Fellow nerds...listen up!

Below is a rap video. Yes...that is right a rap video. Ahhh...but how has a rap video made its way to my blog...? The simple way many things make their way to my blog...economics. My favorite living economist, Dr Russ Roberts, has worked with quite a few folks to create a rap on the boom and bust cycle theories of JM Keynes and FA Hayek. While most of you have likely not heard of these two gentlemen, you have all discussed their theories at some point.

Hayek and Keynes were essentially contempories, well nearly, Keynes is a bit older than Hayek. The most impactful portion of Keynes' theories center around the idea that when we enter the "bust" side of the boom and bust cycle we have problems getting out of the cycle because aggregate demand stays low and wages are "sticky" (meaning that it is hard to move wage rates...). Keynes believed that the best way to solve this issue was for the government to dramatically increase spending. The metaphor used by Keynes, and that is still used today, is that someone needs to "prime the pump". For further references on Keynes theories on priming the pump look to the New Deal of FDR. Keynes, a Brit, was FDR's primary economic advisor during the New Deal.

Hayek believed the exact opposite. Hayek believed that boom and bust cycles are generally driven by government interference with the economy, especially when governments do things like keep interest rates low.

A couple notes about the rap:
-Keynes mentions something about humility...which is an obvious jab...Keynes has always been known as arrogant jerk in economics circles. (For example...his greatest work was a book entitled THE General Theory on Employment, Interest, and Money...Not A theory...THE theory)
- Keynes DID make the argument that little besides "animal spirits" drive boom & bust cycles
- Note the bartenders name tags...