Comments on: Working Paper on Malinvestment http://archive.mises.org/4399/working-paper-on-malinvestment/ Proceeding Ever More Boldly Against Evil Tue, 21 May 2013 04:23:48 +0000 hourly 1 http://wordpress.org/?v=3.5.1 By: Christopher Carr http://archive.mises.org/4399/working-paper-on-malinvestment/comment-page-1/#comment-675638 Christopher Carr Fri, 26 Feb 2010 05:06:29 +0000 http://blog.mises.org/archives/004399.asp#comment-675638 Ultimately, I support this particular stimulus only because our reckless behavior got us to a point of no return. But eventually, there must be massive restructuring and a gradual, gentle purging of toxic institutions. In the early 1900s, the Roosevelt government took over large conglomerates and broke them up. We may have to take similarly drastic action once the economy begins growing again to restore true free-market capitalism.

While Keynes and Hayek spent most of their careers in bitter disagreement, I think it’s possible that the two theoretical frameworks can be reconciled by seeing the former as for efficacious employment in emergency situations, and the latter as our ultimate long-run approach; we must take more minimalist, cautious steps going forward. Moral hazard and malinvestments have contaminated the American economy, and while there’s little we can do towards curbing malinvestments and moral hazard while things remain so fragile, the new Keynesian revival must be tempered with this realization.

http://www.theinductive.com/blog/2010/2/26/our-obese-economy.html

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