[ExI] economic theory and experiment, was: RE: BBC on space solar

[spike]

>... On Behalf Of BillK


>...To be realistic the US doesn't have the finances to fight all the
current wars or pay for Obamacare. It just keeps on printing funny money
because nobody has yet told the Fed to stop doing it. But that time will
come.  BillK
_______________________________________________

BillK, we are watching an interesting experiment playing out right now in
the US government.  We often debate Keynesian vs Hayekian economic theory,
but coming very soon we will get to see actual experimental results, played
out on a grand scale.  The US congress couldn't agree on a spending plan, so
it set up a deal designed to scare both sides: if no agreement could be
reached, then there would be these huge draconian cuts, indiscriminately
across the board.  Nobody chickened out, and now these huge scary cuts are
set to hit Friday, two days from now.

Keynes would predict these cuts will destroy the economy, weaken the nation,
start a new recession, send the country into a tailspin, etc.  Hayek would
argue there will be short term pain, but in the long run, these cuts are
necessary, will help, and must take place, and we need more cuts.  Hayek
might even continue, these cuts are not nearly large enough.  The fed needs
to double the size of the cuts and see if that scares the congress into
action, but if it doesn't, then double again and repeat.

I say let the cuts go forth, see which economic theory comes out right.  How
else are we to know which theory is right, unless we perform an actual
experiment?

Any predictions?

spike