in fact there are no prices in this story. If 1 couple wanted to babysit they could offer to for half a coupon
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I think this is too important to ignore. Prices are key to how a market economy functions
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Replying to @samselikoff @michaellnorth
interest rates are usually part of an enhanced version of the parable. http://www.slate.com/articles/business/the_dismal_science/1998/08/babysitting_the_economy.html …
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but here's the thing: Austrians were so sure they were right in 2008 that they said, loudly, that 1/
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stimulus and rounds of QE would trigger near-term inflation. They said it again when QE was 2/
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about to phase out. When it doesn't happen they blame other factors, lengthen the time horizon 3/
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but since it didn't happen, maybe consider the liquidity trap story? 4/4
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Replying to @wycats @michaellnorth
right - but Keynesians (and others) also made incorrect predictions about effects of stimulus, many times
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which is why I'm skeptical of specific predictions. I think stories and thought experiments are important
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I don't find the babysitting coop compelling, certainly not that management would do a better job
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the question is not whether it's compelling, the question is whether it's an economic model.
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