I sought for the greatness and genius of America in her commodious harbors and her ample rivers, and it was not there; in her fertile fields and boundless prairies, and it was not there; in her rich mines and her vast world commerce, and it was not there. Not until I went to the churches of America and heard her pulpits aflame with righteousness did I understand the secret of her genius and power. America is great because she is good, and if America ever ceases to be good, America will cease to be great.”

- de Tocqueville 1831































Thursday, October 28, 2010

Keyne's Died Sixty-Four Years Ago......Can We Finally Nail Down His Coffin Lid?



When Barack Obama says that most economists agree with the policies that he has put into effect, he is talking about Keynesian economists.  In the thirties, Maynard Keynes and Friedrick Hayek were debating the effectiveness of government intervention in the economy.  The stimulus package of last year is what Keynesian economists advocate to kick start an economy.  There is supposed to be a multiplier effect involved when money is dumped into the economy by the government, ie: people who receive money from the government spend the money boosting other sectors of the economy. Why this has never worked is that the money the government infuses into the economy is backed by debt, creating more debt, inflating our cash flow making the dollar worth less. Picture two Keynesian economists in a deep hole with a shovel (the hole being our debt). The Keynesian with the shovel says, "We need to dig our way out of debt". The other Keynesian says, "Dig up, stupid".  Just as the two with the shovel can not dig their way out, the government has failed every time it has tried to get us out of debt by making more debt, to include President Roosevelt's New Deal.  I know that most of us have been taught in school that the New Deal policies helped to bring us out of the Great Depression.  The fact is that the rest of the world was coming out of the depression while the U.S. was still mired in a sluggish economy due to the policies of President Roosevelt.  Flash-forward to now.  After a year where we have amazingly huge debt spending geared to revive an economy in collapse, mostly due to bad home lending practices (the unintended consequences of government interfering with private loan companies and some greed thrown in for good measure). Can we all see that these ridiculous debt spending policies don't work?  Can we finally agree that the best thing that government can do to help the economy is to get out of the way and stop spending money that we don't have?  Or are there still people that would trust the politician more than themselves?  Yes, there is a role for government.  It is there to protect us from unscrupulous people that would endanger our financial and personal well being.  But, to make villains out of whole sectors of social, political and financial persons and institutions, the way our "beloved" President has, is on its face, absurd.

3 comments:

Angela said...

It's so frustrating to see "smart" people doing things that have already failed in the past.
I love that line from The Simpson's. I think about it every time I read about idiots who want to spend our way out of debt.

goddessdivine said...

When Obama stated that economists agree with his plan, I want to ask him: Are you only talking to economists graduating from the school of Karl Marx? Seriously; most (real) economists would NOT agree with Obama's policies.

rocslinger said...

Keynes is popular in D.C. because it gives them cover for spending money and maintaining control.