Kohtz.org

Ever since I posted that rap video about Hayek and Keynes, I've been reading the author's website, Cafe Hayek. It's written by Don Boudreaux and Russ Roberts, professors at George Mason University. I highly recommend it.

In economics, there are several schools of thought. The prevailing school of thought right now is Keynesian, which basically advocates consumption as the driving force of the economy. An opposing viewpoint to this theory is the Austrian school of thought, for which Friedrich Hayek is largely responsible. That should give you an idea of what they talk about.

Friedrich August von Hayek was an Austrian-born economist and philosopher known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought.

An educational rap video on economics, "Fear the Boom and Bust."

Hayek is from the Austrian school of economics who is for free markets, against inflation, and pro-savings. His theory is that low interest rates, over consumption, and inflation create the booms that eventually lead to the busts. The bigger the boom, the bigger the bust.

Keynes on the other hand is for a government managed economy in which inflation and government spending are tools to guide the economy. He blames too much saving for recessions. His theory is that booms and busts are cyclical, and the bust period can be managed and even avoided through said increased government spending, inflation, and consumption.