Chrysophylax comments on Stupid Questions Thread - January 2014 - Less Wrong

10 Post author: RomeoStevens 13 January 2014 02:31AM

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Comment author: Chrysophylax 16 January 2014 09:33:44PM -2 points [-]

Yes, due to those being standard terms in economics. Overinvestment occurs when investment is poorly allocated due to overly-cheap credit and is a key concept of the Austrian school. Underconsumption is the key concept of Keynesian economics and the economic views of every non-idiot since Keynes; even Friedman openly declared that "we are all Keynesians now". Keynesian thought, which centres on the possibility of prolonged deficient demand (like what caused the recession), wasn't wrong, it was incomplete; the reason fine-tuning by demand management doesn't work simply wasn't known until we had the concept of the vertical long-run Phillips curve. Both of these ideas are currently being taught to first-year undergraduates.