to the editor from this week's Chronicle:
No. 126 - 9/18/17
Some claims have been made in recent reviews, like the last one, which
definitely would not be considered "politically correct" in elite circles
today! One claim, clearly stated that "Keynesian theory is basically flawed."
A dangerous assertion to make in view of the fact that Keynes is revered
around the world today, and is accepted by a large majority of officials
at the government and big bank level, and is dominant in a majority of
colleges and universities. It is repeated here that it is one of the
reasons we have been accumulating huge and not repayable national debt
over the past several decades.
That claim here repeated is that Keynes call for government and bank
increases in the money supply, called "quantitative easing," to combat
recession periods, is used without hesitation, because, first it works!
Imagine what would happen in any little American town if a large plane
would fly over and drop millions of dollars of $100 dollar bills, available
for the taking by anyone lucky enough to grab several handfuls! Prices
of land, homes, automobiles would immediately go up, as demand, fueled
by people's sudden ability to buy, would put pressure on everything in
the area for sale! And that, review readers, is exactly what has
driven our stock market to record breaking new levels! Low and near
zero interest rates, and super easy credit is and has been the driving
force there! And is precisely why we are warned that not only the
national debt, but that business debt and consumer debt is also at record
levels. And we dare not forget that the public is happy with the
system, at least while the economy is buzzing and investors are happy!
But the flip side of the Keynes system is the problem, as human nature
itself explains why the theoretical clamp down on an over-heated economy,
recognized by the ogre inflation, does not happen! Logically and
historically, people in a democratic society simply will not stand for
it! You can see the evidence in the news daily, as every little attempt
by officials to slow the economy by raising interest rates, or to cut spending
in order to bring costs
more under control is met at all levels by howls of protest!
This brings us to the second and more basic reason for the debt hinted
at and quoted here at the end of Review 125: "Human nature itself is an
even more basic cause" both of the big debt and the reason Keynes is doomed
First, common sense and a casual understanding of human nature tells
us that we all prefer easier conditions than hard ones! Do we not
all willingly accept increases in pay or income more readily than decreases?
Are we all not happier with gifts and grants than we are with increased
taxes to pay for them? Is it not a human tendency to sit back and
accept without blushing gifts and handouts which we know we have really
not paid entirely for? Are we unhappy when we are told that our federal
government pours more into our
Idaho economy annually than we pay in turn for federal taxes? Really,
is it at all surprising that some 45 million Americans today are helped
out with food stamps? Would either you or myself turn down such help
if times were tough on ourselves and our families? Finally, is it
not true, that most of us will accept something given free if continually
offered us? And is it therefore surprising that to pay for such largess,
government must borrow on the future?
As discussed at length in reviews 14 to17, was Frederik Bastiat in
his book THE LAW not prophetic when he claimed around 1850 that government
gifts taken from some to give to others was LEGAL PLUNDER and was doomed
to fail? Or was not Alexander Tyler in 1787 not correct when he said that
democracies would always collapse from bankruptcy as they normally
elect officials who would buy their votes with handouts?
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