The Madness of Keynesian Economics

American Thinker ^ | December 24, 2012 | Jonathon Moseley

[Moseley]

President Barack Obama demands more stimulus spending to avoid the "fiscal cliff." Obama increased the national debt $6 trillion to $16 trillion. Yet the Democrats' 'cure for what ails ya' is even more spending. Obama demands around $75 billion in new spending to stimulate the economy in 2013.

"Keynesian Economics" is the insane belief that the economy can be stimulated by government spending. It provides the excuse to depart from common sense that allows politicians to ignore the alarm bells. It is ludicrous mainly because our government doesn't have any money to spend.

If the government had a surplus saved up, spending actual money might give our economy a short-term sugar high (with dubious long-term results). But our Federal and state governments must first suck money out of the economy by borrowing it.

History has repeatedly proven that this is nonsense. Yet Democrats will not let go of the Keynesian Myth. The government is the center of society, America's modern Democrats want to believe. So they cannot shake the dogma that our entire economy depends upon government spending.

The New Deal was the largest real-world test of the Keynesian Myth in recent history. Franklin Roosevelt's Treasury Secretary Henry Morgenthau confessed that the "New Deal" was a failure in sworn testimony before Congress on May 9, 1939.

"We have tried spending money. We are spending more than we have ever spent before and it does not work."

[Moseley]

American Thinker requires that articles be excerpted and hyperlinked.

The complete article is at American Thinker:

http://www.americanthinker.com/2012/12/the_madness_of_keynesian_economics.html

[Moseley]

CLICK HERE for hyperlink

[Ohioan]

See, also, Economics Of A Sociopath.

William Flax

[andy58-in-nh]

If Central Planning worked, the Soviet Union would today be the envy of the world, and it and Communist China would comprise the world's two great superpowers.

But in spite of communism's dismal failure, the leaders of both nations remain unwilling to give up the power inherent in state economic control.

Accordingly, they have now both turned to a quasi-Fascist form of governance, which increasingly (and not coincidentally) appears to be the socioeconomic model of choice for Obama Administration.

[boop]

Someone please tell me where the money is going.

Trillion dollars a year in deficits alone, on top of the budget, and what tangible results have we received? A man on Mars? A new Hoover dam? Rural electrification? Heck ANY evidence of economic activity?

I don't even see "more" roads being repaired, and that's already been paid for by state taxes.

[andy58-in-nh]

Someone please tell me where the money is going.

Have you been to Washington, D.C. lately?

[Idaho_Cowboy]

Few see the connection between modern ‘stimulus’ and the old idea of ‘central planning’. Modern Keynesian's forget a couple of key ideas of Keynes theory. In his original theory Keynes proposed that a government was supposed to save during the good times, so it could dis-save during hard times. While often ignored that you can't keep borrowing forever, a dim light does dawn everyone once in a while for example Ben Bernanke's original comment about a fiscal cliff earlier in the year.

Another overlooked idea is the implicit assumption that any government spending is stimulus and the belief in the government multiplier. From an Austrian perspective government spending can have the same effect as central planning and cause more mal-investment by investing in a bad capital structure. This is one of the primary effects of bail-outs. It keeps the economy from correcting and just prolongs the agony of mal-investment. Even the idea of using interest rates overlooks the inflation tax and its cost to the economy.

Sadly, despite the evidence of the depression, and the communist countries you site, the fallacies of Keynesian economist is overlooked in academia. No other theory of economics giver government the role of savior and guide.

[Bluestocking]

The reason the U.S. economy hasn’t collapsed already during Obama’s first term is because only one of the evil twins of Keynesianism — taxing and spending — has been implemented by the Democrats.

So far, the Democrats have only SPENT — yes, on a stupendous scale; however, they have not TAXED; they have maintained the Bush tax cuts, even during the first two years of Obama’s term when the Democrats controlled Congress.

If Obama and the Democrats don’t agree to save us from the fiscal cliff now by agreeing with the Republicans to continue to maintain the Bush tax cuts, then the full Keynesian nightmare will descend upon us.

[r-q-tek86]

Bflr

[Little Bill]

Adam Smith and the Austrians predict the choices, economically, that people make cannot be predicted.

Let the market work out it's problems, everything every thing else will follow.

[andy58-in-nh]

Adam Smith and the Austrians predict the choices, economically, that people make cannot be predicted. Let the market work out it's problems, everything every thing else will follow.

That's exactly right, of course: a handful of central planners cannot hope to substitute their personal judgment for the billions of economic decisions that people make each and every day. But it sure don't stop 'em from trying...

Merry Christmas to you and your family!

[Little Bill]

Merry Christmas in return my FRiend, and many to follow.

[Moseley]

[Little Bill] Adam Smith and the Austrians predict the choices, economically, that people make cannot be predicted. Let the market work out it's problems, everything every thing else will follow.

[Andy] That's exactly right, of course: a handful of central planners cannot hope to substitute their personal judgment for the billions of economic decisions that people make each and every day.

Absolutely. Yet it is astonishing how almost no one in the political world is even dimly aware of this. SOME conservatives (a minority) have understood this for generations. Yet it still remains a completely unknown concept to most of the political world, even some conservatives.

[Moseley]

The conservative movement argues that we SHOULD NOT engage in central planning.

We are failing to make the even more powerful argument that we CAN NOT engage in central planning.

It is not merely a preference between options. It is an utter impossibility, as Hayek so powerfully shows us, to run an economy through central planning.

Not only should we not do it, we CANNOT do it — it is foolishness to even try.

[Little Bill]

The hidden hand?