Youll get the chance to hear for yourself tonight.

http://www2.lse.ac.uk/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=1095

Approx 67mins in.

I have read that the above quote was not actually something Hoover did, but he was giving examples of some policy suggestions put to him, and in the context of these suggestions he did not agree and did the opposite.

Krugman erroneoulsy refers to this again and again as an example of what Hoover ACTUALLY did. So Krugman once again views economic history through distorted glasses.

Indeed, the central error of Keynesianism–of what Keynes had once intendend to call his “Monetary Theory of Production”–is that it attaches absolutely no significance to how money is spent. Hence Lord Skidelsky’s inability to understand why government spending, of whatever sort, can’t be expected to contribute to long-run growth as much as private spending, which reflects his (and Keynes’s) implicit assumption that it doesn’t even matter whether or not some income is used to maintain and augment an economy’s stock of capital. One needn’t be a Hayekian to see that this, surely, is bad–indeed very bad–economics

It’s nice though to see straw-man-ism well and truly in form in the comments. Please do find me the official Keynesian manifesto where it says that the banks should have been bailed out to create zombie banks. I’m waiting…

Or maybe it’s just that everything non-Hayekian must be Keynesian? If so, that’s a heck of a lot of economics, and bad economics too…

p.s.
Love your lectures on IP!

As for the British economy and its weak growth, well, thats what happens when you deleverage on the scale we have to. The reason nobody is spending now is because they are paying for all the stuuff they bought in the decade before the crunch.

Skidelsky is a typical state apologist, arrogant, without a foggiest idea about human action. Just pointing at phony GDP figures, begging for some sort of national investment bank that would eventually socialise all “investments” and praising Keynes, nothing to show in theory, or practice. He could only appeal to the Keynesian side by making little “funny” remarks about Hayek.

Selgin did pretty good and I liked Whyte’s philosophical take on it however I was disappointed that none of the Hayekians emphasized the main problem that is the state currency. If Rothbard were sitting there, he would have delivered a devastating critique of the Keynesian model, those two made it quite easy.

Their Keynesian argument can be summed up into something like this:
* Hayek/Austrians want to just stand and do nothing
* When Austrians do recommend something, it’s liquidate which is a “no-no”
* Look at China’s or Germany’s GDP – they are doing it right
* We had to bail out banks otherwise cash machines would stop working and the sky would fall
* Reduced government spending would not induce more private investment or spending
* We, the statist quo, know better than millions of people in the market
* We can change our models and predictions of unemployment or GDP growth, we can be always right! Austrians can’t since they don’t quantify but they use some wacky thing called “praxeology”
* Debt doesn’t matter (but we’ll keep always saying that it matters in “the future” and thus extending it forever) because it can be paid when economy grows. That is, in our understanding, when GDP induced by more debt rises.

Of course, on the very next page, Hoover writes that despite this advice from Mellon, Herbert knew that this was an unrealistic approach only supported by troglodytes.

Thanks for the summary.