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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? I had a real plan any fool can understand The advice, real simple--boost aggregate demand!
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... 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!
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.
No it's the animal spirits "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist." John Maynard Keynes The General Theory of Employment, Interest and Money "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." F A Hayek The Fatal Conceit In Fear the Boom and Bust, John Maynard Keynes and F A Hayek, two of the great economists of the 20th century, come back to life to attend an economics conference on the economic crisis. Before the conference begins, and at the insistence of Lord Keynes, they go out for a night on the town and sing about why there's a "boom and bust" cycle in modern economies and good reason to fear it.
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