This page has been archived and commenting is disabled.

Dear Keynesians: Your Sad Devotion To A Failed Religion Hasn't Conjured Up A Recovery; Here's Why

Tyler Durden's picture


Submitted by Charles Hugh-Smith of OfTwoMinds blog,

That any schoolkid could predict eliminating feedback and consequences will lead to a series of disastrously poor choices by speculators and imprudent borrowers doesn't register with the Keynesian Cargo Cult.

The Keynesian Cargo Cult's ability to print and squander money is insignificant next to the power of Diminishing Returns. By now we all know two things about the Keynesian Cargo Cult's religion:

1. It has failed to conjure up the recovery its sadly devoted believers insist is "just around the corner if we only borrow and squander more money" because...

2. Its main tenet--that the problem is "lack of aggregate demand," i.e. people will buy more stuff made in China and corporations will open more stores to sell the stuff made in China--if only it was dirt-cheap to borrow more money--is completely, utterly, painfully false.

The central premise of the Keynesian Cargo Cult is that this mechanism of making it cheap and easy to borrow money will work a kind of magic that can only be manifested by dancing around a fire at night waving dead chickens and chanting "humba-humba." The Keynesian cargo Cult calls this magic "animal spirits."

Unfortunately, waving dead chickens while dancing around a fire doesn't do anything in the real world, and neither does making it cheap and easy to borrow more money. It turns out that prudent people have no interest in borrowing more money, even at low rates of interest, and imprudent people are happy to do so but will stop paying the loan as soon as something untoward occurs in their finances. The cheap, easy-to-get loans default and either the banks who made the loans collapse or the taxpayers have to bail out the banks who foolishly lent money to imprudent borrowers at super-low rates of interest.

Corporations, meanwhile, look at the real risks of expanding business in a debt-saturated economy distorted by Keynesian Cargo Cult policies and realize that gambling capital on the possibility that waving dead chickens and chanting "humba-humba" will actually increase profits is a truly stupid bet, so they borrow the nearly-free money and invest it in various carry trades overseas that return a virtually risk-free return, thanks to the nearly-free cost of borrowing mountains of money from the Cargo Cult.

The Keynesian Cargo Cult is stubbornly blind to the two key dynamics of the real-world economy: diminishing returns and the S-Curve. Diminishing returns result when a system's ability to produce an economically valuable output declines.

Higher education is a good example: tuition has soared $1,100% while the output (value of a college degree) has declined precipitously. A recent major study, Academically Adrift: Limited Learning on College Campuses, concluded that "American higher education is characterized by limited or no learning for a large proportion of students."

'Academically Adrift': The News Gets Worse and Worse (The Chronicle of Higher Education)

Meanwhile, student loans exceed $1 trillion, only 37% of freshmen at four-year colleges graduate in four years (58% finally graduate in six years), and 53% of recent college graduates under the age of 25 are unemployed or doing work they could have done without going to college--retail clerks, waiting tables, etc.

The Keynesian Cargo Cult solution to the diminishing returns is to provide more debt to students, making them into debt-serfs for life. The cruel stupidity and immorality of the Keynesian Cargo Cult knows no bounds because they refuse to accept the reality that diminishing returns cannot be fixed by more debt and more squandering of good money after bad.

The truth is the failed cartel of higher education has to be leapfrogged and left in the dustbin of history: here's a model that lowers costs by 90% and aligns the output with the real economy: The Nearly Free University and The Emerging Economy.

The Fatal Disease of the Status Quo: Diminishing Returns (May 1, 2013)

The Keynesian Cargo Cult's solution allows no feedback from the real world, and allows no mechanism to discipline the imprudent borrower/speculator. If imprudent borrowers take on too much debt, the Keynesian Cargo Cult's solution is to offer them more credit at rates they can afford--near-0% if necessary.

If a speculator borrows money and loses it in a high-risk gamble, the Keynesian Cargo Cult's solution is to force the taxpayer to make good the gambler's losses and then give the speculator more nearly-free money to continue gambling.

This "solution" works the first time around, less well the second time around, and triggers a collapse the third time around. This lifecycle is called the S-Curve:

The Keynesian Cargo Cult inflated one credit bubble in the 1990s, another in the 2000s, and by an extraordinary expansion of credit and lowering interest rates to near-zero has managed to Beat the Devil and inflate a third credit bubble in the 2010s.

That any schoolkid could predict waving dead chickens and eliminating feedback and consequences will lead to a series of disastrously poor choices by speculators and imprudent borrowers doesn't register with the Keynesian Cargo Cult. But since the Keynesian Cargo Cult is headed by a Nobel Prize academic economist, the Cargo Cult members effusively praise the Emperor's fine (and nonexistent) robe.

You poor, dumb, deluded fools. You've destroyed our economy, our values and our ability to deal with reality. Your faith is as boundless and disconnected from the real world as your policies.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 03/27/2014 - 12:56 | 4599122 Headbanger
Headbanger's picture

Don't encourage them!

They're gonna start live sacrifices next!

Thu, 03/27/2014 - 12:58 | 4599134 stant
stant's picture

looks like to me they already are

Thu, 03/27/2014 - 13:27 | 4599223 maskone909
maskone909's picture

Keynesianism: communism 2.0

Common sense communism

Thu, 03/27/2014 - 13:36 | 4599278 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

What the author probably realizes, but fails to mention is the easy money does bouy the economy using non-asset backed credit. To those who will not think the issue through, it appears as if they really are growing the economy. Appearance over a short period of time is all they need to get the political classes to back them. Of course it just collapses in the long run due to a lack of true assets and a flood of fiat money.

Thu, 03/27/2014 - 13:43 | 4599324 maskone909
maskone909's picture

Record amount of food stamps. It doesnt even help the economy

Thu, 03/27/2014 - 13:47 | 4599337 Manthong
Manthong's picture

Well, I think that as the ritual plays out, the animal spirits will eventually be taking it you-know-where by the invisible fist of economic reality.. right in front of the campfire .

Thu, 03/27/2014 - 14:59 | 4599719 knukles
knukles's picture

That's razzzizt, you know....

"dancing around a fire at night waving dead chickens and chanting "humba-humba."

Thu, 03/27/2014 - 13:53 | 4599362 lordylord
lordylord's picture

You're all assuming that Keynesian economic policies are failing.  I am here to tell you that they are working to perfection.  More government control and power has always been the goal.  Not economic growth and stability.

Thu, 03/27/2014 - 13:57 | 4599384 maskone909
maskone909's picture

Modus Operandi

Thu, 03/27/2014 - 14:13 | 4599446 daveO
daveO's picture

Right, see Student Loan takeover by government.

Thu, 03/27/2014 - 13:43 | 4599325 Kayman
Kayman's picture

You little people just don't understand.  The Fed must increase its Balance Sheet to $14 Trillion, interest rates need to go negative and Unicorns must be trained to fart.

Trust me....

Paul Krugman

Thu, 03/27/2014 - 12:59 | 4599140 Dollarmedes
Dollarmedes's picture

It hasn't given them clairvoyance, either.

Thu, 03/27/2014 - 13:00 | 4599146 SilverDoctors
SilverDoctors's picture

Live sacrifices?  Like JPM's top commercial bankruptcy lawyer being run down by a minivan Saturday in a hit and run?

Thu, 03/27/2014 - 13:06 | 4599171 McMolotov
McMolotov's picture

Another dead banker? When will it end? My face is stained from shedding so many tears.*


*of joy

Thu, 03/27/2014 - 18:49 | 4600599 Jafo
Jafo's picture

Somebody somewhere is crying crocodile tears.  Seriously though, a dead lawyer is the best kind of lawyer.  What better way to postpone a bank induced insolvency than killing the lawyer running the application in the courts.

Thu, 03/27/2014 - 13:30 | 4599267 RacerX
RacerX's picture

so technically this was an "assisted suicide"?

Thu, 03/27/2014 - 13:46 | 4599340 DavidC
DavidC's picture

Nah, it's a conspiracy theory (like so many of those others on ZH that appear NOT to be after a couple of years!).


Thu, 03/27/2014 - 14:14 | 4599450 NotApplicable
NotApplicable's picture

This guy was an avid cyclist, so it stands a good chance of not being an assist.



Thu, 03/27/2014 - 13:01 | 4599151 McMolotov
McMolotov's picture

Right now, Darth Krugtard is trying to use the Force to choke Mr. Hugh-Smith.

Thu, 03/27/2014 - 13:14 | 4599193 Leopold B. Scotch
Leopold B. Scotch's picture

Gotta love that Krazy Krugster!

Dude!  It's the Krugmeister!

Thu, 03/27/2014 - 13:15 | 4599197 El Vaquero
El Vaquero's picture

And when that fails, he's going to go break a window and jack off on some poor person's windowsill. 

Thu, 03/27/2014 - 13:01 | 4599154 autofixer
autofixer's picture

Aren't they almost doing that in the U.K.? 

Thu, 03/27/2014 - 13:08 | 4599180 booboo
booboo's picture

Tough to find virgin bankers to throw in the fire. Maybe Abbey Joseph Cohen is a virgin, Yellin, yea, definitly.

Thu, 03/27/2014 - 13:10 | 4599183 SmackDaddy
SmackDaddy's picture

No no no.  Everything will be fine.  My school district just announced it's buying ipads for every kid.  If they did that everywhere, that will solve all the world's problems!

Thu, 03/27/2014 - 13:14 | 4599191 LFMayor
LFMayor's picture

It's just like RIF:  Reading is Fundamental. Remember that one?  Except now it's electronic.  And a little more expensive.  Same GREAT results, though!

Thu, 03/27/2014 - 14:16 | 4599462 daveO
daveO's picture

Never try to teach a pig to sing, it's a waste of time and annoys the pig.

Thu, 03/27/2014 - 13:38 | 4599285 Froman
Froman's picture

Yeah, our school district did that (iPads for all) except the "do-gooders" did not expect that kids being kids would use them as frisbees, impromptu hammers, or expiriment with them to see just how much force it takes to shatter an iPad screen or what an iPad would look like if run over by a school bus (these are probably the same iPads that are now showing up as "refurbs" in the Apple store).   Memo to Apple for a new iPad release; the tough book version of the iPad Air made of a titanium case, encased in two inch vulcanized rubber with a shatter proof screen.  Weight for this new iPad should come in just under 5lbs. Apple should be able to develop this new iPad with a joint DoD/NSA grant with the rationale that soldiers need a combat ready iPad that they can control drones from the field of battle with while sexting their fellow troops...the NSA portion of the grant will provide funding for imbeding not only an upgraded keystroke monitor and trojan horse spyware into the iOS of each new iPad (as is currently done) but also to develop a 44 hi-def megapixel camera that can be remotely operated by the NSA to provide them with video and audio of the users comings and goings in addition to web surfing history, e-mail and text content. Apple in the true spirit of Steve Jobs can charge the school districts $5k a piece under the "educator rate" for these new tough iPads. They will be available to the general public at retail price of $7,500 for 16gb and $8,000 for 16gb + 4G.

Thu, 03/27/2014 - 14:09 | 4599432 marathonman
marathonman's picture

You are onto something now Mr. Froman.  Excellent work.

Thu, 03/27/2014 - 13:59 | 4599391 Smiley
Smiley's picture

GOOD!  Let them eat themselves.  Avoid clumps of people (The Stoopids LOVE to clump) and you will be fine. 

Thu, 03/27/2014 - 13:01 | 4599133 Ghordius
Ghordius's picture

eh. it works. as long as it works, that is...

though in defense of Lord Keynes: his theory was about spending in bad times, and the opposite in good times

Thu, 03/27/2014 - 13:13 | 4599192 SmackDaddy
SmackDaddy's picture

who needs "bad times".  we can start a war whenver we want

Thu, 03/27/2014 - 13:18 | 4599207 Ghordius
Ghordius's picture

the funny or unfunny part is that not that long ago, war was bad times, and peace was good times


btw/OT: Dear Mr. Obama, we europeans don't want nor need moar defence spending

Thu, 03/27/2014 - 13:24 | 4599231 falak pema
falak pema's picture

Blame the symptom not the cause..

Blame the serf not the Patrician for Fiat bunga bunga.

The God of war and the God of hubris always spawn a race of arrogant  liars who expect life to be served on a plate by the slaves of Empire thanks to the sweat of their brows.

Thu, 03/27/2014 - 13:35 | 4599287 XitSam
XitSam's picture

Keynesianism is like a variant of Zeno's Paradox.  

Thu, 03/27/2014 - 15:53 | 4599997 Emergency Ward
Emergency Ward's picture

All times are bad times to these conjurers.....

Thu, 03/27/2014 - 12:59 | 4599137 Ghostdog
Ghostdog's picture

It worked great for Japan......

Thu, 03/27/2014 - 13:01 | 4599150 pound the vix
pound the vix's picture

Truth Hurts.  But they will never give up without complete disaster and even then they will blame "Auserity"

Thu, 03/27/2014 - 13:01 | 4599156 lasvegaspersona
lasvegaspersona's picture

You MUST use the right chickens...everyone knows that.

Thu, 03/27/2014 - 14:20 | 4599477 daveO
daveO's picture

Like the Banty Rooster in the WH?  

Thu, 03/27/2014 - 13:02 | 4599159 Itchy and Scratchy
Itchy and Scratchy's picture

Modern day alchemy! Nothing new here!

Thu, 03/27/2014 - 13:38 | 4599297 cougar_w
cougar_w's picture

Normalcy bias. It is all really new, crazy untested theory, right off the edge of the chalkboard it is. You think it's business as usual because you aren't thinking very hard about how many hundreds of centuries we did things a very different way.

Thu, 03/27/2014 - 14:33 | 4599524 daveO
daveO's picture

Modern day 'coin clipping'.

Thu, 03/27/2014 - 15:44 | 4599959 cougar_w
cougar_w's picture

Give me a break. This episode compares to coin clipping the way the detonation of an atomic bomb compares to a pidgeon farting.

Think of the scale, man. Think of the amount of wealth tied up in all this. Think of the span of history it took to get here and how much of that is now set to evaporate in one single grinding episode of miscalculation and regret.

Stunning. Absolutely.

Thu, 03/27/2014 - 13:03 | 4599163 PlusTic
PlusTic's picture

The perfectly designed monetary theory to destroy any independent nation takes less than 100 yrs. to destory one

Thu, 03/27/2014 - 13:14 | 4599195 cougar_w
cougar_w's picture

That's giving them waaaaay too much credit. Nope they got ahead of themselves, started believing their own hype, and as a direct result just fucked it all completely up. Simple answer is best.

Thu, 03/27/2014 - 13:04 | 4599164 Jason T
Jason T's picture

Undergrad tuition at Cornell up $10k in last 5 years to $60k a year ....


All under the 0% interest rate policy.


Thu, 03/27/2014 - 13:06 | 4599170 ejmoosa
ejmoosa's picture

One often has to hit rock bottom before getting the message.

They haven't gotten the message yet, I assure you.


Thu, 03/27/2014 - 13:08 | 4599178 madcows
madcows's picture

Eventually you have to pay the loan or they write off the debt. 

And, debt is neither money, nor is it economic growth.

Reality is a bitch, ain't it, Krugman.

Thu, 03/27/2014 - 13:35 | 4599284 cougar_w
cougar_w's picture

As a parallel reality it worked -- exactly as long as nobody ever defaulted on a loan.

There was no actual Plan B because there could not be a Plan B.

Who comes up with this crazy shit? "Seemed like a good idea at the time" will be carved into the collective gravemarker of Western civilization.

We'll be back to trading my eggs for your bacon at par, and hauling dirty laundry down to the river in a wooden push cart.

Damn ... things must be pretty bad ... cuz that sounds just fine to me.

Thu, 03/27/2014 - 18:54 | 4600610 Jafo
Jafo's picture

Just want to clarify something here.  It is only a loan if it is repayed.  If it isn't repayed then it was just money that was given away.

Thu, 03/27/2014 - 13:12 | 4599189 LFMayor
LFMayor's picture

And soon, soon, be consumed or incinerated in this new Hell of your own building.  You want animal spirits?  You'll see them firsthand when the section 8 hives burst open in search of food.

Just when you think a boring slide into obscurity is the path ahead, we get to enjoy one of those read about but seldom experienced once in a 1000 year societal collapses.

Thanks assholes, I'll be sure and remember this if you happen to fall into my clutches.  I mean, I enjoy playing Borderlands-2 and all, but not quite so much I want to fucking do it with my family, in real life. 

Thu, 03/27/2014 - 14:25 | 4599497 daveO
daveO's picture

Well, remember Bill Clinton saying it was 'The end of Welfare, as we know it'? That'll finally be it. Say Hallelulah. 

Thu, 03/27/2014 - 13:13 | 4599190 toros
toros's picture

" Like JPM's top commercial bankruptcy lawyer being run down by a minivan Saturday in a hit and run? "



Thu, 03/27/2014 - 13:19 | 4599198 Emergency Ward
Emergency Ward's picture

Ooh-E-Ooh-Ah-Ah, my friend the witch doctor, he told me what to think.
Ooh-E-Ooh-Ah-Ah, my friend the witch doctor, he told me what to say.
Ooh-E-Ooh-Ah-Ah, my friend the witch doctor, he told me what to do.

Thu, 03/27/2014 - 13:17 | 4599203 Steve in Greensboro
Steve in Greensboro's picture

Sounds like Chuck-You is beginning to see reality, that, as Reagan said, "government is not the solution to our problems, government IS the problem."

Thu, 03/27/2014 - 13:40 | 4599307 Stimulati
Stimulati's picture

This is a classic straw man article.  Here is my advice - never take economic advice from a website that doesn't understand the difference between Keynesianism and monetarism.

Thu, 03/27/2014 - 13:48 | 4599345 cougar_w
cougar_w's picture

It's a rant, not an academic essay. I think we all get that part and will overlook conflating one with the other. That the monetarists are all also Keynesians (or serving them) makes it an easy reach.

Thu, 03/27/2014 - 15:06 | 4599751 Stimulati
Stimulati's picture

So you are going to criticize Keynesians for the actions of the monetarists?  How dumb is that?


Thu, 03/27/2014 - 15:31 | 4599886 cougar_w
cougar_w's picture

I'm going to criticize the Keynesians for being an enabling cat's paw for the monetarists.

Feel better?

Thu, 03/27/2014 - 13:46 | 4599334 q99x2
q99x2's picture

Better get your minds together. Instant Karma is going to get you.

Keynesianism was meant to transfer the wealth to the globalists. It worked perfect until Putin stood up against the globalists. They've got a fucking sustainability camp set up at the college I'm going to. They are attacking on multiple fronts but we will come rejoicing bringing in the thieves.

Long live the global insurrection against bankster occupation.

Thu, 03/27/2014 - 13:56 | 4599369 cougar_w
cougar_w's picture

Putin grabbing Crime-ia does not constitute a revolt against the bankster class.

There will be no revolt against the bankster class ever. So you can get over that.

What will happen to the bankster class is their entire world is going to implode under the super gravitational force called "the end of cheap oil" and this will be the utter, absolute, final, total, complete and eternal end of all their bullshit. But don't become confused by this, the rest of us will join them being destroyed in unison crying no no no! as we and they are all dragged screaming into the black devouring vortex of an uncaring universe that is -- to put it mildly -- really sick and tired of our claiming to be God's gift.

Sack up, fuckers. It's a long god-damned way down from here, and it's knives and nightmares the entire way.

Thu, 03/27/2014 - 13:50 | 4599353 TheRideNeverEnds
TheRideNeverEnds's picture

Don't you worry, once the weather clears up the green shoots will really start to grow and propel the economy to escape velocity, if they don't the FED will just print more money so either way the market is going higher.  BTFD; it is free money.



Thu, 03/27/2014 - 13:51 | 4599358 EINSILVERGUY


Tylers.  I sense a little talking out of both sides of the mouth. 

All of these articles on government intrusion and overreach and then I see the fucking advertisements

What is this bullshit?   You guys can't at least be a bit more discerning about your revenue sources when pimping out the eyeballs of your audience

Thu, 03/27/2014 - 13:57 | 4599385 cougar_w
cougar_w's picture

It's Google, fucking with you. Nobody sees those ads but you.

Thu, 03/27/2014 - 14:12 | 4599441 LFMayor
LFMayor's picture

I get good thangs, Latin and Asian lovelies who want to be my love you long time wife.  Cute chix in tee shirts with nipple prints.

You have to fish in better ponds, brother!

Thu, 03/27/2014 - 14:17 | 4599465 cougar_w
cougar_w's picture

Same here. I have Google tracking shut down on my browser (lots of ways to do that) so they probably have no idea most of the time who I am or what interests me. So from that I am forced to conclude that the t-shirt and Asian mailorder bride things are the default ads for ZH based on the overall demographic.

Which is, as you say, absolutely 100% fine with me. The demographic thing, they nailed it.

Thu, 03/27/2014 - 14:04 | 4599411 boozo
boozo's picture

Keynesian economics works wonderfully for ... Keynesian bankers.

See how rich they have become. Presidentes and generales bow before them.

Thu, 03/27/2014 - 16:44 | 4600137 Radical Marijuana
Radical Marijuana's picture

For sure, boozo, the skyline of most cities is dominated by the banks' buildings. "Keynesianism" was a cherry picked work of an intellectual, to provide another camouflaged cover for the fundamental fact that private banks are legally able to create the public "money" supply out of nothing as debts, because the methods of organized crime were persistently and incrementally applied to achieve legalized counterfeiting of the public "money" supply. Various schools of "economics" were promoted in order to pretend to justify that fraud. The privatized ability to make "money" out of nothing was constantly ratcheted and leveraged, up and up, to also dominate the mass media, and the school systems, especially including the schools of economics.

Economics is a science, the way that warfare is a science. Success in warfare was based on deceits, while success in economics was based on fraud. Various intellectuals are picked and promoted by the established systems of runaway triumphantly legalized crimes, to rationalize doing ever more of that. Keynesians fit that bill, of having their ideas cherry picked, and partially applied, in order to keep the triumphant financial frauds running. Keynesian banksters are able to use Keynesian ideas selectively, to continue to promote what is basically happening, which is government forcing everyone to accept fiat "money," made out of nothing, by private banks, which system the government agrees to operate within, while forcing everyone else to also agree to operate within, by deeming that "money" legal tender, and requiring payment of taxes in that form of "money."


However, the feedback loops of the funding of politics continues to drive the established systems to automatically get worse, faster. The successful frauds become more wealthy and powerful, while more truth makes no profits for those promoting it. While there is no doubt that our monetary system is a state religion, which is based on legalized lies, backed by legalized violence, those operating within that system are constantly accumulating more social tokens of power and privilege, which tokens enough other people are forced to work for in order to obtain. Therefore, everyone who has to work for that "money" is enslaved by those who get to legally make that "money" out of nothing as debts. In that situation, where the funding of political processes can dominate those processes, those who are able and willing to provide intellectual rationalizations and justifications for banksters to make more "money" out of nothing have successful careers within that system, while those who do not tend to be excluded from political power.

The economists who operate through the maximum possible willful blindness have the most successful careers, because they get to share some the benefits gained by those who can make "money" out of nothing, within the overall systems where others are forced to sell something to obtain "money," such as sell their time and labour. Meanwhile, on every other layer, throughout every social institution, the same fractal patterns repeat themselves. Since we are all operating through fundamentally fraudulent financial accounting systems, those who are closer to operating those systems do better, while those who are farther away do worse. However, throughout all of that, the schools and mass media continue to promote the triumphantly fraudulent financial accounting as the state religion, which everyone is forced to respect, because that monetary system is backed up by the taxation system, and laws deeming that "money" made out of nothing, as debts by private banks, to be the legal tender.

The "sad devotion" of Keynesian economics enables those doing that to more often to be paid to promote their bullshit. Those are the paradoxical ways that an enforced state religion works. It does not matter now absurd its beliefs are, since its foundation was always backing up lies with violence. Indeed, paradoxically, the more absurd its beliefs become, the more that they are enforced, and thus, the more the spiral of the benefits obtained from increasingly operating those organized lies deliver the benefits from those symbolic robberies to those orchestrating that system to function.

The final failure of a state religion appears to amount to the failure of the state itself. The willful blindness of economists, and politicians, and the public, is all continuing within the context where those benefiting from the financial frauds are constantly accumulating more tokens of social power and privilege, with which they are able to continue to bribe, and or pay for others to be intimidated, or discredited and destroyed. The collective work of everyone who must operate through that system of tokens, of fiat "money" made out of nothing, as debts by private banks, regulates and controls the work that everyone else does, and whatever benefits that they may obtain from that work.

Therefore, a private bank can create out of nothing the "money" to buy a house, as long as the person borrowing that "money" agrees to pay that back with interest. Of course, that debt slavery system is fantastically beneficial to those who can create that "money" out of nothing in the first place! They can then pay other people to generate the kinds of bullshit that justify doing more of that, such as the cherry picked Keynesians economics. However, of course, eventually the runaway continuing triumph of that fraudulence drives the entire system to become increasingly insane, with the manifestation of debt slavery generating debt insanity numbers being the first sign of the deeper and deeper levels of social insanities beneath the surface.

Keynesian economics works wonderfully those who are within that system, obtaining the personal benefits from operating the fraudulent accounting systems. After all, who benefits more, the people who get to make the "money" out of nothing to buy a house, or the people who have to actually work or provide materials to build that house? Although the answer to that question is plainly obvious in the short-term, it is not so obvious in the longer term ... However, we appear to be living in those rare times of changes in state, when the sequence of short-term events are finally entering into the phases of their longer term consequences.


While it is now intellectually clear that nothing can enable any genuine economic "recovery" within the established systems of fundamentally fraudulent accounting systems, so far there is almost nothing to indicate what might possibly survive through the collapse into chaos of that system of triumphant frauds over-extending itself too much, for too long ... Meanwhile, of course, the paradoxical role of "higher education" being distorted by operating within a fundamentally fraudulent accounting system becomes the most perversely exaggerated symbol of the overall processes which are due to being able to make "money" out of nothing as debts controlling civilization. While it was bad enough to create the "money" out of nothing to buy a house, to create the "money" out of nothing to buy an education is symbolically worse.

The deterioration of physical housing due to things like longer term consequences of the subprime mortgage frauds is relatively nothing compared to the deterioration of education which is paid for through a fraudulent financial accounting system. However, young people are even more forced to accept their real sets of alternatives, and nothing much other than that. The same as someone who wants to buy a house within our established systems has to get the "money" made out of nothing to pay for that, by agreeing to pay that back with interest, someone who wants an education within our system has to agree to accept "money" made of nothing to pay for that, and to keep paying and paying for that in the future, due to the interest on that debt.

Ironically, young people are forced by a lack of real alternatives to accept living within the established systems, where they have to agree to pay to be brainwashed, by agreeing to pay their brainwashers more and more, forever and ever ... Thus, the state religion monetary system, of legalized lies, backed by legalized violence, propagates itself, where those who can be recruited to be the best professional liars and immaculate hypocrites can be employed within that system, while others will end up being dumped through the social garburators. However, eventually the whole system will turn itself into garbage thereby, since the bigger picture is trillions of times worse than Hugh-Smith has written about, so far as I have ever read.

Thu, 03/27/2014 - 17:03 | 4600242 MEAN BUSINESS

My limited observation of different skylines is bank buildings and insurance company buildings.  Somehow they must be equally as violent/fraudulent !

Floor after floor populated (sometimes to overflowing these days lol) by lawyers and accountants. CHS's toadies and apparatchiks...

Thu, 03/27/2014 - 23:10 | 4600726 Radical Marijuana
Radical Marijuana's picture

Yeah, MEAN BUSINESS: FIRE is an acronym for the four pillars of finance, which used to be deliberately kept more separated, but which have now all blended together. There were good arguments that insurance was more persistently behind the longer term shaping of society than was apparent, but the distinctions upon which that was based are no longer as valid, since all the aspects are now much more integrated:

FIRE: Finance, Insurance and Real Estate (banks, credit agencies, investment companies, brokers and dealers of securities and commodities, security and commodity exchanges, insurance agents, buyers, sellers, lessors, lessees, etc.)
Thu, 03/27/2014 - 17:57 | 4600421 August
August's picture

>>>...the skyline of most cities is dominated by the banks' buildings

Thanks for the small slice-of-human-life observation.  At one point I lived in Spokane, a fairly isolated small city built on wheat farming, railroads, lumber and mining.  EVERY major building downtown was a bank (except for one hotel).  To a twenty-first century denizen of The West, this may seem normal, but I believe it is a major "tell" as to who/what rules these nations. 

With "less advanced" societies you get some nice temples and palaces, but in 'Murica, all you get are bank buildings, and a scattering of purpose-built palaces for one of the Holy Ball Games.

Thu, 03/27/2014 - 14:08 | 4599427 lasvegaspersona
lasvegaspersona's picture

This madness has caused me to go 'Hugh Hendry'. I am selling paper gold and buying S&P. I'm buying jusr enough to 'feel' like I'm taking part in the 'rally'. Actually I'm feeling the boredom I felt before watching the implosion of the Dunes hotel years ago. I knew something exciting was gong to happen (and it did!) but the waiting was awful. Now I'm making a few bucks, feeling all mainstream and yet in reality completely ready to lose those little bets....just freekin perfect.

Thu, 03/27/2014 - 14:22 | 4599488 cougar_w
cougar_w's picture

Agreed. The opportunity to lose everything in under 5 minutes is hard to pass up.

I was reviewing the flash-crash of 2010 yesterday. Made me sick. S&P down 10%, about 6% of that in under a minute. The rebound was so obviously machine-driven it was not even funny.

If this shit ever goes down -- for whatever the reason -- it is going to be like 15 minutes spent lost in the Ninth Ring of Hell.

Thu, 03/27/2014 - 14:12 | 4599442 gaoptimize
gaoptimize's picture

John Maynard Keynes = John Frum

Janet Yellen = Thitam Goiset

Thu, 03/27/2014 - 14:27 | 4599505 Spungo
Spungo's picture

If you want to make a Keynesian's head explode, write the expression:
cost = (delta X)/(1-X)

Thu, 03/27/2014 - 15:34 | 4599902 cougar_w
cougar_w's picture

My head exloded anyway.

You really should put a disclaimer when you do that.

Thu, 03/27/2014 - 15:22 | 4599837 Clowns on Acid
Clowns on Acid's picture

Can we start beating people up...yet?

Thu, 03/27/2014 - 15:36 | 4599908 cougar_w
cougar_w's picture

You can start anytime you feel up to it, and we'll all watch.

Could do with some entertainment around here.

Thu, 03/27/2014 - 15:43 | 4599954 withglee
withglee's picture

The word "promise" appears nowhere in the article or in the comments. A loan is "a promise to complete a trade". A defaulted loan is "a broken trading promise". It's not about cheap money ... it's about trader integrity. A healthy marketplace doesn't let deadbeats in. An unhealthy marketplace full of deadbeats drives prudent traders out.

Prudent mentioned 7 times. Maybe we're making a little progress.

Thu, 03/27/2014 - 17:14 | 4600275 blindman
blindman's picture

pulitzer prize is due this author.
Don't you just know it! Huey Piano Smith and the Clowns

Thu, 03/27/2014 - 18:59 | 4600623 malek
malek's picture

But that was the whole point of Keynesianism from the start: give politicians a cooked-up "reason" to ignore feedback.

Thu, 03/27/2014 - 21:50 | 4601199 Nassim
Nassim's picture

In the summer of 1969, I spent a few months at a UCLA fraternity house in Westwood Village - a pretty smart area. It cost $1 a night. I got to meet some of these students and they could work their way through college without any big hassles. They had cars and were way better off that us British kids. Their main objective in life seemed to be to keep out of the "draft"

I cannot imagine what it is like now.

Thu, 03/27/2014 - 21:54 | 4601207 FredFlintstone
FredFlintstone's picture

Wasn't tuition free for public universities in California back then?

Fri, 03/28/2014 - 00:54 | 4601588 honestann
honestann's picture

Keynesian ideas, and endless other official (and popular) modern stupid ideas, notions, beliefs and assumptions have one thing in common.


NONE of us doubt that a neighbor who borrows a million bucks and lives the "good life" for several years has "more goods, more goodies, and quite possibly more fun" in the short run (which means, until he spends the money he borrowed).

And without a doubt, his neighbors will notice and many will envy him (because they may assume he earned all that wealth, or because they too ignore the unstated fact of massive DEBT that is attached to the short term goodies).

However, a more "complete" look at this phenomenon of "borrow, spend, enjoy" reveals "the rest of the story", which is obvious to everyone on some level.  Of course irresponsible humans (including all Keynesians) go to great lengths to avoid recognizing, admitting, or considering the "rest of the story" and the many consequences of the rest of the story.

Keynesians in particular spend 83,974 times more time and emphasis on how much more pleasant the immediate short term will be after borrowing and spending that million bucks... than the long term when most of the junk purchased with the million bucks is gone, spoiled, degraded and/or less wonderful.  They also prefer not to mention that the 30-year payback of a historically average mortgage loans is about 300%, so the borrower must forgo 3-million bucks of goods, goodies and enjoyment in the future to pay back the loan.  And that's assuming all the debt is at the relatively lower rate of interest of a mortgage, not the average interest rates for other types of loans.

Furthermore, Keynesians also completely ignore how efficiently and productively funds are typically spent when the funds are earned and saved over many years of time, effort, resources and productive behavior.

Why?  Because Keynesians are nothing more than diabolical predators out to fleece everyone.  They do NOT lend money THEY earned through years of effort --- they simply poke a few keys on a keyboard, and without any productive act or virtuous behavior, they pocket that $2-million of interest on the fiat, fake, fraud, fiction, fantasy, fractional-reserve debt.

Not one single serious Keynesian is unaware of the fact that their theories and practices are 100% predatory assault on the producers of this world.  They advocate Keynesianism because it is the most effective rationalization ever created to sucker producers into accepting blatant theft and enslavement.  PERIOD.

That anyone bothers to treat Keynesianism as an honest much less serious theory is an insult and assault on honesty, on ethics, on liberty, on rationality, on productivity, on individualism... and every productive individual on this planet.

Fri, 03/28/2014 - 09:09 | 4602109 withglee
withglee's picture

When you know those "few keys they poke" mean "a promise to complete a trade", you see that they are promise breakers ... deadbeats. No one likes a deadbeat. The problem is not the debt. Debts are promises. The problem is failure to deliver ... and letting them get away with it.

Sat, 03/29/2014 - 01:42 | 4604958 honestann
honestann's picture

The problem is, they never loaned ANYTHING (real) in the first place.  They simply rigged the system via predators-DBA-government so producers must... by law... accept their FIAT, fake, fraud, fiction, fantasy, fractional-reserve debt-note bits/papers for real, physical, valuable goods.

The basic problem is... the predators get something real (the products they "buy" with the $2-million interest) without producing anything themselves.  They simply poke keys on keyboards, which produces nothing of value, much less real.

The entire scheme is FRAUD.  They never loaned out anything real in the first place, so they have no legitimate basis to require repayment.  But they do, and the collaborators predators-DBA-government and predators-DBA-banksters benefit at the expense of producers.

Here is another way to look at this.  1000 times nothing equals 10000000 times nothing equals 0 times nothing.

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