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Thursday, January 12, 2012

The end of the Keynesian era

With Russia-like tax reforms and world gold standard system, the post-Keynesian era will be a time of great prosperity.

New York, NY - The beginning of the Keynesian Era can be dated, perhaps, to September 1931 - the year when Britain intentionally devalued the pound, throwing the world into turmoil and currency conflict. Today, we are again in an extended period of economic crisis. However, I suspect that this will turn out to be the end of the Keynesian Era - the time when it is, in fact, Keynesianism itself which destroys us.

"Keynesianism" is really just this century's version of Mercantilism, which dates from the beginning of the 17th century. There's nothing particularly new or original about it. Behind the billows of academic obfuscation, it amounts to two policies: exaggerated government spending in the face of recession, and some sort of "easy money" policy. Although the term "Keynesian" has become unfashionable, virtually all academics and government economic advisers are Keynesians today.

The primary attraction of Keynesianism, I would say, is not its wonderful overall results, but rather, that it provides a good excuse for politicians do to what they wanted to do anyway. Any politician knows that a certain way to increase one's popularity is to hand out government money. In a recession, politicians are likely worried about their declining popularity, and thus their first instinct is to hand out more money. The Keynesian economists often boast that the money can be spent on total waste, such as "digging holes and filling them back up". Read More