The term Keynesian applies to the economic theories of Fabian Socialist, John Maynard Keynes. Keynesian economics, is the body of ideas set forth by Keynes's General Theory of Employment, Interest and Money (1935–36) and other works, intended to provide a theoretical basis for big government spending.
That anyone can still believe that Keynes unsustainable policies, holds any answers to the modern world’s economic problems, is one of those rare moments that make one realize just how intellectually difficult it is to reason with big spending politicians and liberal economists, psychologically vested in Keynes's macroeconomic concept.
It's just as well an indication of just how deeply ingrained Keynesian theory has unfortunately become. The truth is that Keynes’s only interest in writing his book "General Theory," was to encourage greater levels of government spending despite the subsequent economic consequences.
The inevitable reality is that stimulus packages, and public spending initiatives, drag economies down with a relentlessness apparently impossible for any Keynesian devotee to fathom. Such public spending, especially if it takes budgets into deficit, inevitably makes matters worse. This is why inflation is over 8% today and GDP retracting.
Japan is the paramount example of what happens through reckless public-sector spending. There have been no end of pseudo-explanations for what has been an unexampled disaster. The rise in public-sector spending and the rise in the level of public debt, left the Japanese economy floundering.
The truth is that the liberal mind, even when confronted with such a profound demonstration of the incapacity of Keynesian theory to provide anything useful in economic policy guidance, outright rejects the evidence when it ought to have kindled somewhere a recognition that Keynesian economics is an abject failure. This speaks volumes as to their hubris and arrogance. The skewed thinking presents yet one more instance of how beliefs will persist, even in the face of irrefutable proof. That's the quintessential liberal psychic, where ideology supersedes reason and arrogance supersedes pragmatism.
To realize that the united State's Federal Reserve is as an institution, a devotee of Keynes's destructive philosophies, should be further evidence as to how poorly based their monetary policy is. That we are now in serious risk of not only an American recession, but of a global one at that, is largely related to the decisions of the Fed to recklessly print money since the Obama administration and prop up the Stock Market. Other central banks throughout the developed world followed the same monetary policies, which have led to the same sad and disastrous outcomes.
Today the Fed, as a consequence of itself, has been forced into only one of two choices: Keep printing trillions of dollars and let inflation skyrocket, or tighten monetary policy and watch the markets crash. Which will it choose?
In other words, will the Federal Reserve, neither federal nor reserve, but a cabal of the very central bankers our founders warned us about, sacrifice the stock market or the dollar? The most sensible solution is “politically unacceptable” — the latter option over the former.
While the option of propping up the Market can maintain a false semblance of economic and financial stability, an eventual day of reckoning cannot be avoided. What can’t go on forever, won’t go on for ever. As of today, the Dow has just booked its worst first half since 1962. On then other hand, devaluation of the dollar has dire consequences for the world's reserve currency. It doesn't take a Nostradamus to know that it's going to get really ugly from now onwards. Sent from my iPhone