Fear of the Boom and Bust

The You tube video Fear the Boom and Bust is a very entertaining and interesting rap debate between the two economists, John Maynard Keynes and Freidrich Hayek, concerning the boom and bust cycle. In the video the economists come back to life and rap about their conflicting theories as they go out for a night on the town. This video is a fun and educational way to learn and discuss the two competing economic philosophies and how they relate to our current economic situation. The two economists go back and forth advancing their economic perspectives on economic issues as their approach to the market, government and consumer spending, the role of savings, human action and motivation and the power of investments. It is pretty amazing how the creators of this rap were able to take economic theories and turn them into catchy lyrics. The chorus of this rap sums up the basic conflict between the economists. Keynes and Hayek both rap that “We've been going back and forth for a century” and Keynes says he wants to “steer markets” and Hayek says he wants them “set free”. They both rap together “There's a boom and bust cycle and good reason to fear it” as Hayek blames “low interest rates” and Keynes disagrees and says “it's the animal spirits” implying the bulls and bears. Then each economists views are summarized in two verses. Keynes stresses that in order to get the economy out of the bust they need to utilize the stimulus of government spending so that if consumers have money and spend it then businesses will thrive and create jobs. However, Hayek says it is not the bust that is the main problem but the boom. He says that allowing low interest rates and extending credit encourage investments that cannot be maintained over time and raps that “The boom plants the seeds for its future destruction”. As we see from our current economic problems that the government turned more to Keynes approach to deal with the financial crisis by stimulating markets with