know that it makes sense to compare 1837 and 1937 since the goods and services produced were so completely different, but it’s not my chart and I am trying to make a different point from Rogoff. Mine is more like Buchanan’s point which is that there should be a balanced budget amendment at all times other than during a declared war which requires the full mobilisation of an economy’s resources.

  3. Alice

    Keynesian inflation is only demand pull infaltion and doesnt address cost push inflatiuon which is inflation which comes via aggregate supply and can be due to all sorts of biblical style disasters eg floods, famine, oil price shocks courtesy of OPEC.
    Im really surprised you have to ask this question. Has no-one heard of the staglfation that wrecked economies in the 70s? (actually a comination of demand pull due to the stupid US entering another stupid war when it was close to full employment – ie Vietnam causing demand pull and then Opec decided on top of that to get pay back by increasing oil prices – ie cost push)
    A pretty ugly set of inflationary circumstances all round.
    So why are we asking what other kinds of inflation are there???? Dont we know the difference here?

  4. Poor Old Rafe

    The Great Society programs of the 1960s probably did as much damage as the Vietnam War and the oil shock. Much more actually because they are still with us and the grandchildren all vote for Obama. Like Gough’s grandchildren, the third generation unemployed.

  5. MattR

    Im really surprised you have to ask this question. Has no-one heard of the staglfation that wrecked economies in the 70s?

    Stagflation is the ultimate result of overbearing government and keynesian economics.

    Inflation is the result of one thing and one thing only, an artificial increase in the money supply: more money chasing the same amount of goods and services. “Cost push” and “demand pull” inflation are nonsense terms. Inflation is devaluation of money within a system, nothing else.

    You talk about wars and natural disasters like they never happened prior to the 70s, lol.

    Keynesian economics is pure voodoo.

  6. Token

    Keynesian economics is pure voodoo.

    It is the sweetest lie. Vote for me and you have a chance to earn enough money to be idle for the rest of your life*.

    * (only if you die before the piles of other people’s & borrowed money runs out)

  7. I saw it posited somewhere that the sharp rise coincides with the break from the gold standard. What will this chart look like in years to come putting a line through it signifying the beginning of quantitative easing?

  8. Jim Rose

    The hyperinflations in the 1920s were not Keynesian, but were fiscally motivated.

    The Bank of England was established to fund war debt as were many other central banks.

    An inflation that is unanticipated reduces the real value of that debt. Any government is tempted to rid itself of a burdensome national debt by inflating it away in an implicit partial default?

    See http://www.thefreelibrary.com/A+fiscal+theory+of+government%27s+role+in+money.-a054157640 for a nice history by white and selgin

  9. Alfonso

    Keynes is never a lay down misere disaster for the comrades, no matter the evidence there are ‘circumstances’ that prevent full expression of his genius…..
    ‘Dastardly circumstance’…..

    Like there has been no ‘proper Communism’ ….due to unforeseen circumstances.

  10. Dr Faustus

    Whether you blame, or worship Keynes as a policy tool, the equation is fairly straightforward. When you systematically fund welfare spending with public debt, you will get an uncontrollable inflationary outcome.

    All spend, no productivity: y’ canna defy the laws of nature, cap’n.

  11. Alice

    MattR

    says

    “Stagflation is the ultimate result of overbearing government and keynesian economics. ”

    Utter bullshit. DSo you have any idea at all of what caused the 1970s stagflation in many (not just one) industrial nation.
    I cant stand pipsqueak comments from pipsqueaks who probably were not even alive in the early 1970s.

    Hopeless Matt.

  12. PSC

    We could just as well say: non-Keynesian deflation, what other kinds are there?

    I look at that graph and I see crippling deflation after crippling deflation prior to WWII.

    Are you seriously suggesting that depression of 1873 was a more comfortable existence than anything after WWII?

  13. Will

    MattR

    says

    “Stagflation is the ultimate result of overbearing government and keynesian economics. ”

    Utter bullshit. DSo you have any idea at all of what caused the 1970s stagflation in many (not just one) industrial nation.

    The 1970′s stagflation was caused by market rigidity caused by overbearing governments, fueled by Keynesian pump priming.

    Alice, the sherry seems to do something to your brain. Give it up.

  14. Pyrmonter

    So Germany in ’23? Hungary in ’46? Inflation is largely a monetary phenomenon, and one fairly well understood before, since, and I’ll venture, by Keynes. It can co-exist with large government transfers – or with a much smaller government that mis-manages money.

    While he seems to have been a conceited so and so, even Keynes seems to have been alert to the potential risks of inflation (even if many of the “Keynesians” sometimes weren’t and aren’t)

    “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.”

    “…By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of contract….governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century.”
    – John Maynard Keynes – The Economic Consequences of the Peace, 1919. pp. 235-248.

  15. harrys on the boat

    Sherry? She’s on the crack pipe.

  16. Alice

    Will

    Its clear you are another one who doesnt know WTF went on in the early seventies and any crap you know, you probably learnt from some political rag

    (ie “How I can spout and argue about what went on with 1970s stagflation without actually knowing jack shit about the period it happened and what led to it – but hey as long as you can drop the words “keynesian failure” in somewhere you can at least look half intelligent here..or somewhere???

    Childish bullshit.

    Trust me – it isnt true- that you look half intelligent because anyone half intelligent knows the stagflation of the 1970s was more complex than a lefty righty argument.

    Do your own research and grow up.

  17. Tal

    Stay on your toes folks, Alice is in the house

  18. wreckage

    When were minimum wages introduced? Because they pretty much mean inflation is necessary.

  19. Andrew Reynolds

    Alice,
    Instead of making comments on others’ opinions how about you give us your take on what happened in the 70s – other than the wonderful fashions, of course.

  20. Tal

    Andrew,flares suited everyone,I hope they come back

  21. Alice

    OK Andy

    I’m waiting for you to finish your sentence above, grammatically and correctly in english?

    Instead of…etc why dont I…etc?

  22. Will

    Do your own research and grow up.

    Ah the 70′s, a time of protectionism, tarrifs and a centralised wage fixing system in Australia. In Europe little free trade or movement of labour. Frozen and immature capital markets. It was a time I remember well, it’s when I did grow up.

  23. Rabz

    Like there has been no ‘proper Communism’ … due to unforeseen circumstances.

    No less than authoritah than marx ‘imself claimed that communism could never work unless it was “implemented globally”.

    There’s your “unforeseen circumstance” right there.

  24. Catfeesh?

    look at that graph and I see crippling deflation after crippling deflation prior to WWII.

    Where do you see that on the graph, exactly?

  25. Alice

    Will says

    “The 1970′s stagflation was caused by market rigidity caused by overbearing governments, fueled by Keynesian pump priming.”

    Oh fuck me!! Ignoring Keynesian warnings about excessice government sopending at full employment your beloved LBJ (remember him? “All the way with LBJ” – decides to lauch a full scale war in Vietnam at full employment in the US!! Rule no one – this is inflationary.

    No to be outdone Willy, Nixon escalated military spending in the late 1960s as if it wasnt bad enough already (government soending in the US).

    No 3. You forgot completely about OPEC and the oil price rise. (oops that was something rather big to gloss over wasnt it?)

    Yes Willy, the 70s stagflation is jigsaw and you cant put the pieces together and it had nothing whatsover to do with rigidity caused by overbearing governments. Unless you want to talk about unions?.

    Small fry in the big picture Willy. Unions have been decimated since and survived a long time before that with no problems. Are we any better off now because unions have been smashed?

    Tell me how? Inequality through the roof. The richest better off (much much better off)? The majority doing it tougher (much much). Economies in the doldrums across the globe?

    Yeah great idea what happened to unions (mind you I dont mind jailing a few union bosses). Average families worse off and on casual contracts..
    Yeah – wrecking unions is going just dandy eh?

    But still I digress. Union rigidities were not the cause of the 1970s stagflation. They just reacted to the inflation (that was already there and ensured their members got sufficient in wage increases to cover higher prices).

    The higher prices??? – look to LBJ, NIxon and OPEC.

  26. Alice

    You dont remember that time well enough Will.

    You only pick and choose what you want to remember.

  27. Jim Rose

    Barsky and Kilian (2002) argue that worldwide shifts in monetary policy regimes played a major role in both the major oil price increases and stagflation in many economies in the 1970s.

  28. “But still I digress. Union rigidities were not the cause of the 1970s stagflation. They just reacted to the inflation (that was already there and ensured their members got sufficient in wage increases to cover higher prices).”

    What, so no feedback into the inflationary spiral? Alice, what is stagflation if not inflation without productivity improvements?

  29. Alice

    Bullshit bullshit bullshit

    “It is not central banks that have been the problem but Keynesian economics. It is why inflation begins to take hold during World War II and then takes off in the middle of the 1960s when…..

    Fucking LBJ went into the Vientnam war when the US was at full employment in the mid 60s – thats what!!!!!!! Who is this guy who wrote this crap?

    Its been nearly half a century since this happened and the only significant thing about the rise since then has been, not Keynesian policy but the bloody useless central banking feds who bailed out the richest banks on Wall Street recently as people were being thrown oyt of their houses and out of their jobs in the U.S.

    Welcome to post modern welfare!!!!!

    BTW folks – the reason the unions got smashed was so that the ordinary man got to bear the brunt of any future inflationary episodes after the early 70s ugly stgflatiob shock

    (yep no unions? = No wage rises – meaning you cant keep up with inflation – ie you pay for it).

    Goodness this is similar to 2008 isnt it?

    Banking crisis – hey guess what? The feds give the ordinary working people’s income taxes to LLOyd Blankfein to bail out wealthy banks and keep the bonuses flowing.

    You get the feeling these arseholes expect us (majority of hardworking tax paying individuals and families) to pay for all economic policy fuck ups with our taxes?

    You might just be right.

    But some fool poster here wants to blame the long dead Keynes nd the long abandoned Keynesian theory by the monetarists and libertians who did the abnadoning but only because they thought they had something better (such is ego in economics!!), instead of the still alive parastic Federal bankers? (who apprently the monetarists and libertarians can somehow tolerate).

    Not its not the feds fault – just keep paying your taxes so the feds can give it to ealthy banks. Its the ne post modern welfare. Pay taxes to help the poor rich.

    Look at the freaking graph. This isnt anything to do with Keynes. Its Steve Kates. He only has one script and its wrong.

  30. Alice

    Beer whisper

    I didnt say unions had no feedback into the spiral (they did) but smashing unions as the cause was pretty pathetic.
    That way the tax payer pays as surely as they paid for the bailouts. Dont yopu see that?
    A feedback into an inflatiobary spiral was never the cause. Go blame the true culprits and let the ordinary man off the cost just for omce.

  31. wreckage

    The richest better off (much much better off)? The majority doing it tougher (much much). Economies in the doldrums across the globe?

    Ah, Australia had the most aggressive and recent union-bashing exercise and one of the best economies. The rest of your post on Unions is basically just US-centric waffle. Unions don’t have to exist. It depends on a whole bunch of other factors. Australia’s Unions have been a ticket-clipping operation since the 70′s and maybe before, and are not needed. Matter of fact, when they get their way in the political scene they benefit themselves, not their workers, so be rid of them.

    Casual contracts are the result of “unfair dismissal” laws and the desire of workers for greater flexibility. Sure, everyone would like a permanent position AND to get paid more pre hour AND to get to choose if they go to work on any given day. We’d also all like a maid. But 90% of people realise a compromise is necessary.

  32. wreckage

    Yeah of course, bosses are scum and hate the workers and that’s why bosses hate unions. You are brain-damaged.

  33. Alice

    Plus the smashing of unions has done untold damage to houshold incomes ever since and allowed inequality to rise obsceneky and faciliated a shift in wages share of aggregate income dtaright across the hiring desk to capital yet our taxes are being used for evey waste under the sun whilst capital is inxcreasingly skipping off from paying their share.

  34. Alice

    Wreckage

    Im too brain damaged to read your inexorably boring post. Better to be brain damaged than plain boring.

  35. Alice

    Wreckage

    I shouldnt have said that but when you tail end a comment with “you are brain damaged” Im afraid you get what you deserve.

  36. JC

    Better to be brain damaged than plain boring.

    alice, if you hadn’t taken to the bottle 40 years ago, you’d have something different to say.

  37. Tal

    Phil’s love child remember Joe let’s be kind

  38. Alice

    Tal and JC – this bottle bit you keep rab=ing on about is getting boring (like the joke is getting stale?)

    Here is my advice to all of you (and JC will hav an objection because he works in or with the financial sector and appears to be doing jus fine – dontcha Mr trader?)

    Dont believe any economits at all for the following reasons..

    1. Dont believe the majority of economists in unis because they are trying to get jobs in a bank

    2. Dont believe any government economists because most of them have had jobs in a bank

    3. Dont believe any freelance economics writers because many are angling for jobs in a bank

    4. Dont believe governments because most of them have banks advising them on how to run economic policy.
    If you prefer government by banks keep believing the crap they spew about (and what JC spews out) about flexible labour and unions and keeping rating agencies happy.

  39. Louis Hissink

    Interesting graph.

    I can understand the inflationary peaks at the civil war and the 1812 one, but what war was on at ~1850?

    Absent war, economies tend to bubble along quietly as shown by the flat handle of the graph from 1775 to WW1.

    Given that the basic tenet of Marxism is to create conflict between the classes in order to implement Marxist goals, one could be forgiven for interpreting the graph as a measure of the ever increasing input of Marxist conflict management: that is, in order to manipulate class conflicts you need to generate wars and those can only be financed by fiat money.

    So the graph shows the influence of Marxism in the US economy. As Keynes was also a self admitted Bolshevic, then it’s clear what the graph represents.

  40. candy

    Im my opinion, casual contracts can be a bit of a problem. It’s very good for those who work around it because of other life interests/study etc and supported by mum and dad or spouse,
    but if you need regular hours to do the supporting, you’re possibly up the creek if you can’t get permanent position. This is particulalry hard for those without qualifications/inherent abilities to move ahead in life.

  41. Louis Hissink

    Whoops, the civil war – brain addled with irish water additives.

  42. JimD

    Alice talks too much. Otherwise she’d be in Wonderland. (: .

  43. Alice

    Do you mean my friend Philo Tal?

  44. Louis Hissink

    Candy,

    That’s why it’s called life and hence the need to be adaptable. Those who can’t or won’t adapt follow the dinosaurs.

  45. Tal

    Alice,I wasn’t talking to you

  46. JimD

    LH,
    That just a gratuitous smear of Nicola Roxon and I’ll say this, people on this site will not tolerate such action.( wrong paste but what the..

  47. Alice

    Anyone listening to Candy above who is a very sweet and conservative lady?

    Casual contracts are a problem Candy. My girlfriends two children (aged in their early 30s – ie married son and daughter in law) went off to live in Sweden because after 6 moths here both of them despite business degrees could only secure casual contracts.

    They wante (been working in europe), but felt their employment was too insecure to make those big decisions like taking a mortgage, having children and setting up a family ie having kids.

    Its very sad. My girlfriend wants them here. Skilled people leaving Australia to start families, because their employment is too insecure here to do so.

    This isnt sensible policy at all.

    They have gone to Sweden to start their family because after three casual contracts the company must offer permanent employment and they feel safer there.

    We of course, being idiots, have followed the advice of the US (make labour felxible) and the us has an enormous problem with insecure employment now.

    Purely flexible labour delivers all the benefits to the employer at the expense of the employee.

  48. Megan

    I’m waiting for you to finish your sentence above, grammatically and correctly in english?

    That’s rich coming from the Mistress of Garbled Grammar, Incorrect Spelling and Incoherent Argument.

  49. Alice

    Louise

    I understand Hitler was a great Darwinian. He so much thought that if people couldnt adapt they didnt deserve to live – so he murdered the mentally and physically disabled. He also thought the Poles were an inferior sub human race and didnt deserve to live – so he murdered 18% of all Poles. He also thought the Russians were a substandard race until they whipped his arse and acted like a subhuman race in Germany.

    Yeah what was it you were saying about ” it’s called life and hence the need to be adaptable. Those who can’t or won’t adapt follow the dinosaurs.”

    Really?? Who here is fit to measure adaptability Louis???

  50. candy

    “Anyone listening to Candy above who is a very sweet and conservative lady?”

    thank you so much Alice, and may I say, you are a beaut chick with a great sense of humour, with all the things these fellows say to you, but you just laugh them away with such good naturedness.

  51. Alice

    Rich it is Megan unless someone like you comes in to expose me. Congratulations.
    What do I really care?
    I was hoping Andy would finish his sentence – instead of you.

  52. Alice

    oops Candy

    Nioce of you to say. I like your comments. They always seem fair to me.

    Im going to be in trouble now though, Its true I dont spell well here as Megan says. Two fingers, in a hurry and Sinc has no spell checker!

    I have now called Louis – Louise.

  53. Dan

    Spell checker is imbedded with the software of whatever device you are using

  54. Louis Hissink

    If self education is the means by which one educates oneself by introspection Alice, you have reached PhD level.

    The left seem to be enamoured with euthanasia – practiced these days by labelling climate sceptics as holocaust deniers – so I suspect, suspect I must add, that if given the chance you would put us into your intellectual gas ovens.

    And I see you havn’t rushed into Russian historical evidence either.

  55. Alice

    Stalingrad Louis.
    That is enough evidence. 90000 germans captured because Mr Stubborn psycho miltary man couldnt face defeat and ordered them to stay and try to capture the city in the freezing winter (they didnt have a hope having travelled so far to get there). Instead he lost the 6th division of his army and was pissed off because the general concerned wouldnt follow orders and commit suicide.

    He promoted that general of 6th division to field marshal spoecifically so he would commit suicide. No german field marshal could be captured – rule was if captured commit suicide but this one didnt despite his captured army and belated promotion.

    Instead the Russions captured and killed him. Hitler was pissed about that.

    He was supposed to die an honourable death according to Hitler as an example to all the youth….
    enuff history for you Louis?

    I have no idea how you came to the conclusion that the left is enamoured with euthenasia Louis (are all earthly sins committed by something you call the left? – if the tooth fairy doesnt come is it the lefts fault? If you dont get the parking space you want – is it because a lefty parked in it?).

    Hitler was as right and as darwinian as they come.
    Enough history for you louis. It isnt just the left thats a problem. The right can also be a problem (what wabout Breivik? ) Generally its fanatics that are the real problem. To me, lefty right arguments and name caling are just completely meaningless.

  56. Alice

    Cant get spell checker when my browser is open Dan.

  57. Louis Hissink

    I knew, personally, a survivor of Stalingrad, (since deceased).

    Now, you sure you have it right? Stalingrad, that is? Or are you again fabricating your hollow memories?

  58. Alice

    Pretty sure – if you want me to check it I can. Close to the Volga river. Not afraid to say I have the city wrong Louis so feel free to correct me.

  59. Alice

    Louis I object to your use of the phrase “your hollow memories” – now either check the city name on google or or shut up (put up or shut up as they say)!

  60. Leigh Lowe

    I can understand the inflationary peaks at the civil war and the 1812 one, but what war was on at ~1850?

    Crimean War.
    Definite correlation with dates, so must be causal.

  61. Louis Hissink

    Ergo, wars require extraordinary requirements for money to pay for them.

    Taxing people doesn’t work, but “creating” money might.

  62. pete m

    The unions keep saying they fought and won wage benefits like annual leave and sick leave.

    I’d like to know if total wage cost to a business as a percentage of capital has moved over this same time.

    As happened with SGT, the more you add to the wage, the less the base pay is.

    And before Alice goes crying foul, explain how a business can afford to pay higher wages / benefits for the same work. Productivity gains are just so much BS.

  63. Leigh Lowe

    It would be interesting to see an overlay of smooth curves at compound rates of, say 2.5% and 3%.
    It would definitely have something of a hockey-stick look but nowhere near the dramatic kick up shown in the graph above.

  64. Leigh Lowe

    Cant get spell checker when my browser is open Dan.

    I tend to rely upon a sound private education, Alice, rather than using spell-check as a crutch.

  65. Grey

    If you want to make this kind of graph meaningful you need to use a log scale – otherwise the jump from 10 to 30 looks far bigger than the jump from 1 to 3 – even though in terms of rate of inflation they are the same.

    I am sure that great interpreter of graphs – Dot – would agree with me.

  66. Andrew Reynolds

    Alice,
    Should LBJ have waited to launch the war at a time of less than full employment, then? Would that have been OK?

  67. .

    If you want to make this kind of graph meaningful you need to use a log scale – otherwise the jump from 10 to 30 looks far bigger than the jump from 1 to 3 – even though in terms of rate of inflation they are the same.

    I am sure that great interpreter of graphs – Dot – would agree with me.

    Grey fuckwit said:

    “I still don’t understand when the 1981 act actually came into force, how it affected all future tax revenue and the cumulative US Federal debt, also, I find the above graph offensive to my fuckbrained worldview so please change it. Also, can we have a 25% unemployment rate like in Sweden? I am a master of statistics but I got the numbers on Australia and Sweden dead wrong on unemployment, hidden unemployment and employment ratios”

  68. Grey

    LOL – what was your source for 25% – an unnamed trade unionist?
    All I did was take total employment of both countries and divided by total population, on the basis of that said the hidden unemployment was unlikely to significantly higher in Sweden than Australia – 25% or not I leave to others.

    And you may be correct with everything you say about the 1981 tax act – all I said is that the graph you pointed out as showing the tax take increased showed the exact opposite.

    Perhaps the graph was bullshit? All I did was read what the graph, bullshit or not, actually said.

  69. .

    LOL – what was your source for 25% – an unnamed trade unionist?

    The head of the peak Swedish labour union, fuckhead.

    And you may be correct with everything you say about the 1981 tax act – all I said is that the graph you pointed out as showing the tax take increased showed the exact opposite.

    No it doesn’t. You are ignorant of what happened to unemployment. Nor do you know why it changed as such.

    Hint: the change in tax receipts to GDP was about equal to than that in unemployment – even though the tax rate was nearly halved.

    You’re a moron grey. Don’t attempt stuff above your paygrade.

  70. Grey

    Dot – have you ever thought what Milton Friedman for think of you. Have you ever thought what kind of opinion James Buchanan might have of you if he could see you?

    Don’t you think you are besmirching the proud name of libertarianism by these deranged antics?

  71. .

    You cannot keep up with the argument.

    Hint: the change in tax receipts to GDP was about equal to than that in unemployment – even though the tax rate was nearly halved.

    Chew on that dickbrain.

    If you can read Swedish, this says there was no private sector job creation in Sweden from 1950-2005

    http://www.ratio.se/media/43604/privat%20och%20offentlig%20sysselsattning.pdf

  72. .

    Don’t you think you are besmirching the proud name of libertarianism by these deranged antics?

    Dude.

    You’re a “wizard”.

  73. Grey

    The Swedes have been declining ever since I was a kid, but it still seemed a pretty nice place to live when I visited and most people seemed quite happy with their decline.

    Surprisingly, despite their perpetual decline since the early 70s they still seem to enjoy a standard of living better than the Americans. Lord knows how much they would outstrip them if they ever stopped declining.

  74. John Mc

    I don’t know. The US, despite their problems, seems to be consistently up there. They oscillate but they never seem to leave the top ten.

    I suspect that when Sweden starts its slide it will be like the UK: a steady downward run out of the top 20 (then who knows where?).

  75. Grey

    I suspect that when Sweden starts its slide it will be like the UK

    But when will they start their slide? Righties have been predicting their slide right from my childhood – maybe earlier – but like the apocalypse it never seems to happen.

    Next year, just you wait and see, always next year.

  76. Infidel tiger

    Go to Malmo and you’ll see Swedens future writ large.

  77. John Mc

    Yeah, well it’s really funny how France used to be the bastion of socialist sophistication. Even in the 1990′s people were predicting their best days were behind them and people like yourself were declaring that France would be up there for a long time to come. Some people saying their 35 hour week would lead them to new levels of prosperity!

    And who would have thought that the UK, which was number one not that long ago, would slip out out of the top 20 in 2010.

    Let’s make some assumptions. France’s heyday was probably around the 1950s. It’s in deep shit now, that’s 50 to 60 years later. Sweden’s heyday was 1970s. So I’ll work on 2020 to 2030 when we’ll see the cracks appear. They don’t have the oil and gas of Norway, after all.

  78. John Mc

    It’s funny how none of the socialists seem to ever refer to France anymore. That’s so different to just a decade ago.

  79. JC

    But when will they start their slide? Righties have been predicting their slide right from my childhood – maybe earlier – but like the apocalypse it never seems to happen.

    In 1970, before instituting leftwing polciies Sweden’s per cap was number 2 in the world after sweden.

    they were sliding alright, it’s just innumerates like you that doesn’t understand declines.

  80. Grey

    I don’t think rankings are that important. I think Australia used to be #1 in the 1950s.
    Lots of things change, its not a direct relationship to macroeconomic theory.
    A bit like educational rankings, a change from position 1 to position 8 in a ranking list may not mean the kids are any less educated.

  81. John Mc

    I’d rather live in #1 than #20.

  82. RodClarke

    The great upward shift in the graph presented correlates most closely with Nixons closing of the gold window in 1971.

    (and I am a person who hates Keynes and thinks Nixon was great (except for Vietnam))

  83. Instead the Russions captured and killed him. Hitler was pissed about that.

    Alice, the Soviets released Paulus in 1953. Seems your history isn’t as rock-solid as you think.

  84. 81Alpha

    Alice, you might want to check your own historical accuracy regarding the South Vietnam War.
    JFK started that off and his democrat successor, Your LBJ ramped it up to the 1 million US troops in-country, carpet bombing in Hanoi and Cambodia etc etc.
    But Leftists have never made good wartime leaders…..ever.

    Nixon was elected on the basis of getting out of VIetnam and pulled the pin on the whole cluster, though the war was specifically lost by the useful idiots in the Media, and their clueless leftist supporters, who opposed standing up to expansionist Communism.
    So, forgive me if I don’t trust your take on economics.

  85. Dr Faustus

    Rod: I’d suggest the upward shift is more influenced by LBJ’s Great Society programs in the mid 1960′s. Welfare spending ran up from $13b/annum in 1965 to $786b/annum in 2010 – a total spend of ~$9.5 trillion over 45 years.

    The systematic allocation of huge funds to social welfare is not necessarily a problem in itself (depending on your perspective on the social compact). Funding welfare by debt, rather than productivity growth/taxation certainly is. US Government debt has increased over the same 45 year period by around $14/15 trillion.

  86. .

    Grey sez:

    “I lost the argument (even old ones I shouldn’t rehash) and look like a pillock, but it’s a nice place to go to on holiday”

    Yes. Like Bangkok.

  87. Chris M

    The other thing that corresponds with this is women entering the workforce in large numbers after ww2. I’ve been told the end result is an approximate halving of the real value of a working persons wage since then.

  88. .

    Chris

    That is suspiciously like the lump of labour fallacy.

    Women entered the workforce because of labour saving devices – which have raised the K/L ratio anyway (or must have happened for them to be built).

    If you compare the real estate price growth in Australia and track it to female labour force participation, that has a strong correlation.

    Not every married woman wants to work, but they have to more or less, as housing costs are so great.

  89. Grand Old Phonies

    It’s funny what we choose to see. Some of us see 1913 as the start of the rot. Rot that grew intellectually, of course, until the Nixon Shock of 1971 after which it grew exponentially. With the able assistance of that modern day sun king, Greenspan, of course.

  90. Alice

    Brian

    what about the other 100,000 of the 6th army?
    Did the Russians release them as well and bearing in mind 50,000 of the 6tth army had already died. So Paulus lived?
    Wow. One??? Split hairs and you missed the point.

    The point is Hitler got smashed by the russians in the end (Stalingrad and the Russian retaliation) didnt he ?

    and wasnt Hitler the darwinian style right winger who thought people who were genetically inferior would naturally lose in life and battles?

    Funny about that. You cant be too sure about who is inferior can you?

  91. Alice

    Sorry 50,000 should say half a million.

  92. Alice

    Dr Faustus

    says

    Rod: I’d suggest the upward shift is more influenced by LBJ’s Great Society programs in the mid 1960′s. Welfare spending ran up from $13b/annum in 1965 to $786b/annum in 2010 – a total spend of ~$9.5 trillion over 45 years.”

    Oh goodness me. Apparently there was never any president after LBJ and he alone was responsible fir the increase in welfare spending between 1965 and hang on….2010.

    Faustus (or Falsetus).

    LBJ died in 1973. You speak crap. Ive heard of blaming ghosts and spirits but this is really stretching it (long dead ghosts?).

  93. Alice

    Chris M

    The other thing that corresponds with this is women entering the workforce in large numbers after ww2. I’ve been told the end result is an approximate halving of the real value of a working persons wage since then.

    You want to check when they invented hire purchase as an explanation Chris. (Oh yes – a n=bank invention). Nothing to do with feminism that women entered the work force and more to do with the “never never” of hire purchase.

    Common old debt. Its the best thing to make people (men and women) turn into work / wage slaves. Cheap credit and debt.

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