This page has been archived and commenting is disabled.

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.

Conclusion

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.

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 10/02/2012 - 16:56 | 2849697 Darth Mul
Darth Mul's picture

it's a fair point, and I think that by Keynesianism is increasingly meant Krugmanism, which is...  I mean apart from seeming to simply not consider inconvenient contrary facts, probably rests in his peculiar worldview more than anything.

Paul Krugman, before he is an economist, is a statist and central planner.

 

He is the little boy who read Asimov's Foundation series and wanted to be the scientist who could predict it all scientifically and make the world orderly, humane and just.

 

Of course, no one who studied science thinks economics is a science, and what Paul Krugman might deem humane and just, I might well deem insane and tyrannical and myopic.

So he says crazy, wrong shit - and feels morally superior while doing it.   Look, the Times is doing their best to make it seem like Iran has a nuclear weapons program while boldly ignoring the fact Israel is actually wiping a country off the map while holding on to hundreds of nukes and other nasty items.

 

They ain't gonna fire him because he's a dishonest cryptofascist.

 

If nothing else that would be awkward come Saturday at temple...

 

 

Tue, 10/02/2012 - 14:53 | 2849225 debtor of last ...
debtor of last resort's picture

It's not icecream coming from the big ape on top of the rock. Don't lick your fingers.

Tue, 10/02/2012 - 14:55 | 2849232 Westcoastliberal
Westcoastliberal's picture

The current problems we face are oh-so multifaceted....IMHO if you dig way down the root of the rot comes from money in politics.

Imagine for a moment that money was not a factor in getting elected or staying in office.  Would we have the same monetary policies, or would the bastard banksters be lounged in the gray bar hotel and the TBTF banks broken up (or never allowed to become so big to begin with)?

Would the US have become the modern day equivalent of Rome, with military spread far and wide, invading other countries without invitation with our drone bombers?

Yes, until and unless we find a way to remove money from politics, this charade of a country will continue.  Right now, we have no solutions, only PR.

Tue, 10/02/2012 - 14:56 | 2849237 Chupacabra-322
Chupacabra-322's picture

Think of it in terms of this.  Keynesian advocates the use of deficit spending while the Milton Friedman model advocates printing money. 

We're at the highest level of doing both. 

Tue, 10/02/2012 - 14:59 | 2849247 dwdollar
dwdollar's picture

"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."

Let me boil it down further... Academia is a bunch of opportunists pretending to be idealists.

Wed, 10/03/2012 - 08:13 | 2851296 Umh
Umh's picture

They know it beats working for a living.

Tue, 10/02/2012 - 15:02 | 2849274 BrigstockBoy
BrigstockBoy's picture

After reading this, I toasted the author and flung my champagne glass into the fireplace. I'll be damned if I'm going to sweep it up...

Tue, 10/02/2012 - 15:08 | 2849281 SoNH80
SoNH80's picture

Cui bono? The collapse looms in the distance, but who would benefit from the end of the welfare state?  Surely not those called "The Little People" by Leona Helmsley, The Little People that Pay Taxes, or, according to Mittens Romney, Those Little People Unworthy of Attention.  With one "private" remark on the Internets, delivered in the barking voice of a corporate shill to a room full of greedy geezers, Romney torpedoed his candidacy.  BHO, the Butterscotch Pudding Pop, will win, and the Republican establishment will turn on itself like a gang of rabid ferrets with mange.  The Little People are realizing, hey, if this ship is sinking anyway, what good does giving up my life jacket do?  So that it will enable me to swim to some island that *may* or *may not* be on the horizon?

I am in Swing Voter Land out here, and Romney completely, royally screwed the pooch with "47%".  People do not like to vote for a politician who believes that Little Peoples' votes stink like a fatass on the T.  In August.

 

Tue, 10/02/2012 - 15:36 | 2849401 El
El's picture

I somewhat disagree. Although it will be very painful, in the long run the weaning of the dependent will be the best thing that ever happened to them. When the little guy can once again embark on an entreprenurial journey without butting up against government regulation (and expensive permits) at every turn. The end of the fractional reserve banking system will most certainly benefit all of us...except the bankers. I'm okay with that.

Tue, 10/02/2012 - 15:39 | 2849417 SoNH80
SoNH80's picture

I don't really see 93-year old widows and severely brain-damaged veterans taking much of an "entrepreneurial journey", but I guess I lack that Kudlowian optimism.

Tue, 10/02/2012 - 16:13 | 2849551 Dr. Acula
Dr. Acula's picture

Obviously, you should commit thefts to help these people. That would be the right thing to do.

 

Tue, 10/02/2012 - 18:06 | 2849910 Moon Pie
Moon Pie's picture

"..Well lookie here buddy...

you wanna be like me?

Pull out yer six shooter

and rob every bank you can see..

...tell the Judge I said it was allright..

Yes." 

- Bob Dylan's Blues - Bob Dylan

Tue, 10/02/2012 - 15:10 | 2849303 DR
DR's picture

"but this means that the money that is stolen from the private sector is removed as a source of economic growth"

 

Record corporate cash...

 

Banks deposits at record high even at low interest rates....

 

Hedge funds returning money to clients because they can't find good investments or using their funds for speculative purposes.

 

PE firms dropping going out of business because there is nothing profitable to buy...

 

There is no shortage of funding for the private sector.

Tue, 10/02/2012 - 15:12 | 2849308 MoneyShaman
MoneyShaman's picture

Keynesianism will never die, because bureaucrats don't want to be demonized, or disparaged by the public. Democracies and free markets don't mix. It's like oil trying to mix with water. It doesn't happen. My guess bureaucrats will still be fond of Keynesians, and their offshoots, because bureaucrats always want power. Let's not forget Margaret Thatcher who rejected Hayek's advise in favor of Milton Friedman. Government likes to make you believe you are free, but in reality, you are living under serfdom. Government letting it's stranglehold over the serfs, not likely. There is a reason why proponents of government call it a necessary "EVIL". Though I don't agree with the former.

Tue, 10/02/2012 - 15:15 | 2849319 SoNH80
SoNH80's picture

Democracies and free markets don't mix.

Do you include a democratic representative republic in the category of "democracy"?  If so, is your ideal form of government along the lines of Pinochet's Chile?

 

Tue, 10/02/2012 - 15:18 | 2849334 Dr. Acula
Dr. Acula's picture

Democracies and people don't mix.

Read Hans-Hermann Hoppe.

 

Wed, 10/03/2012 - 06:54 | 2851171 falak pema
falak pema's picture


...Democracies and people don't mix....

For anybody to write that, you can take out oxy from 'oxymoron' and you have the essence of that person.

Tue, 10/02/2012 - 15:17 | 2849324 geno-econ
geno-econ's picture

US defense spending was always higher than that of USSR and certainly the competition led to the collapse of Soviet Union which then  unleashed another phenomonon. Namely the US always feared the rise of Socialism in US  as espoused  by Marx and Lenin .  In fact it became a phobia during the McCarthy era and reign of FBI Director Edgar Hoover. This fear of Communism/Socialism kept Capitalism "honest" and in check without going to the extreme of Capitalism which is Greed.  However , after the fall of the old Soviet Union we have seen capitalism expand without an honest broker as evidenced by financial industry corruption, income disparity, unemployment, tax avoidance, deficits without regard to consequences and even rise in use of military intervention.  China of today is not an idiological threat.  If anything they have  learned to play the game very well.  Unfortunatly our current political system is  incapable of keeping Capitalism Honest 

Tue, 10/02/2012 - 15:18 | 2849333 luckylongshot
luckylongshot's picture

Replacing the failed fractional reseerve system is actually not that difficult as fiat money issued interest free  by the government and linked to productivity has proven able to turn bankrupt states into economic superpowers in as little as 4 years (Abraham Lincoln did this and got shot for it). The hard part is going to be identifying and bringing to justice the criminal cabal of Rothschild zionists responsible for the current fraudulent system.

Tue, 10/02/2012 - 15:19 | 2849339 PAWNMAN
PAWNMAN's picture

When the debt bubble finally bursts it will give the powers that be another chance to blame the free market and initiate another, even larger, power grab. We've all seen this movie before.

Tue, 10/02/2012 - 15:29 | 2849368 NaiLib
NaiLib's picture

Im going to be a Zerohedge Contrarian here....

I believe we are in a similar situation as we were in the fall of 1999. At that time we had the ultimate CB Fear of the "Millennium Bug". Hence every CB in the world just pushed out as much cash they could - "all systems were to collapse on New Years Eve". Look at what happened to the charts the five months fro September......

 

It is possible that we have the same situation now. All CBs are scared to death of the US Fiscal Cliff. And the Shadow Banking system, and the Failing Europe, and whatever ....

It is actually possible that we will have a Melt Up situation the coming months.

Just give it a thought...

 

 

Tue, 10/02/2012 - 15:35 | 2849392 BinAround
BinAround's picture

Gary's been warning about inflation for at least five years.  Too bad for anyone who listened.

 

Tue, 10/02/2012 - 15:43 | 2849416 Darth Mul
Darth Mul's picture

This is a nice article, if not especially well-written.

 

However, I'd like to humbly object on the basis that the author seems to think that Bernanke and Krugman are merely obtuse twits - confusing the limits of their perception with the limits of a/the "economic system."

 

They are not so stupid as that - the mathematics of fractional reserve, rehypocthecating banking, compound interest, and a Trainspotting-like addiction to deficit spending is all you need to know.  The fact that the federal reserve system is unconstitutional and absurd and per se theft goes to why we need to line these people up and shoot them - not to why the system, qua such is doomed.

 

No, they understand that this economic system is an orbit - it was a slow fall from the beginning.  And they know that a handful of private, international banks have concocted the greatest hoax in history.

 

They are evil, gentlemen - not stupid.

 

They do not deserve ridicule.

 

They deserve punishment.

http://www.jesus-is-savior.com/Evils%20in%20Government/Federal%20Reserve%20Scam/federal_reserve.htm

Tue, 10/02/2012 - 16:24 | 2849588 McRocket
McRocket's picture

Shooting Bernanke is nonsense and slightly insane.

 

I HATE his ideas...but murdering him?

 

Ridiculous.

Tue, 10/02/2012 - 16:57 | 2849703 Darth Mul
Darth Mul's picture

After a fair trial, for fucks' sake.

 

We ain't Bolsheviks, you know.

 

Then - absolutely.

Tue, 10/02/2012 - 17:09 | 2849736 McRocket
McRocket's picture

Trial? On what charge? Doing his job (though incredibly badly)?

 

Don't be ridiculous.

 

 

Besides, most politicians and probably most Americans agree with what he is doing ( macroeconomic idiots that they are).

Tue, 10/02/2012 - 17:01 | 2849714 putaipan
putaipan's picture

again .... just trying to throw out a suitable linky that looks a little less scary christian than yours-

http://libertyrevival.wordpress.com/

Tue, 10/02/2012 - 15:46 | 2849443 McRocket
McRocket's picture

Great article, imo.

 

Though I agree this Keynesian nonsense is doomed, I fear that it will take MUCH longer then many seem to think.

  The capacity of government's/central banks to print money and distort CPI/inflation numbers seems near endless.

I believe that the collapse could take 15-20 years...though I hope it will be much quicker.

Tue, 10/02/2012 - 15:53 | 2849488 surfsup
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!

www.perfecteconomy.com

 

 

Tue, 10/02/2012 - 15:55 | 2849493 lasvegaspersona
lasvegaspersona's picture

Gary

It seems you ignore fofoa the same way you accuse others of having ignored the Austrian view.

Tue, 10/02/2012 - 15:59 | 2849508 daxtonbrown
daxtonbrown's picture

I know, I will be called an asshole for blowing my own horn, but North has just pointed out that only the Austrians have criticized Keynes logically. The problem with the Austrians is that while they are substantially correct, their analysis still relies on explanations based on subjective human nature. I have been working for 30 years on a different parallel approach which looks at the objective physics of value - namely that money is a measure of Free Energy (this has specific meaning in engierering and physics and has nothing to do with free, but with the measurement of useable work). This supports the Austrian school, but from a different angle.

Here's an article on the physics of money. http://www.futurnamics.com/physics.php

The human element of Austrian theory becomes part of the information energy elements of the Free Energy equations. Information energy is governed by the Second Law entropy equation, which is an inequalilty. An inequality means the informational value of a product must be determined in a time dependent floating free market. Gold and oil are examples of the other two potential elements of Free Energy, namely mass and energy, but those are possible to measure objectively. The fucking Keynesians want to only use the information energy element of value because they can steal by sliding the Second Law Entropy wherever they please (i.e. fiat).

This physics approach leads to a better feel for why we are headed into a Biflationary Depression as Keynesianism is an attempt to create a perpetual motion machine (Ponzi scheme to you financial sorts).

http://www.futurnamics.com/biflation.php

Knock my stuff all you want, but I doubt any of you have heard of this outside ZeroHedge

Tue, 10/02/2012 - 18:36 | 2849989 nofluer
nofluer's picture

"engierering"

Is that what gay folks do?

Would "biflationary" be something that is bi-squanshus? Or is it not so until it's 'flated?

The physics approach... gosh. I must be gettin OLD! In MY day physics was science that dealt with the natural world - You know - quarks and leptons and all that stuff. Not people and money. I could be wrong, tho...

I don't believe you can make equations out of the things people do - because as soon as you do, some jerk-wad will come along and do something else just to be different! ie - I don't believe that human behavior is quantifiable.

Tue, 10/02/2012 - 15:59 | 2849512 Fix It Again Timmy
Fix It Again Timmy's picture

The problem is that we are being taxed [robbed in many ways] into poverty...

Tue, 10/02/2012 - 16:07 | 2849537 lynnybee
lynnybee's picture

yup, being robbed....looted, defrauded, lied to, scammed & outright criminals have invaded our peace.

Tue, 10/02/2012 - 16:15 | 2849559 Sparkey
Sparkey's picture

For something to be believed "Religiously" require three things, belief, supplied by the true believers, ritual, and incantation, as long as things work well everyone is happy with the results, when things start to faulter, the Preists/practioners start to adjust the incantations and rituals, since true reality resides outside our minds, it only rains when it does and not because we will it or our ideology promises it.

Out with Keynesianism, (the false Prophet's religion) In with Miseianism our new Savior, learn your rituals and incantations and pray the new "belief" can deliver what the old God delivered, when it was delivering I mean.

America didn't "Beat" Russia, Russia beat you, out played you really, they understood you better than you understood your selves, they left the field and watched America bankrupt herself, now they are coming back, asssisting the "Underdog" that is the sweet spot, all the World,s oppressed love those who stand with the Underdog. 

Tue, 10/02/2012 - 16:48 | 2849673 Hobbleknee
Hobbleknee's picture

Oh please.  The crash will be blamed on the mythical free market and Capitalism, and everyone will fall for it.*

 

 

 

 

 

*Except us

Wed, 10/03/2012 - 08:35 | 2851324 Umh
Umh's picture

I'm certain the politicians will never blame themselves.

Tue, 10/02/2012 - 18:33 | 2849976 tony bonn
tony bonn's picture

"...Yet we cannot show conclusively that "the West" defeated the Soviet Union..."

the west did not defeat the ussr....the wall street banksters who installed it in 1917 uninstalled it in 1991....they got all of the lessons and mileage they needed from it and then shut it down....simple as that....

all of the communism vs freedom horseshit is disgusting - i can't believe i ever bought into it but the mammon worshippers of wall street are practicing their craft here in the usa and wanted to focus all of their attention on subduing this country - they have succeeded.....

so discussion of who loses the economic philiosophy battle in moot and rather lame....

Tue, 10/02/2012 - 20:15 | 2850245 Inspector Bird
Inspector Bird's picture

Yeah.  I'm sure the guys who set it up in 1917 were alive in 1991 to uninstall it.

Or they left instructions for the guys who followed.

You can always tell an overly simplistic explanation when it rears its ugly head.

Wed, 10/03/2012 - 00:59 | 2850939 putaipan
putaipan's picture

yeah , just like there was no gap in finishing the district of colombia's city planning....'cause if you think they just crumbled between the failure of central planning and the threat of ronnie's star wars- i got a load of bush nazi gold to rehypothicate for ya

Tue, 10/02/2012 - 18:40 | 2849983 shuckster
shuckster's picture

Money is the carnal unchecked power of modern society. Government receives press, good bad, all sorts. People talk about government actions. People talk about politics, people, war, everything. But people never talk about money. It's quiet, it's under the radar. You can spend as much money as you want on whatever cause, no matter how dastardly, and the moment someone says something in protest, you will be defeneded by a chorus of "it's their money to spend!!". All sinful use of money is negated by the fact that it was executed through the disposal of money. Do you really think the government would forgo this power - this ultimate, mysterious energy? That's what Keynesianism is - power through money. Keynesianism satisfies government's baser thirst for power. Actions carried out in the name of government are subject to criticism, but expenditures are never. No expenditure is open to criticism because all matters regarding money are quickly swept under the rug. No one wants to give up the power that they gain from money, therefore, no one talks about it. Keynesianism is the natural manifestation of lust for power in a checked and balance government system. If the beaurocrat's lust for power is checked by the constitution or other documents, written and unwritten, the only natural option is to increase power by means of increasing spending power. The government increases its spending power either by taxing or by inflating. Since taxing involves consent, inflating is the natural choice. You cannot expect anyone to resist such an enticing opportunity when given it

To test this theory, just ask yourself the last time money was ever talked about in history. Was it suddenly invented? No, money has been around for 5000 years, yet history books rarely talk about its influence

Wed, 10/03/2012 - 08:46 | 2851366 Umh
Umh's picture

We discussed money when & where I went to school. On the other hand we didn't spend much class time on sex ( an hour or 2 about getting the clap and oh yeah it causes babies), drinking, lawn maintenance, shopping or many other everyday common place topics.

Then I went to college and spend hundreds of hours studying money. I really hated accounting, but it was a required course.

Tue, 10/02/2012 - 19:00 | 2850046 UnpatrioticHoarder
UnpatrioticHoarder's picture

The 100% gold-backed money Austrians will emerge triumphant then within a decade or two will be discredited as we should have adopted Fekete's Real Bills Doctrine from the start. Whoops.

Tue, 10/02/2012 - 20:13 | 2850240 Inspector Bird
Inspector Bird's picture

Oh how I wish this was true.  How I wish it would happen.

 

It won't.  And the author explains why in the article.  Just as many Austrians have bowed to the Keynesian altar just to get tenure, so many more will in the future. 

Basically any victory the Austrians have will be short-lived.  It always is.  Schumpeter outlines the nature of failure, and every time the Austrians have a window of opportunity, the nature of human frailty alters the path.  Politics, never something we enjoy but something we all realize we need to some degree, intervenes with the failure of human desire in a political realm.

Sure, we'll win for a while.  And for a while it will be fun.  But this path has been trod many millions of times over the course of history.  Just when we think we've got it right, the politicians screw it up.

Tue, 10/02/2012 - 20:26 | 2850273 Sparkey
Sparkey's picture

cAN IT BE TRUE? The voices say Von Mieses is the new prophet, the man with the `real` ideology, sent by Mammon to lead us back to plenty, OH! if only we can, by Faith and Belief follow the Ideology, incantations and rituals Von Mieses brings us, all will be well and Mana will be plenty in the land! the voices also say,, If you don't believe you are spoiling the majic,, so if you don't really believe in things anymore perhaps it would be wise to pretend that you do, so as not to be identified as an enemy of plenty, a starver of the poor, although i'm afraid  poor people don't face a bright future!

Wed, 10/03/2012 - 01:01 | 2850942 putaipan
putaipan's picture

substitute henry george for mises and it might just happen

Wed, 10/03/2012 - 00:16 | 2850883 polo007
polo007's picture

http://www.safehaven.com/article/27164/unraveling-why-a-fed-president-just-suggested-doubling-qe3

The Federal Reserve is, of course, well aware that the unemployment situation is far, far worse than what is being captured in the official headline unemployment rate of 8.1%. The government knows full well that the true unemployment rate, once workforce participation rate manipulations are netted out, is closer to 19% - and getting worse.

This building crisis of a strengthening dollar and rising unemployment called for emergency action, and that is exactly what Bernanke is doing. He is effectively calling in a B-52 strike on the US dollar, monetizing for the world to see, and pledging to monetize for as long as it takes - until the US dollar is driven down to a level where American workers can once again be globally competitive.

If the rest of the world sits back and lets the United States drive down the value of the dollar, then US employment is indeed likely to rise - at the cost of falling employment elsewhere. But if the rest of the world is not willing to sit back and watch jobs flow to the US, then there is likelihood of counterstrikes, and even the danger of all-out currency warfare.

Wed, 10/03/2012 - 12:18 | 2852098 Monk
Monk's picture

It was not a Keynesian era for the last few decades but a global free market capitalist one, with government money used to cover up losses due to increased unregulated financial speculation.

 

Do NOT follow this link or you will be banned from the site!