Fear the Boom and Bust: Keynes vs. Hayek – The Original Economics Rap Battle!

Fear the Boom and Bust: Keynes vs. Hayek – The Original Economics Rap Battle!


>>HOTEL CLERK: Lord Keynes! Welcome, sir. It’s a pleasure.>>KEYNES: The pleasure’s all mine.
>>CLERK: Your agenda–>>KEYNES: That won’t be necessary. I am the agenda.
>>CLERK: [laughs]>>KEYNES: Tell them I’ve arrived–
>>HAYEK: And then tell them I’ve arrived.>>CLERK: And, your name is?>>HAYEK: Hayek. F.A. Hayek. With an “H”.>>KEYNES: Freddy. (yeah) Keynes. Hey, listen, party at the Fed.>>HAYEK: Already?
>>KEYNES: Twenty minutes. Lobby. John Maynard Keynes. F.A. Hayek.>>KEYNES: Yeah, we’re opposed
>>HAYEK: We oppose each other philosophically>>KEYNES: In the same studio 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 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, altogether gets to Y,
Keep that total 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,
It 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 reasons to fear It’s 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 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
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 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

100 comments

  1. This is

    A MASTERPIECE

    Ps studying for my macro-exam and I feel like I'm gonna slay it.
    PLS MAKE MOOOOOORE!!!

  2. War creates jobs, it’s better than being poor or not working at all, think about how angry everyone is out there, with Trump, racism and unemployment. A world war would give people a much needed outlet for their anger and provide jobs, additionally, it will thin out the job market because people will die in the war. We just need a good old fashioned world war. It's going to happen anyways #AFD

  3. They both bring up good points but ultimately human nature is the folly of every economic system no matter how well designed it may seem.

  4. Anyone not studying economy in a neoliberal school can see Keynes theory is horribly misinterpreted here. His theory is the one aiming for social welfare and an increase in salaries, and yet you put Hayek as if his free markets policies weren't a complete mess with Tatcher in England or the neoliberal hell we all live in.

  5. First pic I ever saw, of Keynes I knew in one glance: 1) He as gay, 2) He would be wrong about everything.

  6. Holy…. These guys used the House builder analogy from Mises and personified that to Keynes and I just noticed that.

  7. Having Keynes' book "The General Theory" in the hotel room drawer is just the perfect touch!!!! LOL

  8. You know why ERB put subtitles on EVERY videos? So the viewers can follow the messages and judge the flow as well with the lyrical content.

  9. Ah, both merely are trying to delay the inevitable overthrow/collapse of the capitalist mode of production

  10. " The curious task of Economics is to demonstarete 2 men how little they really know of what they imagine they can dssign. " – Hayck

    Well, the more you train the better u get! 😅

  11. There is no free market, and there never will be until all are free to go to market. In other words, we SHOULD all be Keynesians.

  12. I have literally relied on this video for macro economics tests. Or as I like to call it “mythic studies”

  13. If you had a time machine would you go back in time and kill Hitler? Probably not id be to busy tracking down Keynes.

  14. One of the most memorable moments from university was when they showed us this video in introductory macroeconomics, back in 2012. Ah, good times.

  15. FA Hayek is correct! Savings are the only way to build businesses, homes and families, and create overall stability. Bust and boom cycles are the result of oscillating liquidity pumps from a manipulative central banking system. If individuals, families, or businesses are not allowed to form capital to purchase homes, create businesses, and save for their future the consumer is subject to institutional theft and manipulation!

  16. Almost 10 years old! Amazing! I was 11 when my dad showed this to me and explained Economics to me. Real work of genius. Now I'm a business student and watched these videos nearly every day during my Econ classes. We need a round 3 already!

  17. I remember watching this in AP econ when I was 17 and having no interest or clue what was going on, now I'm 24 watching this as if my future depends on it.

  18. The lyrics:

    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
    Prepared 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

  19. Where does monetarism and Milton Friedman stand in all of this? In my days Keynes and Friedman were paired together as each other's contrast.

  20. We cannot have separate currencies for different industries even though it would shelter from recessions in others, because the people who buy from that industry would have to be employed from the industry.

  21. Pfffft, capitalism will always face crisis every few years. As long as we have a system built on anarchy you can’t regulate it, and “setting it free” means letting the capitalists dominate over the producers

  22. le virgin Hayek vs. le chad Keynes

    problem is, in reality it doesn't work that way. Hayek was secretly the real chad all along

  23. Keynes lost when he argued that breaking windows created growth. I expected Hayek to have been the one to bring up Bastiat.

  24. It's really "Keynes & Hayek (2 atheists hand in hand with the Usurers)" against The People / The Church. "Emergent" implies a belief that higher Order merely "emerges" out of nothing, similar to Abiogenesis. i.e. no God nor 10 Commandments nor morals need be involved.

    So perhaps it isn't constructive to use misdirection against the public as if Keynes & Hayek were the main "battle", when in fact both are manifestly in favor of Usurers. Neither of them discuss Usury at all. They just take it "for granted", as part of the fog they emit whilst they both make War upon us all.

    Keynes ("liberal" anti-Marxian "socialist" Eugenicist) favored Big Government Spending (i.e. more profits for the money-changer Usurer class printing the money & leeching 30%+ interest off of it). Hayek ("conservative" Austrian School) favored Small Government (i.e. deregulate everything, let the Hegemon Bankers who hoard most of the Gold take over). Both sides favor the Hegemon money-changers. So it's similar to the so-called "Democrats vs Republicans" debate….just smoke & mirrors misdirection to distract audiences from examining closer the real parties in Control, using rap music, football, baseball and hot dogs + hot female models to "stimulate aggregate demand spending".

  25. Keynes was a moron. His economics are what caused most of the big problems in 20th and 21st centuries..

    Ever heard of Great Depression of 1921? That's right – it was similar to 1929, only government did nothing and it ended within a year followed by enormous growth and healthy economy until govt. and Fed started to steer it again with artificial interest rates and other shit. Then it crashed and crisis lasted many many years – all the way to the 1946.

  26. Hayek was better than Mises. And Keynes was better than Marx. Therefore this is better than Mises vs Marx. Fight me.

  27. The government $ stimulates the economy and where does that money come from? Taxes on the middle class. So yeah eventually the 1% end up with all the money. Yeah they may invest some. but they keep billions in their pocket just collecting dust and the rest the get interest that they keep for themselves

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