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Guest Post: Why Keynesian Political Economy Is Theft

Tyler Durden's picture




 

Via Monty Pelerin's World blog,

The plague of our time is Keynesian economics. It has destroyed the economics profession and enabled the political class to obtain powers never intended.

Keynesian economics provided the intellectual cover for the criminal class we politely call “government” to plunder its citizenry. In the beginning, clear-thinking, independent economists (not dependent on government largess) expressed objections to this “new economics.” There was little new in Keynes’ work and many errors that had been debunked decades before Keynes was even born. Bastiat’s parable of the “broken window” in 1850 is probably the best-known refutation, although similar arguments preceded Bastiat by a century or more.

In the 1930s leaders were desperate and willing to try anything. Keynes General Theory was published in 1936, during the middle of the greatest depression the world had ever experienced. Politicians, more so than economists, welcomed his ideas as a new approach.

The Austrian economists  represented by Mises and Hayek saw the fallacies in this new approach immediately. Some of the Chicago School (Knight, Simons, Viner) did also. Ludwig von Mises, never one to mince words, described Keynesian economics in the following manner:

What he really did was to write an apology for the prevailing policies of governments.

Mises likely was one of the few who saw the full ramifications of what Keynesian economics would provide for government. Most early criticisms were in terms of the economic unsoundness of the theory.

To contrast the blatant differences between proper economics and Keynesian prescriptions, the following two prescriptions were offered early in this century:

austriankeynesian

It was proper that one of these men should have won the Nobel Prize in economics. It just happened to be the wrong one.

buchananeconomy-1986-1

James Buchanan, Nobel Laureate

In 1977 James M. Buchanan and Richard E. Wagner wrote “Democracy In Deficit — The Political Legacy of Lord Keynes” (available online). It was the first comprehensive attempt to apply public-choice theory to macroeconomic theory and policy. According to Robert D. Tollison:

The central purpose of the book was to examine the simple precepts of Keynesian economics through the lens of public-choice theory. The basic discovery was that Keynesian economics had a bias toward deficits in terms of political self-interest.

From Buchanan and Wagner came this judgment regarding Keynesian economics:

The message of Keynesianism might be summarized as: What is folly in the conduct of a private family may be prudence in the conduct of the affairs of a great nation. (p. 3)

This fundamental confusion was responsible for the political acceptance of Keynesian economics. Politicians saw the potential for themselves in this new doctrine which advocated central control of the economy and fiscal irresponsibility as a necessary and patriotic thing. Giving them this gift was like providing matches and gasoline to an arsonist. (“I don’t want to spend money, but I have to otherwise the economy will tank.”)

Once government took control of the economy, they needed economists to provide the analysis and justifications for their new policies. Many in the economics profession were procured in similar fashion used with prostitutes. Money and power were heady incentives for a profession that had rightly been consigned to a section in their own ivory tower.

Justifying what government wanted to do and was doing was the only requisite. But, in order to qualify, it became necessary to convert to Keynesianism. Other branches of economics condemned government policies, at least on economic grounds.

Economists more than most understand incentives. When the payoffs increase, some men in any profession find it easy to modify ethics and integrity.

Buchanan and Wagner knew the damage that Keynesian economics had already inflicted and knew its potential was much greater. Thirty-seven years ago they commented: 

What happened? Why does Camelot lay in ruin? Viet Nam and Watergate cannot explain everything forever. Intellectual error of monumental proportion has been made, and not exclusively by the ordinary politicians. Error also lies squarely with the economists. (p. 4)

They answered their own question:

The academic scribbler of the past who must bear substantial responsibility is Lord Keynes himself, whose ideas were uncritically accepted by American establishment economists. The mounting historical evidence of the effects of these ideas cannot continue to be ignored. Keynesian economics has turned the politicians loose, it has destroyed the effective constraint on politicians’ ordinary appetites. Armed with the Keynesian message, politicians can spend and spend without the apparent necessity to tax. “Democracy in deficit” is descriptive, both of our economic plight and of the subject matter for this book. (p.4)

Now, thirty-five plus years later, one may judge the merit in this book. Prescience, while not limited to them alone, was amazing.

One must also marvel at the continuation and acceleration of the ruinous policies. Whether Buchanan and Wagner imagined things could go on for so long and to such an extent is not known. However, to appreciate these changes, this graph from Zerohedge shows the effects of Keynesianism and what it has done to governments around the world:

keynesian legacy

The deterioration in fiscal discipline was astounding and in line what they predicted.

As this false economic theology known as Keynesianism runs its course, the following conclusions are probable:

  • Regardless of whether this generation escapes or not, we have impoverished our children and grandchildren.
  • Politicians now control most of the economy, including what passes for acceptable economics.
  • No honest economist can work for government; nor would one want to.
  • The tipping point for reversing this condition has long past.
  • Politicians have no incentive to stop the process underway.
  • Markets (and perhaps societies and governments) will eventually collapse, ending this terrible period of economic madness.

When this flawed paradigm is finally exhausted, the world may enter a better place in terms of economics and limited government. Without this shift, poverty and misery will grow along with wars used as political diversions.

One can only hope that the world avoids an Economic Dark Age when the collapse occurs.

 

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Sun, 03/02/2014 - 21:38 | 4499440 Mr Poopra
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Imagine how much more dangerous a guy like Krugman could be if he were to actually believe what he says.

Sun, 03/02/2014 - 22:21 | 4499545 Pladizow
Pladizow's picture

 

 

“By 2005 or so, it will become clear that the internet’s impact on the economy has been no greater than the fax machines….” – Paul "The Hack" Krugman

“It is difficult to get a man to understand something, when his salary depends on him not understanding it.” - Upton Sinclair


Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened.” Winston Churchill


“Although there are countless maladies that are forever causing the decline of kingdoms, princedoms, and republics, the following four (in my judgment) are the most serious: civil discord, a high death rate, sterility of the soil, and the debasement of coinage.The first three are so obvious that everybody recognizes the damage they cause; but the fourth one, which has to do with money, is noticed by only a few very thoughtful people, since it does not operate all at once and at a single blow, but gradually overthrows governments, and in a hidden, insidious way.” – Copernicus 1526

 

 

 

Sun, 03/02/2014 - 23:48 | 4499997 linniepar
linniepar's picture

Copernicus for prez!

Mon, 03/03/2014 - 01:21 | 4500322 fonestar
fonestar's picture

Is that Harland Sanders on the photo on the main page?  Fonestar was unaware he was an economist too?

 

Mon, 03/03/2014 - 07:19 | 4500724 negative rates
negative rates's picture

And the main stream media enables and promotes this defective policy. In many cases they provide funding to force legislation, and then push their ideals on the rest of the world. In a, we have more money so we have to be right in the decision making process here. Should any resistance arise, they simply change the subject or refuse to talk. This won't end well for many folks. 

Mon, 03/03/2014 - 08:34 | 4500811 Unpopular Truth
Unpopular Truth's picture

Keynes has shown that democracy is wrong to stop on property rights (aka two wolves and a sheep voting what's for dinner).

As a society, we are just refusing to learn it.

Sun, 03/02/2014 - 23:55 | 4500040 A Nanny Moose
A Nanny Moose's picture

RE: Copernicus. 2 out of 4 ain't bad (soil and currency).

Historical evidence has demonstrated exactly what not to do, for more than a thousand years. Yet we keep repeating the same mistakes over, and over.

Sun, 03/02/2014 - 22:04 | 4499549 Seasmoke
Seasmoke's picture

I think he would be less. You may be able to show him the error of his ways. But being bought off and knowing full well what he is doing, outside of hanging for treason , he will not stop.

Mon, 03/03/2014 - 07:22 | 4500728 negative rates
negative rates's picture

But he can be stopped.

Sun, 03/02/2014 - 22:08 | 4499559 TBT or not TBT
TBT or not TBT's picture

How would we tell the difference?

Mon, 03/03/2014 - 07:21 | 4500726 negative rates
negative rates's picture

Honey, they do believe what they think and say, it's the denial factor coming to light which is hard to stomach.

Sun, 03/02/2014 - 21:39 | 4499451 masaccio
masaccio's picture

If Keynes is so fucking dangerous, how come the oligarchs got all the money instead of the government?

 

Sun, 03/02/2014 - 22:02 | 4499544 Seasmoke
Seasmoke's picture

Because they own the government. 

Sun, 03/02/2014 - 22:17 | 4499589 GoinFawr
GoinFawr's picture

good, you're almost there; all you need to do now is just follow it through and you'll come around to the point that mas was actually making.

Sun, 03/02/2014 - 23:06 | 4499796 Clint Liquor
Clint Liquor's picture

Keynesians are so fucking dangerous precisely because the Oligarchs end up with all the money, dumb-ass.

Mon, 03/03/2014 - 01:08 | 4499882 GoinFawr
GoinFawr's picture

Hey, you on the big fact hunt, it doesn't follow that only oligarchs can 'own' a gov't

Try again

Mon, 03/03/2014 - 09:04 | 4500883 Graph
Graph's picture

Sea and Clint just departed from Peter Schiff's lemonade stand. Do not even try, they are drunk.

Mon, 03/03/2014 - 05:30 | 4500651 Squid-puppets a...
Squid-puppets a-go-go's picture

I reckon the Tylers would do well to keep tabs on these guys

http://www.alhambrapartners.com/2014/02/27/the-financial-end-big-picture...

one of the few to articulate the hard mechanics behind why continued QE will break down even without hyperinflation potentially taking hold.  If each new $1 of QE only generates , say 10 cents of GDP growth in china - and the interest rates are also 10% - well, then, the printing of additional money no longer prevents defaults

Sun, 03/02/2014 - 23:06 | 4499802 Carl Popper
Carl Popper's picture

The point i get out of it is keep the government so small and so limited that its power cannot be used to enrich any particular group.

Also if it doesnt have any money to bestow on anyone then lobbyists disappear

Was that your point?

Sun, 03/02/2014 - 23:57 | 4500050 A Nanny Moose
A Nanny Moose's picture

We started with exactly this. Look where it got us...

Mon, 03/03/2014 - 01:11 | 4500298 GoinFawr
GoinFawr's picture

Sure.

Keynesian policies: Free to those who can afford them. Very expensive for those who can't.

Mon, 03/03/2014 - 03:11 | 4500524 James_Cole
James_Cole's picture

The point i get out of it is keep the government so small and so limited that its power cannot be used to enrich any particular group.

The goal should not be the 'size' of government, a concept which is totally vague, but whether it is controlled by the citizens or not. 

Or visit a place like Somalia - bastion of limited government - and explain why their system is preferable. 

Cause' it's not about governments, it's about this:

 'He who controls the spice controls the universe.'

Mon, 03/03/2014 - 10:25 | 4501157 Flakmeister
Flakmeister's picture

Yes....

If you want "small effective government" you had better limit corporations to be "small and effective"....

The state is the apparatus through which power is projected....

Mon, 03/03/2014 - 07:59 | 4500762 Acet
Acet's picture

The point is that "small government" is at most an ideological strawman meant to keep people enganged in war with the puppets rather than going after the puppeteers.

The oligrachs control government and draw most of their wealth directly or indirectly from Government, hence they are the ones maintaining government large and overbearing. 

Any good strategist knows that you don't conquer a fortress by attacking the strongest, steepest, highest wall, instead you either starve them or find and attack the weak spots. Government has all the weapons and are accepted by most as the authorized yielders of force, so rather than attacking that, one goes after the oligarchs to take control of government and only after that can one start working on making government small.

Sun, 03/02/2014 - 22:16 | 4499603 asteroids
asteroids's picture

It's theft from your kids and grandkids. They are born into debt serfdome. It's evil, corrupt, and immoral.

Mon, 03/03/2014 - 10:02 | 4501075 N2OJoe
N2OJoe's picture

Somebody actually downvoted that?

Sun, 03/02/2014 - 21:40 | 4499456 Atomizer
Atomizer's picture

Paul Krugman- The aliens landed and stole the entire ponzi loot.

Sun, 03/02/2014 - 22:10 | 4499566 TBT or not TBT
TBT or not TBT's picture

Stoopid aliens, we can just print more. Did they take the social security lock box too? Oh noeees.

Mon, 03/03/2014 - 00:06 | 4500093 A Nanny Moose
A Nanny Moose's picture

They spent it on h00kerz n' blow at ManBearPig's beach house.

Sun, 03/02/2014 - 22:13 | 4499583 ebworthen
ebworthen's picture

I know; just look at that picture of him next to Ron Paul - which one would you trust with your money, your children?

Sun, 03/02/2014 - 21:40 | 4499460 lordylord
lordylord's picture

President Paul!

Sun, 03/02/2014 - 21:45 | 4499481 Cabreado
Cabreado's picture

"The plague of our time is Keynesian economics."

No, the plague of our time is that we are incapable of recognizing in force that economic theory has nothing to do with it.

Sun, 03/02/2014 - 21:47 | 4499491 Ignatius
Ignatius's picture

The economics profession today is a creature of the banks.

Sun, 03/02/2014 - 21:47 | 4499492 pontificus
pontificus's picture

Release the Kraaken!!!

Sun, 03/02/2014 - 21:51 | 4499505 nector_collecter
nector_collecter's picture

Economic theories are only theories, the fact of the matter is , there has been  no trickle down effect, on the contary the billionairs have gained big time .The best way to rob a bank is to own one  and the best way to rule and ruin a country is to turn the middle class to serfs

Sun, 03/02/2014 - 22:46 | 4499533 Shad_ow
Shad_ow's picture

Maybe but some have been tested and proven failures.  There are always people who think they can do it better.  They can't and usually know it.  They just use the failure to excuse theft.

Mon, 03/03/2014 - 00:15 | 4500130 RaceToTheBottom
RaceToTheBottom's picture

When faced with the FUCKING alternative that ALWAYS enriches the 1%, I say give the FUCKING alternatives a FUCKING chance.....

Sun, 03/02/2014 - 21:53 | 4499515 Kirk2NCC1701
Kirk2NCC1701's picture

I believe we now have something new altogether:  Kenyan Economics.  Even Keynes would be shocked & awed.

Mon, 03/03/2014 - 00:49 | 4500199 RaceToTheBottom
RaceToTheBottom's picture

Most people do not know or recognize that Keynes would be shocked what is being shlock-ed in his name.

I don't agree with your and others boner that some community organizer has the balls or time in grade to affect the change you attribute to the Obama.  This was started long before the Obama.

There are bigger dicks in play....  It would be fruitful for you to recognize it

Sun, 03/02/2014 - 21:57 | 4499526 Stud Duck
Stud Duck's picture

If every banker, college prfo read this post, had the epifinay tha it repesents, all would immediated go survivor!

Good read

Sun, 03/02/2014 - 22:15 | 4499536 Chuck Knoblauch
Chuck Knoblauch's picture

Government spending is not inducing the private sector to spend in the United States. Why? Because of the damn one-side free trade policies (NAFTA) and slave labor in China and Mexico! Globalization did not exist during the Great Depression! QE is not working.

Sun, 03/02/2014 - 22:02 | 4499541 AdvancingTime
AdvancingTime's picture

During the "boom times" when asset values are going up lots of people think they are getting rich. In inflationary times government also does well as tax revenues grow. Not only does government get to spend the money they print, the side effects of inflation on taxes are good for government, though bad for their subjects.

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens. said John Maynard Keynes. As the central banks print like crazy to control interest rates on bonds they devalue the currency. Inflation, deflation, what is something worth? These are all very important questions going forward. More on this subject in the article below,

http://brucewilds.blogspot.com/2014/02/when-will-inflation-strike_1.html

 

Sun, 03/02/2014 - 23:45 | 4499979 Umh
Umh's picture

Most people are either to busy with their life or just to dumb to see how inflation feeds the government.

Sun, 03/02/2014 - 22:03 | 4499546 Loophole
Loophole's picture

Keynesianism is nothing but govt enforced wealth redistribution, that is, armed robbery.

Any idiot can see that.

The economics depts of most universities are filled with frauds and have been for decades-pushing this crap.

Sun, 03/02/2014 - 22:10 | 4499565 Grande Tetons
Grande Tetons's picture

Modern day idots have poor eyesight. 


Sun, 03/02/2014 - 22:13 | 4499582 Chuck Knoblauch
Chuck Knoblauch's picture

QE will kill this economic theory, not your tax rate.

Mon, 03/03/2014 - 10:26 | 4501167 Flakmeister
Flakmeister's picture

Peak oil will kill the economic system as we know it....

QE is merely a symptom....

Mon, 03/03/2014 - 00:10 | 4500114 Radical Marijuana
Radical Marijuana's picture

Loophole, I liked the levels of irony in this quote:

http://www.youtube.com/watch?v=cB4lH312siw

Keiser Report: Round Tripping Financial Crisis (E557)

Published on Feb 1, 2014

Every time we get to tomorrow we've already spent it yesterday ...

At 14:49 minute mark is a direct quote of
one of the most Bizarro Mirror World
statements made by Ben Benanke:

"The problem with QE is that is works in practice, but it doesn't work in theory."

Sun, 03/02/2014 - 22:08 | 4499560 Stud Duck
Stud Duck's picture

Emergency, everyby leave the city imediately!! Emergecy everybdy leave the city immediately!!! When one of the crazies get Homeland Securty idiot ot belevie they really have what it takes,then the whole thing crumbles.

Get your shit together, right now! Dont be one of those in thevac lines, get out now!

 yea, this little artucle explains why all that have any true economic.historical knowledge knows why, emergency, everybody leave the city immediately!!

Sun, 03/02/2014 - 23:52 | 4500027 Umh
Umh's picture

Give the booze to the female ducks.

Sun, 03/02/2014 - 22:11 | 4499573 ebworthen
ebworthen's picture

There are at least $17 TRILLION reasons (at the least) why this article is spot on.

http://www.usdebtclock.org/

Sun, 03/02/2014 - 22:26 | 4499659 Son of Captain Nemo
Son of Captain Nemo's picture

Wonderful visual. 

Mon, 03/03/2014 - 10:27 | 4501170 Graph
Graph's picture

From 30-ies we have building legacy that we marvel about even today. Where these 17 trill did go?

 

Sun, 03/02/2014 - 22:16 | 4499604 Atomizer
Atomizer's picture


The Modern World-System

 

Watch third bubble down from left.

Globalization and World System Theories

http://prezi.com/bms3t1nwmmx3/globalization-and-world-system-theories/

 

Dear NGO,

We’re not interdependent on you. We can produce & sell within the United States. If we dump the debt currency, you eat the debt you promised to repay to your foreign warlords. We can re-coin new currency to exchange commerce. It will turn you from riches into rags. Maybe we can borrow your same cultural Marxist idea. Turning a group of bankers casted into a fixed income working peasant.

Sun, 03/02/2014 - 22:16 | 4499605 blindman
blindman's picture

http://www.thedailybell.com/exclusive-interviews/35051/Anthony-Wile-Fred...
.
Fred Sheehan on the Futility of Wall Street, the Coming Derivatives Disaster and the Craziness of Keynes
With Anthony Wile - February 23, 2014
.
"..Plunging on, Keynes wrote the Fed's open-market policy in 1933 and 1934, a policy of only buying short-term securities, may have had the effect (quoting from General Theory) "confined to the very short-term rate of interest and have very little reaction on the much more important long-term rates of interest."

Anderson was lost as to the influence and success of the book. In Economics and the Public Welfare, Anderson thinks the consensus he heard in London was as good as any. That is, the British government's early management of The Great War accounted for Keynes's success: "England, in the first two and one half years of the war, had the terrible volunteer system under which her best and finest rushed first into the battlefield. And this included very many of the younger men and even men no longer young who would normally become, in a short time, the leaders of industry and finance." The result, "was that in the City in the middle 1920s you would find a few fine old veterans who remembered the ancient wisdom of London, and who would find their grandsons 'miseducated by Keynes.' "

This makes sense to me. In any case, the deterioration of thinking across the twentieth century (and counting) is a fact.

American Keynesians, which may or may not have much to do with Keynes, have used the label to increase monetary stimulus with no limit. Economics is a dreadful example of the deterioration of thinking. But again, the crop in control was not taught economics; it was trained to build its bureaucracies.

Now, one word about Keynes that may surprise readers. It at least surprised me. William McChesney Martin, head of the Fed from 1951-1971, and my hero among central bankers, kept a quote in his desk. It comes from John Maynard Keynes, spoken in 1948: "The U.S. is becoming a high cost, high living country." (Robert P. Bremner, Chairman of the Fed: William McChesney Martin Jr., 2004, p. 146)

Daily Bell: We think his system may have been set up as a deliberate fraud. In other words, it justifies state interference in the marketplace. He created his General Theory with this in mind. Your reaction?

Fred Sheehan: Keynes was a nationalist. In his autobiography, Felix Somary, and Austrian (later Swiss) economist, banker and diplomat, wrote of Keynes in the late 1920s: "He came to Berlin with a speech titled 'The End of Laissez-Faire', a lot of vulgarities that the [German] nationalists greeted with fervour....Keynes was English through and through, and his entire mind was influenced by the difficult situation his country was then going through....And now Keynes justified these" German critics of free trade "and shook the field of economics itself: the science of economics appeared to be merely a cover for temporary local economic policies." (Felix Somary, The Raven of Zurich, 1986; first translation in English, St. Martin's Press, p. 146)

In the German edition to the General Theory, Keynes added an introduction, with my underlining: "The theory of aggregated production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire. This is one of the reasons that justifies the fact that I call my theory a general theory. Since it is based on fewer hypotheses than the orthodox theory, it can accommodate itself all the easier to a wider field of varying conditions. Although I have, after all, worked it out with a view to the conditions prevailing in the Anglo-Saxon countries where a large degree of laissez-faire still prevails, nevertheless it remains applicable to situations in which state management is more pronounced. For the theory of psychological laws which bring consumption and saving into relationship with each other, the influence of loan expenditures on prices, and real wages, the role played by the rate of interest—all these basic ideas also remain under such conditions necessary parts of our plan of thought." (John Maynard Keynes, September 7, 1936, Foreword to General Theory, German edition.)"..
.
and in other related news ...
Who Gets Thrown Under the Bus in the Next Financial Crisis?
Posted on March 2, 2014 by Charles Hugh Smith
http://www.maxkeiser.com/2014/03/who-gets-thrown-under-the-bus-in-the-ne...
.
"..The Deep State’s prime directive is to preserve the Deep State itself and the nation it depends on for its survival. My analysis starts by identifying the vectors of dependency. " c.h.s.

Sun, 03/02/2014 - 22:24 | 4499648 Chuck Knoblauch
Chuck Knoblauch's picture

QE induced bubbles has done nothing to induce spending on CAPEX by the private sector in the United States.

Sun, 03/02/2014 - 22:57 | 4499746 blindman
blindman's picture

time frame? and the petro dollar is global.
greenspan.
.
the part in there concerning the flexibility of keynesian
theory that works in a politically totalitarian arrangement,
there the gold! the shadow government can then blame "the
government" and "regulation" and then pocket the world.
it is beautiful in its perversion and evil purity!
.
no one will ever be the wiser.

Mon, 03/03/2014 - 00:08 | 4500096 Atomizer
Atomizer's picture

'The petrodollar globally began' with Kissinger, not greenscam - the latter took out the housing market. The prior removed Brenton Woods gold standard. All new wars are to protect the petrodollar currency under the Federal Reserve printing press.

http://www.newyorkfed.org/research/current_issues/ci12-9/ci12-9.html

 

Mon, 03/03/2014 - 01:02 | 4500180 blindman
blindman's picture

the petro-dollar began with the golden gimmick in 1950.
kermit the frog.
.
http://en.wikipedia.org/wiki/Golden_gimmick
.
grenscam invented the qe theft to stimulate capex,
>in china and "emerging markets" via global petro status<
and it worked for a time, just like madoff.
move along to africa ......

Mon, 03/03/2014 - 01:05 | 4500285 blindman
blindman's picture

@ "in the united states" , right and so what?
qe is about front running the global harvest
and its future. many trillions ......like
god and his universal creation using real big
numbers ....

Sun, 03/02/2014 - 22:23 | 4499644 Son of Captain Nemo
Son of Captain Nemo's picture

"One can only "hope" that the world avoids an Economic Dark Age when the collapse occurs."...

"Hope" that useless word again!

Sun, 03/02/2014 - 22:34 | 4499689 laomei
laomei's picture

Keynesianism works as long as it's carried out as intended.  Shovel-ready, make-work spending which provides civilian infrastructure is a great investment to make, as it's real.  Building things that will be in demand in the future or disruptive to status-quo can spark new industries and business sectors.  It's not a bad thing.  When you just piss away debt-money on bullshit however, it's more harmful than doing nothing at all... all that spending does is create more obligations with nothing to show for it.

Mon, 03/03/2014 - 00:15 | 4499714 Chuck Knoblauch
Chuck Knoblauch's picture

If only we had responsible bankers? They don't have to be anymore. Glass Steagall helped, but someone had the idea that bankers didn't need to be told how to be responsible, right? The best government money can buy.

 

If you don't want regulation, clean up your fucking act! Fucking fascist!

Mon, 03/03/2014 - 00:24 | 4500158 RaceToTheBottom
RaceToTheBottom's picture

I have never heard of a full Keynesian. 

I have only heard of the Half Keynesian-ism:  Those that want the free money but never want the other side of the Keynesian coin, the payment for that free money....

 

Most people do not realize that Keynesian-ism is really the same as Cash for clunkers or huge discounting of cars: where you steal future sales to get present sales.  Keynesian-ism takes present money for future austerity.  No one seems to get that part...

Sun, 03/02/2014 - 22:51 | 4499741 Jeepers Creepers
Jeepers Creepers's picture

It disgusts me when Zerohedgers jump on the socialist bandwagon purely out of hatred of the Wall Street elite.

Common sense would tell you Central banks and the howling masses that want to blame free markets are two sides of the same coin.

Economic freedom, entrepreneurship, and a work ethic are not the same as the bankster economy.

Mon, 03/03/2014 - 00:02 | 4499890 Chuck Knoblauch
Chuck Knoblauch's picture

Einstein, how would you induce the private sector to spend capex in the US? Teach us something. Most multi-nationals don't even pay US income tax, so don't give me the obvious answer.

 

Parasite.

Sun, 03/02/2014 - 23:04 | 4499792 lieto
lieto's picture

Elastic, fiat money is doomed from the day it's instituted.

Always was and always will be.

Sigh.

Sun, 03/02/2014 - 23:17 | 4499850 Imminent Collapse
Imminent Collapse's picture

It's just the bad weather.

Sun, 03/02/2014 - 23:59 | 4500042 Radical Marijuana
Radical Marijuana's picture
OF COURSE, "Keynesian Political Economy Is Theft"

However, this kind of analysis stays on a superficial level, since it does not start with the axiom that all human realities are always organized lies, operating organized robberies, which is the only axiomatic orientation that allows the understanding of human civilization be consistent with the rest of the sciences. Economics is a science like militarism is a science. Both manifest the paradoxical ways that human society is based on backing up lies with violence. Civilization was created in the crucible of conflicts, where the murder systems, understood through militarism, were based on backing up deceits with destruction, because that is what successfully worked in the real world. Upon that basis was built the economic system, which naturally developed a more elaborate superstructure of force backed frauds.

OF COURSE, KEYNESIAN ECONOMICS WAS AN ELABORATE RATIONALIZATION OF FINANCIAL FRAUDS, JUSTIFYING MORE FINANCIAL FRAUDS. The relative success of those doing that generated a feedback which tended to dominate the funding of the schools of economics. However, all of the significant schools of economics that stand against Keynesian notions tend to be shades of controlled opposition, and so, merely more reactionary revolutionaries, who tend to want to stay within the same frame of reference of false fundamental dichotomies, and their related impossible ideals.

This kind of article above was way too superficial in its overall presumptions, and even more shallow with respect to any possible resolutions to these problems. The significant problems we face are due to science and technology becoming trillions of times more powerful and capable, while nothing like that has happened in the realm of political economy, because in order for economics to actually be made more scientific, it would have to be reconstructed on foundations which are consistent with the basic principles of thermodynamics and information theory, BUT ALSO UNDERSTAND HOW THOSE PRINCIPLES WERE THEMSELVES PERVERTED BY THE TRIUMPHANT INVERSIONS OF MEANING, SINCE THE PHILOSOPHY OF SCIENCE ALSO FELL VICTIM TO THE BIGGEST BULLIES' BULLSHIT WORLD VIEW.

In my view, it is a sterile debate about whether or not "Keynesian Political Economy Is Theft." The answer is obviously so! However, there is nothing gained to then posit some impossible ideals whereby human realities could stop being based upon SUBTRACTION, and from that necessarily following ROBBERY. Indeed, warfare was the oldest and best developed social science. There is no doubt that economics is a science, however, economics is necessarily a science about operating organized lies, operating organized robberies, and it must necessarily be. Articles like this, and so many other similar articles which appear on Zero Hedge, continue to be the work of reactionary revolutionaries, who tend to provide good historical analysis of the social facts, but then collapse back to the same old bullshit social stories in the end, when it comes to "solutions."

What we should be doing is moving through to different sets of axioms regarding social sciences, which understand how and why the biggest bullies' bullshit has dominated the philosophy of science so much, and therefore, why bullshit economics has become the most dominant forms of that craft. Politics needs to go through even more profound paradigm shifts than physics already has! Politics should start using unitary mechanisms, rather than continue to rely upon false fundamental dichotomies.

Continuing to rely upon false fundamental dichotomies means that we keep on proposing "solutions" based on impossible ideals, which will continue to make the opposite actually happen in the real world. Unitary mechanisms can be made consistent with the rest of the scientific world view, especially after a radical critique of the ways in which basic concepts of the philosophy of science were also biased by the past triumphs of the biggest bullies' bullshit world view. If we do that, then postmodernizing sciences are able to be better reconciled with ancient mysticism. Therefore, more of the elementary principles of philosophy and genuine spiritualism begin to be possible to operate within a better integrated understanding of political economy, inside of human ecology. The more that progress in other sciences and technology continues, the more imperative it becomes to match that in the field of politics.

IT IS AXIOMATIC THAT ALL HUMAN REALITIES ARE ALWAYS ORGANIZED LIES, OPERATING ORGANIZED ROBBERIES, AND SO, OF COURSE, KEYNESIAN POLITICAL ECONOMY WAS THEFT. FURTHERMORE, IT BECAME THE DOMINANT SCHOOL OF ECONOMICS BECAUSE IT MOST FACILITATED MORE THEFT!

The only things which actually exist are different systems of organized lies, operating organized robberies. The only real solutions are changes in the dynamic equilibria between those systems (which can also include relatively rare changes of state, when some previous systems of dynamic equilibria break down, which then allows some different systems to perhaps emerge.) The conclusion to this article above was quite correct, but still presents the situation in a false fundamental dichotomy way, with residual nostalgic nonsense towards somehow there being some return of impossible ideals after the crises.

"When this flawed paradigm is finally exhausted ..." THEN WE SHOULD BE MOVING ON THROUGH BETTER POLITICAL ECONOMY PARADIGMS. As I have briefly outlined those above, better concepts about economics are NOT going to be any kind of return to any old-fashioned alternative school of economics, whose ideology is already manifested in any significant schools. Rather, a study of the history of scientific revolutions indicates that the kind of intellectual scientific revolution needed in political economy is not now publicly presented in any already established school of economics, since it could not be. Sufficiently radical truth would not operate within the frame-of-reference of the biggest bullies' bullshit, as another form of controlled opposition. REAL, RADICAL, REVOLUTION SHOULD BE BASED ON CHANGING THE PARADIGMS WHICH PERCEIVED POLITICAL ECONOMY.

Mon, 03/03/2014 - 00:12 | 4500121 Chuck Knoblauch
Chuck Knoblauch's picture

We've moved from Capitalism to Fascism. There is no going back until those too big to fail, collapse and die.

Mon, 03/03/2014 - 03:30 | 4500273 Radical Marijuana
Radical Marijuana's picture

That is what I think too, Chuck!

The biggest problem is whether or not one will survive through those kinds of psychotic breakdowns when "those too big to fail, collapse and die." It is not clear that there will necessarily even be any sufficiently surviving civilization after that finally happens!

The banksters changed the fundamentals of the economic system to be based on what could be call "negative capital," which was a public "money" supply made out of nothing as debts. That kind of negative capital negated capitalism. Also, its ability to rig all markets, from interest rates on through, wiped out the ability of free markets to operate in the ways that they should have.

For more than a Century, the international banksters have been consolidating a system which has no good labels, but which could be called fascist plutocracy. However, their "wealth" was not genuinely financial capitalism, but rather their success was based upon applying the methods of organized crime to take control over the political processes. (Bribery and intimidation, and assassination of politicians that could not be bribed or intimidated, so that almost all of the successful and surviving politicians became the banksters' puppets, whose job was to perform for the masses of muppets, to fool enough of them, enough of the time.)

Keynesian economics is one of the rationalizations or theoretical justifications of the fundamentally fraudulent monetary system, which is privatized fiat "money" made out of nothing, as debts, which FRAUD THE GOVERNMENT ENFORCES. Therefore, Keynesian economics is an elaborate charade around a foundation of organized crime. That runaway fascist plutocracy juggernaut is going to turn most people into its road kill. As far as I can tell, our society is already terminally sick and insane, due to the degree to which capitalist free markets have been destroyed and replaced by the inverted totalitarianism of blenderized forms of organized crime, operated by professional liars and immaculate hypocrites.

Keynesian economics is the jargon of the high priests (and now high priestess) of the STATE RELIGION of faith-based "money," which enabled the biggest banks to become insane runaway fascism. I.e., where the power of those private corporations blended totally together with the power of government, to become an integrated system of organized crime, as frauds backed by force, which everyone else had to operate within.

Financial capitalism became more and more financialized by a fundamentally fraudulent financial accounting system, as the fascist blending of the biggest banks with the powers of government resulted in that form of organized crime becoming more and more dominant. Thus, the original financial capitalism, within which the bigger banks operated as the top predators in the economic system, became more and more triumphantly based on legalized counterfeiting of the public "money" supply, which in turn gradually resulted in the biggest banks degenerating into systemic parasites that are killing their host.

The resulting Too Big To Fail, and Too Big to Jail, etc., banks has driven "fascism" through to an unprecedented system of globalized electronic frauds, backed by atomic bombs, which overall has created literally quadrillions of notational units of "money," which are at least a couple orders of magnitude greater than all the collateral that is supposed to back them up.

Every time that the system is able to save itself by creating even more "money" out of nothing, as even more debts, that system as a whole becomes even more insane than it previously was. However, within that entrenched established system, there is nothing else that it can do but keep on temporarily resolving its problems that there there is too much debt by creating even more debt. Therefore, to repeat, I agree with your reply Chuck. We have moved from Capitalism to Fascism, and that there does not appear to anything else practically possible than for the Too Big To Fail banks still pushing everything further and further, until some points where there will be globalized collapses, and the debt insanities provoke death insanities.

Personally, I like to hold on to irrational hopes that "we" might survive through that, and learn something thereby. However, that is clearly not guaranteed, given the astronomically amplified SIZE of the debt insanity situation we are in, while the basic force backed fraud of MONEY-AS-DEBT system drives itself through its own mad self-destruction. The main point of my comment was that the MONEY-AS-DEBT system exists because of the success of the application of the methods of organized crime to capture control over the political processes, (and to develop the Keynesian school of economics to conceal that under bullshit.) Therefore, no genuine solutions to that problem can actually exist which do not directly address that deeper issue that human realities are always forms of organized crime, as organized lies, operating organized robberies.

There is no point in learning from history that that was what actually happened, to create the runaway social insanities in the political economy that exist today, but then ignore those facts when proposing genuine solutions. There ARE combined money/murder systems, where the debt controls depend upon the death controls. There are no genuine solutions to the problem that the government is the biggest form of organized crime, controlled by the best organized criminals, other than accepting those solutions must necessarily be better organized crime.

Mon, 03/03/2014 - 01:13 | 4500306 general ambivalent
general ambivalent's picture

One has to wonder how a non-governmental society would exist with such extreme technology and historical violence behind the system. The Austrian economic argument is horribly oversimplified, as if the state ceases to exist if we stop funding it. Unfortunately the subjective relations of people are now dominated by thousands of years of state, theological, and economic systems designed to force people into different forms of slavery.

As de Tocqueville said of the French Revolution, the ancien regime lived on at a deep level as men moved on to fight other battles. Almost all of the post-revolutionary forms of organisation were already present within the monarchy, so the economic society many hold to be right actually had its origins in monarchist and state practises. There is no simple transition.

Unfortunately such economic utopianism is not much different than marxism, the idea that there is only an economy and can only be an economy is a disastrous mode of thought. And this is, I think, where the anarcho-capitalists and ultra-free market ideas fail: they are essentially just replacing the dictatorship of the proletariat with a dictatorship of the petit-bourgeoisie. The theories rely on Adam Smith, where 'capitalism' was just a series of very small shops and it would be relatively simple to balance an economy. But to balance an industrial economy without a government of measurable size to the economy is just nonsense. Call it what you will, but massive private security systems and networks of capitalists are still the state - whether you call it an abstract state or a deep state, no matter, the big bad government remains.

It's called feedback runaway, if a system is not set up with the knowledge of feedback loops and runaway they will fall victim to the processes. It is possible that such theories as Austrian economics are even more absurd than marxism. An essentially capitalist economy would require everyone to be a seller, and in the end who is buying? Can everyone in a city be selling items from their small manufacturing business? In a town? In a village even? No, it's not possible. It's a fantasy and would look like the collapse of the Soviet Union when the people were not getting paid and had to sell the items they made from the factory that day themselves. Lining up on the street, a perfect democracy of sellers with no buyers.

And it's not really even hidden well. The title of this article itself goes back to the anarchist 'Property is theft', and many of the Austrian economic arguments are simply taken from marxism and simply applied to the state. It is then half-marxism. It seems a society set up on the principles of absolute economy would be just as bad as Bolshevism, as it is its inverse form. Bolshevism was the huge state fish that consumed the economy into itself, and anarcho-capitalism is the big economic fish that consumes the state into itself. Appropriately, they are hegelian inversions of each other.

Mon, 03/03/2014 - 03:36 | 4500464 Radical Marijuana
Radical Marijuana's picture

I agree, general ambivalent!

"As de Tocqueville said of the French Revolution, the ancien regime lived on at a deep level as men moved on to fight other battles."  If anything, in the end, the French Revolution ended up advancing the global agenda of the international banksters. Similarly, the Messianic Marxism (which was NOT scientific Marxism) appeared to have the same deep structure as Catholicism.

My own day dreams are based on the emergence of a new kind of ruling class, from the transnational scientific community. However, that may only emerge IF enough civilization survives through its current runaway craziness. Such a series of political miracles presumes that there could be some Translithic Civilization, which transcended Neolithic Civilization, whose ruling classes were drawn from some hypothetically politicalized transnational scientific community, which had embraced the notions that warfare was the oldest and best developed social science, and understood general energy systems is a thoroughly radical way. What I try to do may be called political science fiction, where I try to approach harder science fiction, rather than the softer fantasy kinds.

In my view, most of the people who get articles posted on Zero Hedge, as well as comment here, tend to be what I call reactionary revolutionaries, or Black Sheep, who want to promote old-fashioned ideologies as somehow providing ideal solutions for the current runaway problems, which are likely to get many orders of magnitude worse than they are now, or even can now imagine. Right now, what is happening is that the worst B grade science fiction horror stories are the ones which are becoming facts. Unfortunately, since that is what is actually happening, my kind of more favourable hard political science fiction notions appear to be romantic nonsense.

Right now, we appear headed towards debt insanities provoking death insanities in which more than half of the human population will be mass murdered, and therefore, nothing better will emerge. Like I said, I continue to indulge in irrational hopes for a series of political miracles, that there could be enough scientific enlightenment for society to survive having developed science. However, in reality, all the power of science has generated technologies which are trillions of times more powerful, to actually be used to be that much more dishonest and violent. So far, technologies which have made human beings trillions of times more powerful are almost totally dominated by the same old fear and greed, and used with the utmost evil deliberate ignorance.

In that context, it may be that my ideas are merely romantic nonsense, which may be theoretically correct, but which have no practical political point of application. Instead, goof ball reactionary revolutionaries will end up contributing to the collapse into chaos, rather than provide any better genuine solutions, when those Black Sheep respond in their personally preferred ways to "fuck the banksters."

Mon, 03/03/2014 - 00:15 | 4500136 assistedliving
assistedliving's picture

Copernicus?  isnt he the guy who thought everything revolved around us?  goes to show how wrong you are in your profession but venture out and u nail it.  therefore, Krugman should start immediately on astrology

Mon, 03/03/2014 - 01:10 | 4500297 Radical Marijuana
Radical Marijuana's picture

Ptolemy was famous for the system of understanding the details of the motions of the stars and the planet, based on the common sense view that the Earth was the center, and everything revolved around the Earth.

Copernicus was famous for surviving the paradigm shift proposal that the Sun was at the center, and that the planets, including Earth, revolved around the Sun. However, Kepler was the one who worked on the astronomical data long and hard enough to modify Copernicus to recognize that the Earth and the other planets circled the Sun in elliptical orbits. Of course, then Newton systematized that, until Einstein came along and again changed the basic paradigms.

The history of astronomy is full of profound paradigms shifts, which were archetypes of the kinds of ways that we should change the basic ways that we think about politics. However, those kinds of changes are political experiments that consume one's entire life to participate in!

Mon, 03/03/2014 - 03:40 | 4500504 Radical Marijuana
Radical Marijuana's picture

Yeah, blindman, that was a visually interesting video presentation of the way that the Solar System as a whole traces a grand spiral trajectory through space, as the whole of that goes around the center of the Milky Way Galaxy.

No doubt there are higher levels too, regarding the local cluster of galaxies, and whatever else there may be? (There are also local mysteries, such as does the Solar System have a companion star, in a binary star system, or is there another bigger planet that swings through that bigger system as a whole, etc.?)

Just for fun, if one looked at a few atoms in a molecule in one's hand, how would one be able to know what that hand was doing ??? It could possible that the whole Solar System is inside of a some other being, say a cosmic turtle, swimming through an ocean of its own, infinitely farther from us than we could ever comprehend. Maybe, someday, we will rediscover that astrology or ancient legends had considerable merit, e.g. http://www.thunderbolts.info/wp/

These days, I regard almost everything that mainstream orthodox astronomy asserts as being too sure of itself, while too much of it seems to be too biased by the biggest bullies' bullshit world view. I tend to believe there are is an infinity of infinities, from which we subtract an infinitesimal part which is our own reality. That little reality is what I care about, because it is the only thing that I experience. However, theoretically, mathematically, intellectually, I imagine an infinite infinity of universes, which are totally dense with spiritual levels, which are all real enough to those beings who are then there. But nevertheless, in the usual four dimensions of space and time, then the master metaphor that I use to organize my imagination of how the world works is the toroidal vortex. Therefore, I LIKE attempting to image the Solar System as a whole following the path of a spiral as it goes around the galaxy, swinging up, then down, through the galactic equatorial plane, as it goes around during hundreds of millions of years ...

ALL OF WHICH METAPHORICALLY INDICATES THAT THE PROCESS OF PARADIGM SHIFTING IS NEVER FINISHED!

Mon, 03/03/2014 - 00:29 | 4500186 VWAndy
VWAndy's picture

There are other ways to run an economic system. The best would for sure be based on something with an actual value that is fixed like joules of energies. To bad that wont work with our current forms of governance. A world wide reset would be absolutly nessasary. If a nation were to try it they would be pillaged by fiat instantly. Fiat is gives all the advantages to the dishonest.

There is no way honest people can compete with the counterfitters. On anything over even a short timeframe. Fiat has been used to pick both winners and loosers from the start. Add to that unbacked credit and here we are.

The trick is how do we get there from here?

Mon, 03/03/2014 - 01:19 | 4500318 Radical Marijuana
Radical Marijuana's picture

VWAndy, that was a good summary of some of the basic obstacles to fixing the established systems.

I am not aware of any easy "tricks." The basic problem is that there are combined money/murder systems, and it is NOT possible to change the money system without changing the murder system. That is the case both in the short-term, when coping with the international banksters, as well as theoretically necessary in the longer term, in order for there to be any better human ecology, inside of which the political economy must really operate.

If one is serious about setting the value of some monetary unit on the basis of an amount of energy, then one has to have a better systematic understanding of general energy systems. However, AFTER one does that, then one understands how and why the best organized gang of criminals, the international banksters, were able to make and maintain the monetary system that exists now.

Furthermore, that understanding is then the only one which could be made more fully consistent with what it would take to create and control a truly better monetary system, to operate as a better accounting system, within a better political economy, which could operate saner industrial ecologies, which were consistent with both human and natural ecologies.

Mon, 03/03/2014 - 01:45 | 4500368 VWAndy
VWAndy's picture

The global reset is going to be the trick but how? A stall might do it, it might be the only way to do it. No governmet would stand for it if they could stop it they would. The fiat nation would have such an advantage over the others millitarily and economicaly.

In my opinion the first step is building the concensus. Then a catilizing event. Anything is possible? If one turd can change the world for the worst then it stands to reason a large group of honest folks could set things to right. The global honest concensus is a goal worth trying to build at any cost.

Mon, 03/03/2014 - 03:21 | 4500538 Radical Marijuana
Radical Marijuana's picture

Yeah, VWAndy, for many years I have been referring to what I called "Operation Hammerhead Stall."

http://en.wikipedia.org/wiki/Stall_Turn

"The Hammerhead Turn, Stall Turn, or Fieseler is an aerobatics turn-around maneuver."

When one looks at all of the various exponential growth curves, all of which approach their limits at an exponentially accelerating rate, with Peak This, and Peak That, and Peak Everything, then one can imagine the classic exponential growth of total debts, etc., which is going to eventually STALL. After it stalls, can we get the motor going again, and similar questions, obviously arise, in that metaphorical set of conditions.

Another metaphor I like is the issue of Jerry Rigging versus Jury Rigging. The analogy is that after a serious storm at sea, one may have to look at the broken pieces of the surviving ship, and figure out creative ways to rearrange those broken pieces, to be able to sail on ...

Right now, globalized civilization is on the rocket ride nearly straight up phase of exponential growth, which MUST STOP, one way or another, sooner or later, and will probably be stopped by a series of psychotic social storms ... then, we will (if we survive through that) be attempting to Jury Rig some Hammerhead Stall ...

However, the main thing that I agreed with your comment about was the problem that as long as any country is in the fantasy fiat world, then the whole world is still being dragged down by that insanity. I tend to want there to be global solutions. I would like there to be a global government, but NOT the kind that the international banksters are planning to develop, according to their agenda.

Whether we will be able to survive long enough for enough people to have some consensus is still a wide open question ... The deeper problem with a global consensus is that it would have to include some way to agree on limits, which, right now seems quite impossible. Right now, it appears that the only thing that people can agree to do together is commit collective suicide. One would think that should motivate people to change, but so far, not really.

The problem is that the current system is based on a dominant minority, who specialize in being dishonest and violent, controlling a large majority, who are thereby kept ignorant and afraid. It is very, very difficult to imagine changing that established system! ... But nevertheless, future events appear guaranteed to force more people to think about those systems than they ever used to!

Mon, 03/03/2014 - 03:41 | 4500565 VWAndy
VWAndy's picture

The concensus is going to be the harder to get too. The stall part will be much simpler to pull off after the concensus forms. The restart should happen naturally because all those honest folks are iching for a shot. As a group we will make real progress faster if we stop tripping each other.

To me its all about the concensus. It might exist now? The tower of babbel thing makes recognizing it very hard.

Mon, 03/03/2014 - 00:43 | 4500236 kchrisc
kchrisc's picture

Keynesian economics is NOT theft. It is justification for theft. Theft that is fraudulent-reserve banking.

Just a huge magnificent lie to legitimize what the thieves were already doing.

 

"They said that my broken window is good for the economy. I told them that my guillotine is even better."

Mon, 03/03/2014 - 00:48 | 4500246 stpioc
stpioc's picture

There is a pesky little thing called facts which show that Keynes was right:

http://seekingalpha.com/article/1966651-why-we-are-keynesians

Mon, 03/03/2014 - 02:32 | 4500447 caustixoid
caustixoid's picture

mmm, okay.  you totally set us straight with that link.   gonna go out and borrow my way to prosperity.  thanks.

Mon, 03/03/2014 - 00:55 | 4500260 Lordflin
Lordflin's picture

No system designed by man will not ultimately fail. It was this very fact that was at the heart of the founding of this once great nation, and the cornerstone of the document we call our Constitution.

Depreciation of the money supply is always the source of the evil that eventually destroys all civilizations.

The sad thing is that each time it is different... or so those who lead us down this path believe, as they build their empire... their tower of Bable... their vain attempt to challenge God for authority, having overcome man, and man's nature... or so the mantra runs.

Only this time it may be different.

For those who credence such things, myself being one, it was God's opinion that were he not to shorten the last days there would not be one of us left alive.

Don't know about you, but it is starting to look a bit grim to me...

Mon, 03/03/2014 - 01:25 | 4500331 Tao Jonesing
Tao Jonesing's picture

Let's be honest.  The economics of the Fed have been Chicago School, Milton Friedman Monetarism since at lest Paul Volcker's reign.  And Milton Friedman was president of the Mont Pelerin Society from 1970-1972, "Monty Pelerin."  Friedmanite Monetarism is distinctly NOT Keynesianism, and Bernanke was an avowed Friedmanite.  So stop trying to rewrite history, and lay our current problems at the feet of Keynes, when we find ourselves where we are today because of Milton Friedman, the first "Monty Pelerin" (the Tokyo Rose of neoliberalism). 

Mon, 03/03/2014 - 01:29 | 4500341 tomcat1762
tomcat1762's picture

The response to centralized government and economics will be to de-centralize.  It is the nature of things to bring about their own opposite.  Once Bitcoin and Ethereum gain critical mass, more and more transactions will be performed on a peer-to-peer block-chain which cannot easily be falsified.  It will take decades but the world will turn.  The banksters have dug their own graves.  In a way we should thank them, this is quite an elegant solution.

Mon, 03/03/2014 - 01:45 | 4500371 tony bonn
tony bonn's picture

keynes was the hand maiden to the fed's debt based federal reserve note - a piece of toilet paper based upon debt which in turn demands persistent government deficits to keep the ponzi afloat. it will end when all wealth has been obliterated and not a moment sooner.

Mon, 03/03/2014 - 02:51 | 4500485 caustixoid
caustixoid's picture

Keynes was indeed a towering genius, and his idea of counter-cyclical government spending in theory is sound.  It's much like the argument that a benevolent/enlightened dictatorship can exceed a messy democracy by leaps and bounds.  (isn't there a quote from Keynes that his economic theories were even better suited to dictatorships than democracies?).

However the problem with benevolent dictatorship is that it soon devolves to malignant dictatorship, whether the dictatorship passes from a remarkable man to an idiot, or the remarkable man himself devolves into a monstrous beast.  Read the history of any empire.

Similarly "Keynesian" economics has devolved from counter-cyclical gov't spending to petal-to-the-metal, all-the-time spending.  When is it ever a good time to cut back on spending?

I suspect that it's a bit like the quote about Jesus:  if [Keynes] were alive today and saw what was done in his name he'd never stop puking.

Mon, 03/03/2014 - 03:23 | 4500544 Radical Marijuana
Radical Marijuana's picture

RIGHT!

"The problem with benevolent dictatorship is that it soon devolves to malignant dictatorship!"

Nobody guards the guardians!

Mon, 03/03/2014 - 03:37 | 4500562 yt75
yt75's picture

Yes, plus Keynesian economics is based on the premises that their is potential growth "available".

Which was true in Keynes times, but is highly questionable these days, and for very "mundane" reasons, basically like below one :

http://i.bnet.com/blogs/laherrere_all_liquids_production_1900-2200.jpg

Mon, 03/03/2014 - 04:36 | 4500606 The Abstraction...
The Abstraction of Justice's picture

Keynes was a homosexual paedophile, so we can litereally say his is the school of the homosexual paedophile.

Mon, 03/03/2014 - 04:34 | 4500605 evernewecon
evernewecon's picture

Keynesians would say falling
GNP led to a drop in money supply,
vs. the monetarists' drop in money
supply led to a fall in GNP.

Unfortunately both Treasury
AND the Fed have fed $US Trillions
to privatizers having nothing
to do with democratic process.

They just hire puppets to appeal
to people's weaknesses, needs to
prove whatever, etc., so those
puppets can send policy-making
the way of the guy
controlling air, water and
the food chain, health care
value chain profit boxes,
communications and thus the
internet upon the ending of
net neutrality, etc.

Their suckers can criminalize
each other's children in schools,
they can perhaps soon do this:

http://www.truth-out.org/news/item/22194-proposed-florida-law-would-allo...

despite:

http://www.huffingtonpost.com/2014/02/25/man-shoots-himself_n_4853983.html

http://pages.citebite.com/i1i2f8m1y4ubq

https://duckduckgo.com/?q=nypd+shoots+9+bystanders

http://www.futurity.org/search/gun+owners
(if you can buy guns at walmart then
public health should be able to keep
guns out of the hands of the person who
happens to be a drunk paranoid)

The Florida proposed law makes
the shooter likely to start,
resonating with taser use

http://digitalcommons.law.ggu.edu/cgi/viewcontent.cgi?article=1971&conte...

bundle is spam free

http://www.multiurl.com/la/Why_The_Next_Trayvon_Is_Easily_Possibly_You

Mon, 03/03/2014 - 06:11 | 4500677 aqualech
aqualech's picture

The author gives government too much credit.  It is worse than that - gov is using fake agencies (FED) to transfer money directly from future taxpayers to controlling banks.  The crises are manufactured to give gov a plausible excuse for the transfer.  We nave no more representative government.

Mon, 03/03/2014 - 07:10 | 4500717 Accounting101
Accounting101's picture

Wait a minute. I thought that the big banks, financial services industry and massive corporate entities were the wizards behind the curtain. Don't they literally write the legislation and then pass it on to the legislative puppets?

Seriously! This article is shit. The Oligarchs were in charge in 1929, and their still in charge. No amount of pseudo-intellectual economic bullshit is going to change that dynamic.

Mon, 03/03/2014 - 09:14 | 4500909 Graph
Graph's picture

Trying to imagine the world where bridges and, God forbid, airplane engineering have TWO theories how to do things.

Does anybody see the problem?

Mon, 03/03/2014 - 09:42 | 4500994 Global Observer
Global Observer's picture

Availability of money (be it gold or bank credit) doesn't by itself lead to creation of wealth, tradable goods and services. However, if an economy has the necessary raw resources to increase wealth creation, increase in money supply helps that process. This is what fractional reserve banking proved. What Keynes proposed was just one step further, government expanding the money supply by deficit spending in a counter-cyclical manner. Keynes did not propose deficit spending as a permanent mechanism to spur growth, but only when demand has fallen temporarily due to an economic downturn  caused by excessive private credit and malinvestment and resulting in high unemployment. Keynesians, however, believed it can function as a permanent tool of economic growth Since infinite economic growth is not possible on a planet of finite resources, the policy was bound to hit its limits some time and it did so now. Even without Keynesianism that point would have been reached some time later, but it probably wouldn't be as bad because we wouldn't be having an army of consumers feeling entitled to their life styles just because they exist.

Mon, 03/03/2014 - 14:06 | 4502367 franciscopendergrass
franciscopendergrass's picture

It's kinda funny that the word "Austrian," the periodic symbol for gold is "Au," and the word "austerity" all start with the letters "a" and "u".  its also funny to note that Austrian economics, gold, and austerity are all words despised by governments and Keynesians. 

Mon, 03/03/2014 - 14:10 | 4502380 Lord Koos
Lord Koos's picture

The plundering is more from giant privately held companies, with the government merely protecting them...

 

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