"Fear the Boom and Bust: A Hayek vs. Keynes Rap Anthem"

Duration: 7 minutes and 32 seconds

Country: United States

Language: English

License: CC - Attribution Non-commercial No Derivatives

Genre: Music Video

Producer: econstories.tv

Director: econstories.tv

Views: 3,100 (1,918 embedded)

Posted by: kramerdsp on Jan 27, 2010

Econstories.tv is a place to learn about the economic way of thinking through the eyes of creative director John Papola and creative economist Russ Roberts. In Fear the Boom and Bust, John Maynard Keynes and F. A. Hayek, two of the great economists of the 20th century, come back to life to attend an economics conference on the economic crisis. Before the conference begins, and at the insistence of Lord Keynes, they go out for a night on the town and sing about why there's a "boom and bust" cycle in modern economies and good reason to fear it. Get the full lyrics, story and free download of the song in high quality MP3 and AAC files at www.econstories.tv

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[RAP SONG SUBTITLES BEGIN AT 1:05]
[Chorus] We’ve been going back and forth for a century
[Keynes] I want to steer markets
[Hayek] I want them set free
There’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] John Maynard Keynes, wrote the book on modern macro
The man you need when the economy’s off track
Depression, recession now your question’s in session
Have a seat and I’ll school you in one simple lesson
BOOM, 1929 the big crash. We didn’t bounce back—economy’s in the trash
Persistent unemployment, the result of sticky wages
Waiting for recovery? Seriously? That’s outrageous!
I had a real plan any fool can understand
The advice, real simple—boost aggregate demand!
C, I, G, all together gets to Y
Make sure the total’s growing, watch the economy fly
[Chorus] We’ve been going back and forth for a century.
[Keynes] I want to steer markets,
[Hayek] I want them set free. There’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] You see it’s all about spending, hear the register cha-ching.
Circular flow, the dough is everything.
So if that flow is getting low, doesn’t matter the reason.
We need more government spending, now it’s stimulus season.
So forget about saving, get it straight out of your head.
Like I said, in the long run—we’re all dead!
Savings is destruction, that’s the paradox of thrift
Don’t keep money in your pocket, or that growth will never lift…
because…
Business is driven by the animal spirits. The bull and the bear, and there’s reason to fear its
Effects on capital investment, income and growth
That’s why the state should fill the gap with stimulus both…
The monetary and the fiscal, they’re equally correct
Public works, digging ditches, war has the same effect
Even a broken window helps the glass man have some wealth
The multiplier driving higher the economy’s health
And if the Central Bank’s interest rate policy tanks
A liquidity trap, that new money’s stuck in the banks!
Deficits could be the cure, you been looking for
Let the spending soar, now that you know the score
My general theory’s made quite an impression
I transformed the econ profession
You know me, modesty, still I’m taking a bow
Say it loud, say it proud, we’re all Keynesians now!
[Chorus] We’ve been going back and forth for a century.
[Keynes] I want to steer markets,
[Hayek] I want them set free. There’s a boom and bust cycle and good reason to fear it.
[Keynes] I made my case, Freddie H
Listen up , Can you hear it?
[Hayek] I’ll begin in broad strokes, just like my friend Keynes
His theory conceals the mechanics of change,
That simple equation, too much aggregation
Ignores human action and motivation
And yet it continues as a justification
For bailouts and payoffs by pols with machinations
You provide them with cover to sell us a free lunch
Then all that we’re left with is debt, and a bunch
If you’re living high on that cheap credit hog
Don’t look for cure from the hair of the dog
Real savings come first if you want to invest
The market coordinates time with interest
Your focus on spending is pushing on thread
In the long run, my friend, it’s your theory that’s dead
So sorry there, buddy, if that sounds like invective
Prepared to get schooled in my Austrian perspective
[Chorus] We’ve been going back and forth for a century
[Keynes] I want to steer markets,
[Hayek] I want them set free
There’s a boom and bust cycle and good reason to fear it
[Hayek] Blame low interest rates.
[Keynes] No… it’s the animal spirits
[Hayek] The place you should study isn’t the bust
It’s the boom that should make you feel leery, that’s the thrust
Of my theory, the capital structure is key.
Malinvestments wreck the economy
The boom gets started with an expansion of credit
The Fed sets rates low, are you starting to get it?
That new money is confused for real loanable funds
But it’s just inflation that’s driving the ones
Who invest in new projects like housing construction
The boom plants the seeds for its future destruction
The savings aren’t real, consumption’s up too
And the grasping for resources reveals there’s too few
So the boom turns to bust as the interest rates rise
With the costs of production, price signals were lies
The boom was a binge that’s a matter of fact
Now its devalued capital that makes up the slack.
Whether it’s the late twenties or two thousand and five
Booming bad investments, seems like they’d thrive
You must save to invest, don’t use the printing press
Or a bust will surely follow, an economy depressed
Your so-called “stimulus” will make things even worse
It’s just more of the same, more incentives perversed
And that credit crunch ain’t a liquidity trap
Just a broke banking system, I’m done, that’s a wrap.
[Chorus] We’ve been goin’ back n forth for a century
[Keynes] I want to steer markets,
[Hayek] I want them set free
There’s a boom and bust cycle and good reason to fear it
[Hayek] Blame low interest rates.
[Keynes] No it’s the animal spirits