CovenantNews.com

Old Keynesian Dogs, Old Fiscal Tricks

Gary North / LewRockwell.com:
As a dog returneth to his vomit, so a fool returneth to his folly (Proverbs 26:11). We are about to be thrown back into the tender mercies of Keynesian economists. In the current setting, this will push the economy lower rather than higher. The main Keynesian solutions to a faltering economy are federal budget deficits and monetary inflation. This two-part program assumes unemployment at 25% and annual deflation at 10%: the Great Depression in America. Problem: it's not 1936 any more. ... Keynesianism is based on two fundamental ideas: (1) sellers do not learn that something is better than nothing, and therefore will not lower their selling prices; (2) economists do not learn that government spending that is financed by debt is accomplished in one of only two ways: (a) money lent by savers, which could have been lent to businesses or consumers; (b) money lent by a central bank, which lowers the purchasing power of the currency unit. This is a philosophy of something for nothing.

Posted by Editor at June 25, 2008 07:51 AM