Tanner-Maluchnik

“Fear the Boom and Bust” a Hayek vs. Keynes Rap Anthem

by Tanner M. on

“Fear the Boom and Bust” a Hayek vs. Keynes Rap Anthem

I recently came across a rather entertaining and interesting video on YouTube called “Fear the Boom and Bust.”

Who is Behind “Fear the Boom and Bust”

One of the producers of the video is a fellow Penn State Nittany Lion, John Papola. According to EconStories.tv, John became interesting in the economic crisis and concern for the future “that comes with being a new dad.” He helps make people understand the financial crisis in a little more entertaining way with this video.

You can learn more about John Papola at JohnPapola.com.

The other mind behind Fear the Boom and Bust viral video is Russ Roberts. A professor in economics at George Mason University, Roberts recently released a book entitled “The Price of Everything: A Parable of Possibility and Prosperity” (Affiliate link).

Russ Roberts also runs a weekly podcast called EconTalk and blogs over at Cafe Hayak.

The Story behind Fear The Boom and Bust

According to EconStories.tv:

“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.”

Lyrics for Fear The Boom and Bust Video

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 Sings:]

John Maynard Keynes, wrote the book on modern macro
The man you need when the economy’s off track, [whoa]
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

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

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
[a revolution] 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

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
[Keynes] I made my case, Freddie H
Listen up , Can you hear it?

Hayek sings:

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
Prepare to get schooled in my Austrian perspective

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

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.

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

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

John Maynard Keynes
The General Theory of Employment, Interest and Money

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

F A Hayek
The Fatal Conceit

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7 comments

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  • http://www.Escapingthe9to5.com/ Maren Kate

    This is AMAZING :) not only humorous (or to me at least) but very true to life!! Oh economists those jokers.

    • http://lifedestiny.net/ Tanner @ Life Destiny

      Hey Maren, glad you enjoyed it! I thought it was excellent too. Am actually working with someone on a product to help lessen the effects of the economy. Will be talking about it soon.

  • kruby

    This was entertaining video, Tanner. I actually learned something new from it. Thanks for sharing. I should check out YouTube more often! :-)

    • http://lifedestiny.net/ Tanner @ Life Destiny

      I love the power of the internet and the ability for people to put out awesome material like this for people to learn while enjoying it. Glad you enjoyed it too!

      I might be putting together some videos that help educate and entertain at the same time gathered from YouTube into a post here soon.

  • Erik

    Hey, can anyone explain to me what they mean by “the animal spirits”?

    • Aboiz_krw

      It means investors don't have rational decision to invest. They just follow the trend of the market just like animals that follow the herd without knowing what really happens.

  • Aboiz_krw

    It means investors don't have rational decision to invest. They just follow the trend of the market just like animals that follow the herd without knowing what really happens.

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