classical economics
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Proof Keynesian Stimulus Fails

$5 Trillion in Four Years Buys Only “Grand Illusion”
By Wayne Jett © April 22, 2013

       Since 2009, the U. S. has borrowed and spent $5 Trillion – $42,500 on behalf of every household in the nation – to produce economic recovery, and has failed to achieve it. A suggestion four years ago that each household should borrow and spend that much new debt would have been called, at best, ill advised. This being so, the federal government doing the equivalent on our behalf has been both destructive and unpardonable.

      In 1935, John Maynard Keynes himself would have backed away from spending $5 trillion of borrowed money on his proposed economic experiment.  After all, when he wrote The General Theory, Keynes faced a vigorous community of classical economists who would have torn his fallacious idea apart.

     But this is 75 years later, and Keynes surely would have conceded long ago his support of centrally planned spending as a substitute for insufficient “animal spirits” in the private economy has been an abject failure. Who would suggest otherwise except the perpetrators of this elaborate ruse: the ruling elite, their puppet officials, monopoly corporate beneficiaries of the spending, the elite media, and intellectuals who swap integrity for career advancement.

                                                          Experiments with Borrowed Money

    How many more trillions will be borrowed and wasted – diverted to political cronies – before Keynesian deficit spending to “stimulate” economic recovery is stopped? It is a sham which, if congressional legislators treated it justly, ought to be punished as a felony.

      Progress, however, does not require recovering the squandered trillions or punishing transgressions of the public’s interests. Let’s begin by stopping deficit spending to stimulate economic recovery forever. The wisdom of this simple conclusion is compelling, and its open admission would rehabilitate economic thought as something other than politically correct dogma.

    Since 2009, the U. S. government has spent Five Thousand Billion Dollars of borrowed money, plus all tax revenues, while insisting its primary objective was economic recovery. Yet there is no economic recovery. An honest observer, wishing recovery to be true, looks around and finds only “grand illusion.”

     Millions of Americans see economic depression. The grand illusion apparent to some is created primarily by (i) deceitful official employment data, and (ii) superficially impressive earnings by the circle of corporations which are favored recipients of international bank financing and government spending.

                                                             Mercantilist Barriers to Recovery

     The absence of economic recovery is no surprise. Repeatedly since 2008, commentaries here (here1, here2, here3 and here4) have asserted existing U. S. economic policies will not permit economic recovery. So long as mercantilist policies remain unchanged, recovery will not happen.

     What mercantilist policies, you ask? Here is a short list:

•    U. S. financial markets are riven by fraud on a macro scale, aided and abetted by federal regulators
•    Monetary policy imposed by international banks through the Federal Reserve destroys dollar stability, steals value from saved capital, and prevents fair competition from regional and community banks
•    Financial fraud and monetary policy combine to manipulate markets in precious metals, disrupting efforts to shelter capital
•    Tax and regulatory burdens are heavy and uncertain, as epitomized by the Affordable Care Act and the drumbeat for “fair share” income tax rates
•    Government presses for control of access to energy, health care and personal liberty/security (gun control)

     Keynesian deficit spending itself is a mercantilist policy, as Keynes knew when he gave it his support. Read about Keynes’ switch from classical economic theory to mercantilism in The Fruits of Graft, which is available on the home page of this site and on Amazon.

                                                                  End Stimulus Spending Now

     Seventy-five years of government commandeering and squandering trillions of dollars of privately produced capital have proved the obvious. Deficit spending to stimulate economic recovery is a total bust. It is actually counter-productive to its stated purpose. If the productive, middle class can muster sufficient political influence, “stimulus” spending must be stopped and relegated to the dustbin of history before republican government meets that fate. ~