Keynesian economics, full speed ahead since the Great Depression, has failed

Keynesian economists may make claims about their successes, but Keynesian economics has been a failure everywhere most especially over the long turn. And every period of artificial “prosperity” that rode in on their ideas fell flat against the wall of the next downturn.

The 1990s decade of prosperity was artificial in part from easy money policies and in part from a real “peace dividend”, meaning reduction in military spending, and in part from optimistic investing based on a balanced federal budget.

Drastic reductions in federal budgets always results in more prosperity, because it means less pressure to raise taxes, and it’s not adding to the debt, which reduces investment jitters.

Market pressure always wins anyway. The Fed was created to stop the boom-bust cycle, but the 20th and 21st century has seen much worse than any such cycle of the 19th century, and since we have now reached the limits of the ability of the dollar, even as the world’s reserve currency, to hold back true market forces, we have had a ten-year “recession” that has no end in sight. The pressures of the free market are pushing for dollar devaluation. They won’t default, they’ll just keep printing money.

They have a paradox right now. There’s no saving the value of the dollar, but they have been devaluing it from even before they detached it from the dollar. But it looks like it’s about to hit critical mass. There won’t be a default, they’ll just print more of it.

If the House does what it should, and what Americans obviously wanted in the 2010 elections, and just refuse to let pass another hike in the debt ceiling, one of two things will happen. Obama’s administration will default on debt service, or they will extort the public receiving aid by withholding entitlement checks (they won’t do that, too risky for them too). The first option won’t happen, because they are already in hock to the money-changers in off-line ways, because the Fed and other bankers have happily financed their pie-in-the-sky promises all along so far.

Proverbs 22:7 ¶The rich ruleth over the poor, and the borrower is servant to the lender.

So that leaves the option to just print money. They don’t print it, what the Fed does now is just add itself another, oh, say, trillion dollars to their own asset column without the balancing real-world entry the rest of us have to make. Meaning, having to put something in the column for where it came from.


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