Dancing On The Grave Of Keynesianism

Tyler Durden's picture

Authored by Gary North via the Ludwig von Mises Institute

Dancing On The Grave Of Keynesianism

The collapse of the Soviet Union in December of 1991 was the best news of my lifetime. The monster died. It was not just that the USSR went down. The entire mythology of revolutionary violence as the method of social regeneration, promoted since the French Revolution, went down with it. As I wrote in my 1968 book, Marxism was a religion of revolution. And Marxism died institutionally in the last month of 1991.

Yet we cannot show conclusively that "the West" defeated the Soviet Union. What defeated the Soviet Union was socialist economic planning. The Soviet Union was based on socialism, and socialist economic calculation is irrational. Ludwig von Mises in 1920 described why in his article, "Economic Calculation in the Socialist Commonwealth." He showed in theory exactly what is wrong with all socialist planning. He made it clear why socialism could never compete with the free market. It has no capital goods markets, and therefore economic planners cannot allocate capital according to capital's most important and most desired needs among by the public.

Mises's argument was not taken seriously by the academic community. Socialism was so popular by 1920 among academics that they did not respond to Mises for over 15 years. When finally one major economist, who really was not a major economist but was simply a Polish Communist, wrote a response to Mises, it got a great deal of publicity. His name was Oscar Lange. He was a hack. He taught at the University of Chicago. He had no theory of economics. Immediately after World War II, he returned to Poland, renounced his American citizenship, and became a major Polish government bureaucrat. He was Stalin's hand-picked first Polish ambassador to the United States. He was a Marxist. He was a Communist. He was a hack. He spent his career with his finger in the wind, seeing which way it was blowing. As for his critique of Mises, Poland never adopted his so-called practical organizational answer to Mises, and neither did any other Socialist Commonwealth nation.

So, the only major supposed academic refutation of Mises was made by a hack who switched sides to Communism when he got a better offer. Yet he was heralded as a brilliant economist because he had supposedly refuted Mises. The academic world never admitted what Lange was, which was a hack Communist. It never admitted that no socialist nation ever implemented his supposed alternative to the free-market system. The academic world simply clung for over 50 years to his completely hypothetical alternative to free-market capital allocation. The academic world would not learn the truth.

Finally, when it became clear in the late 1980s that the Soviet economy was bankrupt, a multimillionaire socialist professor named Robert Heilbroner wrote an article, "After Communism," for the New Yorker (September 10, 1990), which is not an academic journal, in which he admitted that throughout his entire career, he had always believed what he had been taught in graduate school, namely that Lange was right and Mises was wrong.

Then, he wrote these words: "Mises was right."

Heilbroner wrote the most popular textbook on the history of economic thought that has ever been written, The Worldly Philosophers. He became a multimillionaire off the book royalties. In that book, he did not even mention the existence of Mises. He, too, was a hack — a polished hack (though not Polish), but still a hack. Yet he was widely respected in academia. Academia made him rich.

The academic community is intellectually corrupt. It goes with fads, and it does not react to the truth. It suppresses the truth. I realized this very early in my career, long before I got a PhD. The guild in every university department operates as a guild, and it has no commitment to truth in matters controversial until one side or the other loses power. When one side is perceived as possessing power, which the Communists were perceived as possessing, 1917–1991, there is never any direct challenge by the academic community. Academia argued about this or that aspect of the Soviet system that was wrong, which generally related to freedom of speech. But, with respect to the basic operations of the Communist economic-planning system, there was never anything like a comprehensive critique of that system, and never did anybody inside the academic community look for the weakness of Communism in Mises's 1920 article.

The Soviet Union was always economically bankrupt. It was poverty-stricken in 1991. It was, in conservative journalist Richard Grenier's magnificent phrase, Bangladesh with missiles. Outside of Moscow, Russians in 1990 lived in poverty comparable to mid-19th-century America, but with far less freedom. Yet this was never told to students during the years that I was in school, which was in the 1960s. There were a few economists who did talk about it, but they got little publicity, were not famous, and their books were not assigned in college classrooms. The standard approach of the academic community was to say that the Soviet Union was a functioning economy: a worthy competitor to capitalism.

Paul Samuelson was the most influential academic economist of the second half of the 20th century. He wrote the introductory textbook that sold more than any other in the history of college economics. In 1989, as the USSR's economy was collapsing, he wrote in his textbook that the Soviet Union's central-planning system proves that central planning can work. Mark Skousen nailed him on this in his book Economics on Trial in 1990. David Henderson reminded readers in the Wall Street Journal in 2009.

Samuelson had an amazingly tin ear about communism. As early as the 1960s, economist G. Warren Nutter at the University of Virginia had done empirical work showing that the much-vaunted economic growth in the Soviet Union was a myth. Samuelson did not pay attention. In the 1989 edition of his textbook, Samuelson and William Nordhaus wrote, "the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive."

The creator of the so-called Keynesian synthesis and the first American winner of a Nobel Prize in economics was blind as a bat to the most important economic failure of the modern world. Two years later, the USSR was literally broken up, as if it had been some bankrupt corporation. Samuelson never saw it coming. People who are conceptually blind never do.

The Keynesian Era Is Coming to a Close

I say this to give you hope. The Keynesians seem to be dominant today. They are dominant because they have been brought into the hierarchy of political power. They serve as court prophets to the equivalent of the Babylonians, just before the Medo-Persians took the nation.

They are in charge of the major academic institutions. They are the main advisers in the federal government. They are the overwhelmingly dominant faction within the Federal Reserve System. Their only major institutional opponents are the monetarists, and the monetarists are as committed to fiat money as the Keynesians are. They hate the idea of a gold-coin standard. They hate the idea of market-produced money.

There was no overwhelming outrage among staff economists at the Federal Reserve when Ben Bernanke and the Federal Open Market Committee (FOMC) cranked up the monetary base from $900 billion to $1.7 trillion in late 2008, and then cranked it up to $2.7 trillion by the middle of 2011. This expansion of the money supply had no foundation whatsoever in anybody's theory of economics. It was totally an ad hoc decision. It was a desperate FOMC trying to keep the system from collapsing, or at least they thought it was about to collapse. The evidence for that is questionable. But, in any case, they cranked up the monetary base, and nobody in the academic community except a handful of Austrians complained that this was a complete betrayal of the monetary system and out of alignment with any theory of economics.

The Keynesians are eventually going to face what the Marxists have faced since 1991. Literally within months of the collapse of the Soviet Union, when members of the Communist Party simply folded up shop and stole the money that was inside the Communist Party coffers, any respect for Marxism disappeared within academia. Marxism became a laughingstock. Nobody except English professors, a handful of old tenured political scientists, and a tiny handful of economists in the Union of Radical Political Economists (URPE), were still willing to admit in late 1992 that they were advocates of Marxism, and that they had been in favor of Soviet economic planning. They became pariahs overnight. That was because academia, then as now, is committed to power. If you appear to have power, you will get praised by academia, but when you lose power, you will be tossed into what Trotsky called the ashcan of history.

This is going to happen to the Keynesians as surely as it happened to the Marxists. The Keynesians basically got a free ride, and have for over 60 years. Their system is illogical. It is incoherent. Students taking undergraduate courses in economics never really remember the categories. That is because they are illogical categories. They all rest on the idea that government spending can goose the economy, but they cannot explain how it is that the government gets its hands on the money to do the stimulative spending without at the same time reducing spending in the private sector. The government has to steal money to boost the economy, but this means that the money that is stolen from the private sector is removed as a source of economic growth.

"The academic world rejected Mises's theory of socialist economic calculation. Everything in their system was against acknowledging the truth of Mises's criticisms, because he was equally critical about central banking, Keynesian economics, and the welfare state."

The Keynesian economic system makes no sense. But, decade after decade, the Keynesians get away with utter nonsense. None of their peers will ever call them to account. They go merrily down the mixed-economy road, as if that road were not leading to a day of economic destruction. They are just like Marxist economists and academics in 1960, 1970, and 1980. They are oblivious to the fact that they are going over the cliff with the debt-ridden, over-leveraged Western economy, because they are committed in the name of Keynesian theory to the fractional-reserve-banking system, which cannot be sustained either theoretically or practically.

The problem we are going to face at some point as a nation and in fact as a civilization is this: there is no well-developed economic theory inside the corridors of power that will explain to the administrators of a failed system what they should do after the system collapses. This was true in the Eastern bloc in 1991. There was no plan of action, no program of institutional reform. This is true in banking. This is true in politics. This is true in every aspect of the welfare-warfare state. The people at the top are going to be presiding over a complete disaster, and they will not be able to admit to themselves or anybody else that their system is what produced the disaster. So, they will not make fundamental changes. They will not restructure the system, by decentralizing power, and by drastically reducing government spending. They will be forced to decentralize by the collapsed capital markets.

When the Soviet Union collapsed, academics in the West could not explain why. They could not explain what inherently forced the complete collapse of the Soviet economy, nor could they explain why nobody in their camp had seen it coming. Judy Shelton did, but very late: in 1989. Nobody else had seen it coming, because the non-Austrian academic world rejected Mises's theory of socialist economic calculation. Everything in their system was against acknowledging the truth of Mises's criticisms, because he was equally critical about central banking, Keynesian economics, and the welfare state. They could not accept his criticism of Communism precisely because he used the same arguments against them.

The West could not take advantage of the collapse of the Soviet Union, precisely because it had gone Keynesian rather than Austrian. The West was as compromised with Keynesian mixed economic planning, both in theory and in practice, as the Soviets had been compromised with Marx. So, there was great praise of the West's welfare state and democracy as the victorious system, when there should have been praise of Austrian economics. There was no realization that the West's fiat-money economy is heading down the same bumpy road that led to the collapse of the Soviet Union.

It was not a victory for the West, except insofar as Reagan had expanded spending on the military, and the Soviets stupidly attempted to match this expenditure. That finally "broke the bank" in the Soviet Union. The country was so poverty-stricken that it did not have the capital reserves efficient to match the United States. When its surrogate client state, Iraq, was completely defeated in the 1991 Iraq war, the self-confidence inside the Soviet military simply collapsed. This had followed the devastating psychological defeat of the retreat of the Soviet Union out of Afghanistan in 1989. Those two defeats, coupled with the domestic economic bankruptcy of the country, led to the breakup of the Soviet Union.

The present value of the unfunded liabilities of the American welfare state, totaling over $200 trillion today, shows where this nation's Keynesian government is headed: to default. It is also trapped in the quagmire of Afghanistan. The government will pull out at some point in this decade. This will not have the same psychological effect that it did on the Soviet Union, because we are not a total military state. But it will still be a defeat, and the stupidity of the whole operation will be visible to everybody. The only politician who will get any benefit out of this is Ron Paul. He was wise enough to oppose the entire operation in 2001, and he was the only national figure who did. There were others who voted against it, but nobody got the publicity that he did. Nobody else had a system of foreign policy that justified staying out. His opposition was not a pragmatic issue; it was philosophical.

The welfare-warfare state, Keynesian economics, and the Council on Foreign Relations are going to suffer major defeats when the economic system finally goes down. The system will go down. It is not clear what will pull the trigger, but it is obvious that the banking system is fragile, and the only thing capable of bailing it out is fiat money. The system is sapping the productivity of the nation, because the Federal Reserve's purchases of debt are siphoning productivity and capital out of the private sector and into those sectors subsidized by the federal government.

After the Crash

There will be a great scramble ideologically among economists and social theorist as to why the system went down, and what ought to replace it. On campus, there will be no coherent answers whatsoever. The suppression of the truth has gone on so systematically on campus for half a century, as manifested by the universal praise of the Federal Reserve System, that the reputation of campus will not recover. It shouldn't recover. The entire academic community has been in favor of the welfare-warfare state, so it will not survive the collapse of that system. It will become a laughingstock.

It is not clear who is going to come out the victors in all this. That could take a generation to begin to sort out. There will be many claimants, all pitching their solutions, all insisting that they saw the crisis coming. But that will be hard to prove for anybody except the Austrians.

This is why it is important that people understand what is wrong with the prevailing system, and that they say so publicly.

This is why the Christian churches will not have much of a say in any of this, because the churches, and Christianity in general, have had nothing independent to say about the development of the welfare-warfare state.

The analysts with the best arguments are the Austrians. As to whether they are going to be able to multiply fast enough, or recruit students fast enough, or train them fast enough, with some of them going into positions of authority, is problematical. But we do know this: there has been no systematic criticism of Keynesian theory and its policies except by the Austrians over the past 70 years. Only the Marxists gave comparable criticism, and their ship went down in 1991.

Keynesians talk to each other. They do not seek converts. They do not think they need to. Austrians, being in a small minority, seek to persuade non-Austrians. Keynesian economists get tenure for writing gibberish and including meaningless formulas that begin by assuming away reality. Austrians begin with reality: individual human action. Keynesians, when writing for the public, offer conclusions, not explanations. Austrians seek to explain their position, since they know the public is unfamiliar with the fundamentals of Austrian economics.

In a time of breakdown, Austrians will explain why it happened, and pin the blame on Keynesians: "Their system failed. They had control ever since 1940."

Keynesians will pin the blame on Keynesians who did not go far enough: "more of the same." We see this already "Krugman vs. Bernanke."

Which version will the public be ready to believe in a crisis? In the late 1930s, we found it: the Keynesians, who blamed the free market, not the neoclassical economists. "The present system is basically OK. We just need more time."

Housebroken Austrian Economists

The battle will be fought and won outside of academia. Here is where Austrians must learn to do battle.

Inside academia, to gain tenure, every assistant professor must go through the motions of genuflecting in front of the Keynesian altar. After they gain tenure, most anti-Keynesians cannot break the habit. They sugarcoat their criticisms of Keynesianism. They play the role of loyal opponents. This even includes some Austrians — those who are appalled by the rhetoric of the Mises Institute and Lew Rockwell.com. They are housebroken.

I recall one academic Austrian economist who told me that I am far too dismissive of Keynesianism, and far too contemptuous in my rhetoric. "You just can't say such things!" he told me, not grasping his grammatical error. I responded: "Yes, I can. And I do." That was in 1992. He has not changed. Neither have I.

We have different audiences. He teaches 130 students, three days a week, eight months a year, in a government-funded minor university with no clout within the economics guild. I have 120,000 people on my mailing lists, 70,000 of them five days a week, plus readers on Lew Rockwell.com two days a week, 52 weeks a year. I can play hardball with Keynesian twits. He must guard his words so as to curry favor with those whose opinions count in academia. He has spent his career looking over his shoulder at Keynesians, who exercise power in all of the social-science academic guilds, by whose rules he must play as an outsider who is barely tolerated inside the economics guild. I have spent mine telling the crowd that the emperor has no clothes, and that his tailors are mostly Keynesians, with a few monetarists pretending to hem the invisible garments. I do not abide by the rhetorical rules — "gentle, be gentle" — that Keynesian academics impose on their critics inside academia. "You sit in the corner and wait for your turn. You will get your 15 minutes. Be polite when you get your turn." That is not my style.


I offer this optimistic assessment: the bad guys are going to lose. Their statist policies will bring destruction that they will not be able to explain away. Their plea will be rejected. "Give us more time. We just need a little more time. We can fix this if you let us get deeper into your wallets."

In the very long run, the good guys are going to win, but in the interim, there is going to be a lot of competition to see which group gets to dance on the grave of the Keynesian system.

Get out your dancing shoes. Keep them polished. Our day is coming.


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LawsofPhysics's picture

"The system is sapping the productivity of the nation, because the Federal Reserve's purchases of debt are siphoning productivity and capital out of the private sector and into those sectors subsidized by the federal government."


It isn't even that complicated.  Here, allow me to simplify; "The system is collapsing because productive people who provide, innovate, or create real goods and services of real value are not being compensated for their labor."

Fuck the god damn paper-pushing fuckers scaming and skiming wealth through financial bullshit "products".  

Then there is the issue of folks actually saving some capital.  Give them a decent return assholes.  anyone really believe the true cost for captial and risk is zero (ZIRP has destroyed captial pricing you dumb fucks)?

Couterparty risk is a bitch when moral hazard goes unchecked.  How many paper promises does your life depend on?  Hedge accordingly.

Skateboarder's picture

How many stupid VC-backed mobile games and web apps do you need? How many bullshit layers of indirection built on other layers of indirection do you need?

"CRM on the cloud? WHY NOT CRM ON YOUR PHONE SYSTEM!" I saw that on a billboard yesterday. I fucking lost it - what the fuck does that advertisement even mean! IMO people are producing pure shit these days, for the most part at least. GIGO always applies... garbage in, garbage out.

LawsofPhysics's picture

Careful, don't date yourself, but yes good analogy.

Skateboarder's picture

Dating myself as in providing temporal context of my whenabouts? lol

redpill's picture

Dear Keynesians,


Sorry for party rocking.



The Austrians

notbot's picture

Best ZH piece I've ever read.  And I've read many.

They will not restructure the system, by decentralizing power, and by drastically reducing government spending. They will be forced to decentralize by the collapsed capital markets."

It could drag on a while, like Japan, but collapse seems like almost a sure thing.  It's painful to watch; no, it's worse than that...really it's excruciating. 

It seems like the only people who get it are Ron Paul, Jim Grant, and some ZH readers.  Throw in a few money managers like Seth Klarman and Einhorn and Paul Singer. But that's about it.

I need a support group, apparently.

Darth Mul's picture

Instead of a support group, maybe what you need is a good scare.


Go read the comments on Paul Krugman's blog.


These are the people who would jail film makers to protect speech, would amend the meaning of words to preserve the Constitution, and would like nothing more than to rule absolutely over your life and property via government proxy.


And they are as batshit crazy as they are full of self-righteousness.

Overfed's picture

According to one douche over there: "We don't have a debt problem, we have an unemployment problem." Fuck. I guess I never thought of it like that. If everybody had a job at TSA, all of our problems would be solved forever. /s

Skateboarder's picture

Everyone paid to grope each other? That's a pretty sight. No wonder I tended to agree when a buddy of mine called us the circlejerk species.

notbot's picture

Darth...I already have that scare on a daily basis.  I live in NYC.  I'm surrounded by the High Priests of Keynesian Econ and the liberal mania.  

That's why I need a support group.  Some days, I wonder if I'm the only one in NYC who isn't liberal.

I know good people, and I mean sincerely good-hearted people, who are just blinded by the sheer magnitude of the Keynesian snowjob.  They aren't evil or stupid, they just haven't studied this for a living, or their livelihood doesn't depend on it, so they don't really get it.  They read the NYT.  They go to work in Marketing or PR or Medicine or some back-office job, and econ is an after-thought.

And that's what makes me so sick.  Because the people who are shoveling this propaganda do know, or should know, better. And they are duping otherwise good people.

ListLincolnBismarkRoosevelt's picture

If only you, the "good" people, could see that's on purpose. Keynes is a british Lord and on the other end you are like modern private Indian Company. It's a global war for supremacy against the nations itself. You say failure ? I say a major step in an anglobloc : UE have alraidy decided to fusion all the markets, Gov. Scahs is on the BCE, Blair the Liar (know to be in big opposition on US war) was promoted à the head of the EU and his daughter Ashton rule the EU foreign affairs...

The dream is coming true for the private&publique imperialists. You play their game by denying the concept of nation like HenryIV, Carey (Lincoln), list (Bismarck) did, not to mention Roosevelt with the biggest industrial world power ever after his political economy. Just saying ! 

nofluer's picture

Okay... now we need a piece that drags MMT out into the sunshine as the absolutely ludicrous "theory" that it is - and kill it before it gains a following! When an MMT proponent told me that "monetary sovereigns have no constraints on printing money" I about lost it! I was laughing so hard I thought I'd need a life preserver to survive the flood of pissing myself! And like Keyunesians, the concept of "logic" is NOT in their lexicon!

GREAT piece!

TimmyB's picture

What nonsense. Propping up Wall Street at the expense of Main Street isn't Keynesian. It's Kleptocracy.

Yeah, that's right. We live in a Kleptocracy. The owners of our county like it that way, so they can rob us blind without fear of arrest. This Austrian bullshit is just another attempt at propaganda by the owners of this country to hang a fig leaf over their rampant greed. Same with Rand. Just self serving bullshit to justify greed.

What's funny is how many here eat this shit up.

tennisdude's picture

What does a worldview based on non-aggression have to do with greed? Keynesian = Kleptocracy. It's only natural.

JeffB's picture

"Best ZH piece I've ever read.  And I've read many."


I completely agree.

I just hope he's right about the good times following the bad. Some Russian scientists and engineers were living off of scraps they could pick up in garbage dumps after the collapse of the Soviet Union if I recall.

Hopefully things will be better coming out the other side, but it might be hell getting there.


putaipan's picture

not to rain on anyone's victory dance.....but an alternative version of 'post-keynsianism'-


i don't know how to score the 'fake austrians' ( hat tip to max k. and others) but this guy's cock sure walk gets high marks

nofluer's picture

I was quite surprised when I saw that L Rendal Wray (UMKC) was apparently a regular contributor on the Mises Institutes blog... He's not an Austrian!!! As I understand it, he's one of the originators of MMT!!!

bigdumbnugly's picture

The analysts with the best arguments are the Austrians. As to whether they are going to be able to multiply fast enough, or recruit students fast enough, or train them fast enough, with some of them going into positions of authority, is problematical.


i got it!   gov't subsidizes austrians!

and removes condoms from their schools of study.


next problem please...

Elzon1's picture

The funny thing is we would likely take offense to this...


Even though we would be supportive of the thoughtfulness. 


Although, the ladies wouldn't be as supportive since there wouldn't be any welfare for their children and there would be economic turmoil until we finally took full control of the situation.


But hey, if the austrian school of thought attracts the ladies we wouldn't be a minority for very long ;)

AnAnonymous's picture

'Americanism' is all about real stuff...

PiratePawpaw's picture

And I really got a lot of cool stuff.

akak's picture

AnAnonymous, do you know why you are such an extreme douchbag?  It is because you do NOTHING but make sweeping, simplistic and bigoted assertions with utterly no facts, no arguments, and no logic behind any of them. Just repeating the same tired claims endlessly does not make them true.

Nor do you ever try to engage in any form of honest debate here --- you just monotonously dump your blanket anti-American accusations and generalizations in this forum and then run away like the anti-intellectual coward and troll that you are.  And the few times that you do ever respond to other posters, we get nothing from you but circular arguments, evasion and diversion, with NEVER any attempt to either defend your blind assertions and accusations or to logically challenge other posters' condemnations or refutations of those same naked assertions.  Clearly, you are here for no reason at all other than to spread your sick and obsessive anti-American hatred.

You idiotically attempt to blame Americans for every single thing wrong in the world today, while never acknowledging the role that your own consumption-mad nation of China, for example, plays in the madness that is the economic and political world of today.  No, according to you, EVERYTHING that is bad in the world can be laid at the feet of the citizens (each and every one of them) of only one nation in the world, the USA --- never our sociopathic leaders in Washington, never our financial overlords, but ALL of us collectively.  That kind of irrational thinking is known as prejudice and bigotry, and is your (only) stock in trade.

There are plenty of posters, most of them in fact (myself included) who are perfectly willing to condemn our psychopathic leaders in Washington, our hopelessly corrupt political system, and many perverted aspects of our US society and "culture" (such as it is). But you are not content with limiting yourself to such logic --- no, according to you, EVERY American alive today, or who has every lived, is responsible for ALL the sins of the world.  That is collectivism in its most perverse, extreme and idiotic form.

You are dishonest, irrational, hate-filled and close-minded, and that is why no other sincere poster here ever agrees with you or upvotes your ridiculously bigoted and nonsensical comments.

I have nothing whatsoever but contempt for you.

malikai's picture

Actually, CRM is very important on the clouds.

Failing at CRM in the clouds can lead to a spiraly, firey death for the crew and passengers.

kaiserhoff's picture

I'm not sure you understand, kind sir.

In the near future, we will spend all day typing with our thumbs and our toes, gossiping with the same five or six chumps we have known since kindergarten.  That and the SOMA will be more than sufficient for our needs.  And Ben von Numbnutts prints on...

dugorama's picture

It's not that Keynesianism, per se, is at fault.  I'm all for an injection of stimulus during bad times.  Rather, it's the failure to recognize the liquidity trap that threatens us.  The author is correct - having exhausted monetary stimulus, it's time to try something else.  The policy failure is not having a Plan B.  Fiscal stimulus is clumsier and slower to enact and react, but the R party in Congress has taken that off the table anyway (except for more military spending).  That leaves us with????


Once real interest rates are near zero, nevermind negative, it's time to realize that more liquidity injections only benefit the first line recipient.  

putaipan's picture

big greenie for "not even wrong"! ok ok so is this guy 'not even wrong'?.....


don't know how i found it/haven't seen it linked by anyone....but i like it. iwish max keiser or someone would get him as a guest.


tip e. canoe's picture

it's a shame that there isn't more discussion/debate centered around "geolibertarianism".

surfsup's picture

Its not Keynesian philosphy its INTEREST - PERIOD!   Interest has killed far more economies than anything else and the terminal phase of systems which over extend because of SIMPLE INTEREST is trackable.  90% of solutions would solve NOTHING -- keep interest in the picture you'll get the same shit.    Think "Obamaphone" does the money changing scam -- you want interest pad on your savings so you play along with the abstractions of blame on tangential aspects!   THINK!



Darth Mul's picture

Er...  and spending money you don't have.


And borrowing money when you burn through that in order to "create jobs" in order to pay back the money you'll borrow when the money you borrowed isn't paid back because you had to borrow more to pay someone else that you'd borrowed from before.


I suppose if you just keep on doing it a real realw hole lot, eventually unicorns come and bring you sexy leprechauns carrying gold coins and free ice cream.

ListLincolnBismarkRoosevelt's picture

Lord Keynes is an eugenist, british imperialist and malthusian ! Wat you try to say (with the nonsense from the imperialists) is that Henry IV boost the real economy with the birth of the modern state. Or, if you dare challegging the most ridiculous nonsense from the british mind,  Roosevelt boost the industrial US capacity with injection IN THE REAL ECONOMY, PEOPLE INCLUSIVE.  

nofluer's picture

It's not that Keynesianism, per se, is at fault.  I'm all for an injection of stimulus during bad times.

OMG! A closet Keynesian!!! HELLLLLLPPPPP!!!!! (running away.)

Ummm.... isn't the whole IDEA of "stimulus" a Keynesian concept? IN any case, just in case you DON'T know - I'll ask you this, where does the government GET the "money" to stimulate the economy with? (Think carefully, now... if you can...)

dugorama's picture

What closet?  No, I'm for avoiding depressions if possible.  That doesn't mean I think you blindly inflate to the moon.  Is your world only black and white?

Okay, so you naysayers do what when the economy runs aground?  Wait for food riots to break out and then hunker down in your basement with your shotguns?  

yes, I actually believe that there is a role for regulating an economy - I like streets and sewers and air traffic control and etc.  And I think we should pay for it with some combo of taxes and user fees.  Do I think we should only spend in some artificial accounting period exactly what we took in during that same artificial accounting period?  No.  I'm for that old fashioned concept of surpluses in good times (remember Clinton's budget? or the biblical injunction to save 7 years of crops?) and deficits in bad.  Not bat shit crazy deficits, but don't be like Arkansas and leave highways halfbuilt because you can't issue bonds.

Do you think US Steel can build a plant without borrowing?  If so, they'd have never built the first one nor the last.  

None of these statements indicate that I think we should triple the national debt, nor are they "not even wrong".

"Lighten up Francis" to quote a poster from yesterday quoting from a favorite flick.



nofluer's picture

Low hanging fruit fruit first...

I'm for that old fashioned concept of surpluses in good times (remember Clinton's budget?

Clinton never had a surplus. What Clinton had was a batshit crazy chairman of the FED (Greenspaz) who printed his buns off to inflate alll the bubbles that are now popping like a kettle of pop corn at temperature! That and a whole bunch of accounting tricks, and monetary tricks (like shifting from long term Treasuries to short term, and like inventing the Roth IRA so he could collect taxes in the present on money that would probably never be taxed otherwise) and spending the SS "trust fund" like EVERY other president since LBJ. 

And you didn't answer my question, Keynesian... WHERE DOES THE GOVERNMENT GET THE MONEY TO SPEND DURING "BAD TIMES"????? A government is not a business. It doesn't make "products" from which it earns profits to set aside "for bad times." So where does the government's slush fund come from????? Come on, Keynesian - you know... admit it.

When bad times come, if the government has NOT inflated the money, some citizens will have savings that will see them through (the value of thrift - the principle behiind the whole 7 years of fat and lean thiing). Others will still be working and earning. And some will be unemployed with no resources to see them through for whatever reason. That's what CHARITY is all about - helping your fellow man through hard times. It is NOT the government's job or responsibility to care for individuals in the population!!! The US Constitution makes provision for the GENERAL welfare - ie infrastructure, defense, etc. things that benefit the ENTIRE population - the background of the nation - NOT for the inDUHvidual! If someone's too lazy to work - let them starve!

One of the things that I think is part of the "general welfare" is regulation of the banking system so it doens't abuse the people. Proper regulations like Glass-Steagal are properly within the governments portfolio. Creating an "independent bank" that takes over the governmemt's function of creating and controling the currency is NOT a proper function of government. There is absolutely NO authority for the government to pass its power to regulate and print money to an outside entity. As well assign control of the Army and Navy to a Mafia Don! You'd get pretty much the same result that we now see coming from the FED.

As to the save for 7 years and spend for 7 years - first that command came directly from God. Are you saying that our government gets commands from God? (I think some of them think they ARE god!) And second, that was a ONE TIME SITUATION - not an ongoing policy.

US Steel is not a government. Different principles, different case.


Mr. Magniloquent's picture

Why do you believe an economy needs central planning (See: Regulation)? Do you honestly believe that people do not desire plumbing or having their air traffic coordinated without being compelled to participate?

NidStyles's picture

The first derpession was caused by economic stimulus...

falak pema's picture

the first "derpression" was caused by irrational exuberance and greed. 

Your understanding of economics matches your acumen for looking into closets and finding bogeymen.

BigJim's picture

US M2 tripled between 1913 and 1929, Falak. Without artificially cheap credit leveraged "irrational exuberance and greed" can't get off the ground.

DoChenRollingBearing's picture

A conservative guy I know a month ago believed that Romney would win.  Now he thinks Obama will.  Rather than being dejected, he has done something that is interesting.

He has now gone into a WHOLE 'NOTHER mode of thought: Looking out for No. 1.  He has a good niche (taking advantage of Dodd-Frank to make LOTS of money lending at usurious rates), so he is making money while he can...  He then will "Go Galt" if he can no longer make money in the field he knows.  

He has a plan and is ready.

Dr. Acula's picture

Your commie friend likes Romney? So he loves Romneykov socialist health care plan and Komrade Ryan's bailouts? Gross.

Anyway, Obama will almost certainly win:


"Polly takes advantage of one of the best procedures to improve accuracy: combining forecasts. A meta-analysis of 30 studies found that combining reduced the error of the typical forecast on average by 12% (Armstrong 2001). For the past five elections, the PollyVote has shown that the gains from combining can be even higher, if the forecasting situation meets the conditions under which combining is most beneficial (Graefe et al. 2010)"

nofluer's picture

Hummmm.... what did you say? OH! I get it... I think. You ignore the fact that you're using invalid sources of imputs and pure unadulterated BS and grant validity to the result BECAUSE you combined a bunch of pure unadulterated BS with OTHER sources of pure unadulterated BS, and so you end up with a MORE CORRECT pile of BS. Did I get that right?

falak pema's picture

don't corner him into logic; he loves sophistry and denial of the undeniability of irrefutable fact. 

That is not tact or tactics, its just blatant act of fartassery.

Dr. Acula's picture

Yes, that's more or less what it says.

Forecasting is obviously an art, not a science.


Umh's picture

That's just like bundling a large number of sub prime mortgages together and calling it AAA.

knukles's picture

All my neo-Keynesian uber-liberal People's Republic of Kalifornia government employee golf buds think if more debt and currency is printed and more (as in everybody) work for the gubamint everything be Hunkie Dorie A-OK in Never Never Land.

They still seem to have a look of abject confusion when I ask them why retaining what I've earned is greed but taking it away from me is not...


In fact they all agree with the Insane (as one person I know describes him) Dr. Krugman that the whole problem is that Not Enuf Has Been Done, Yet.
To which I point out a QED with the unheralded debt and federal budget expenditures and money growth with a barely breathing economy which by their reckoning should be going va va voom gangbusters... but WTF...  No accounting for stupidity...

kaiserhoff's picture

Hell, knuks, I'm talking to the same retards on the other coast, and I hate golf.

Try this.  When all reason fails, just ask "Why should we keep feeding you?"

They don't understand, but the blank, bull frog stares you get from the fuckers is a real hoot.

knukles's picture

Kaiserhoff, so true

Here's another one.
One day they were railing on about how corporate executives should have no influence upon board members and salary decisions as it represented a Conflict of Interest.
Sensing a perfect opportunity to screw 'em over blind with their very own logic, I mentioned that....

Should gubamint employees have a say in their compensation?

To which they resoundingly replied but of fucking course, dipshit (in so many words) because they pay taxes, too!

To which I replied that they only fund a small portion of their salaries, medical and retirement bennies since their tax rate is not 100% which is a greater percentage "conflict of interest" than the corporate employee...

Bullfrog looks, deluxe.


Anusocracy's picture

"They still seem to have a look of abject confusion when I ask them why retaining what I've earned is greed but taking it away from me is not..."

The same look that you would get if you were talking to hunter-gatherer tribesmen, or monarchs and royalty, of days past.

That's what the culture was and you are an anomaly. Culture hasn't caught up with you yet.

mrktwtch2's picture

good and valid points but the author misses one key element..if the usa goes down so does the rest of the world economically because they need our consumer base..there fore they will try to keep the american consumer alive at any cost..