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John Maynard Keynes predicts economic chaos

John Maynard Keynes predicts economic chaos


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At the Palace of Versailles outside Paris, Germany signs the Treaty of Versailles with the Allies, officially ending World War I. The English economist John Maynard Keynes, who had attended the peace conference but then left in protest of the treaty, was one of the most outspoken critics of the punitive agreement. In his The Economic Consequences of the Peace, published in December 1919, Keynes predicted that the stiff war reparations and other harsh terms imposed on Germany by the treaty would lead to the financial collapse of the country, which in turn would have serious economic and political repercussions on Europe and the world.

By the fall of 1918, it was apparent to the leaders of Germany that defeat was inevitable in World War I. After four years of terrible attrition, Germany no longer had the men or resources to resist the Allies, who had been given a tremendous boost by the infusion of American manpower and supplies. In order to avert an Allied invasion of Germany, the German government contacted U.S. President Woodrow Wilson in October 1918 and asked him to arrange a general armistice. Earlier that year, Wilson had proclaimed his “Fourteen Points,” which proposed terms for a “just and stable peace” between Germany and its enemies. The Germans asked that the armistice be established along these terms, and the Allies more or less complied, assuring Germany of a fair and unselfish final peace treaty. On November 11, 1918, the armistice was signed and went into effect, and fighting in World War I came to an end.

READ MORE: How the Treaty of Versailles and German Guilt Led to World War II

In January 1919, John Maynard Keynes traveled to the Paris Peace Conference as the chief representative of the British Treasury. The brilliant 35-year-old economist had previously won acclaim for his work with the Indian currency and his management of British finances during the war. In Paris, he sat on an economic council and advised British Prime Minister David Lloyd George, but the important peacemaking decisions were out of his hands, and President Wilson, Prime Minister Lloyd George, and French Prime Minister Georges Clemenceau wielded the real authority. Germany had no role in the negotiations deciding its fate, and lesser Allied powers had little responsibility in the drafting of the final treaty.

It soon became apparent that the treaty would bear only a faint resemblance to the Fourteen Points that had been proposed by Wilson and embraced by the Germans. Wilson, a great idealist, had few negotiating skills, and he soon buckled under the pressure of Clemenceau, who hoped to punish Germany as severely as it had punished France in the Treaty of Frankfurt that ended the Franco-Prussian War in 1871. Lloyd George took the middle ground between the two men, but he backed the French plan to force Germany to pay reparations for damages inflicted on Allied civilians and their property. Since the treaty officially held Germany responsible for the outbreak of World War I (in reality it was only partially responsible), the Allies would not have to pay reparations for damages they inflicted on German civilians.

The treaty that began to emerge was a thinly veiled Carthaginian Peace, an agreement that accomplished Clemenceau’s hope to crush France’s old rival. According to its terms, Germany was to relinquish 10 percent of its territory. It was to be disarmed, and its overseas empire taken over by the Allies. Most detrimental to Germany’s immediate future, however, was the confiscation of its foreign financial holdings and its merchant carrier fleet. The German economy, already devastated by the war, was thus further crippled, and the stiff war reparations demanded ensured that it would not soon return to its feet. A final reparations figure was not agreed upon in the treaty, but estimates placed the amount in excess of $30 billion, far beyond Germany’s capacity to pay. Germany would be subject to invasion if it fell behind on payments.

READ MORE: Germany's World War I Debt Was So Crushing It Took 92 Years to Pay Off

Keynes, horrified by the terms of the emerging treaty, presented a plan to the Allied leaders in which the German government be given a substantial loan, thus allowing it to buy food and materials while beginning reparations payments immediately. Lloyd George approved the “Keynes Plan,” but President Wilson turned it down because he feared it would not receive congressional approval. In a private letter to a friend, Keynes called the idealistic American president “the greatest fraud on earth.” On June 5, 1919, Keynes wrote a note to Lloyd George informing the prime minister that he was resigning his post in protest of the impending “devastation of Europe.”

The Germans initially refused to sign the Treaty of Versailles, and it took an ultimatum from the Allies to bring the German delegation to Paris on June 28. It was five years to the day since the assassination of Archduke Francis Ferdinand, which began the chain of events that led to the outbreak of World War I. Clemenceau chose the location for the signing of the treaty: the Hall of Mirrors in Versailles Palace, site of the signing of the Treaty of Frankfurt that ended the Franco-Prussian War. At the ceremony, General Jan Christiaan Smuts, soon to be president of South Africa, was the only Allied leader to protest formally the Treaty of Versailles, saying it would do grave injury to the industrial revival of Europe.

At Smuts’ urging, Keynes began work on The Economic Consequences of the Peace. It was published in December 1919 and was widely read. In the book, Keynes made a grim prophecy that would have particular relevance to the next generation of Europeans: “If we aim at the impoverishment of Central Europe, vengeance, I dare say, will not limp. Nothing can then delay for very long the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the later German war will fade into nothing, and which will destroy, whoever is victor, the civilisation and the progress of our generation.”

Germany soon fell hopelessly behind in its reparations payments, and in 1923 France and Belgium occupied the industrial Ruhr region as a means of forcing payment. In protest, workers and employers closed down the factories in the region. Catastrophic inflation ensued, and Germany’s fragile economy began quickly to collapse. By the time the crash came in November 1923, a lifetime of savings could not buy a loaf of bread. That month, the Nazi Party led by Adolf Hitler launched an abortive coup against Germany’s government. The Nazis were crushed and Hitler was imprisoned, but many resentful Germans sympathized with the Nazis and their hatred of the Treaty of Versailles.

A decade later, Hitler would exploit this continuing bitterness among Germans to seize control of the German state. In the 1930s, the Treaty of Versailles was significantly revised and altered in Germany’s favor, but this belated amendment could not stop the rise of German militarism and the subsequent outbreak of World War II.

In the late 1930s, John Maynard Keynes gained a reputation as the world’s foremost economist by advocating large-scale government economic planning to keep unemployment low and markets healthy. Today, all major capitalist nations adhere to the key principles of Keynesian economics. He died in 1946.


The Trail

President Harry S. Truman signs the National Security Act, which becomes one of the most important pieces of Cold War legislation. The act established much of the bureaucratic framework for foreign policymaking for the next 40-plus years of the Cold War.

By July 1947, the Cold War was in full swing. The United States and the Soviet Union, once allies during World War II, now faced off as ideological enemies. In the preceding months, the administration of President Truman had argued for, and secured, military and economic aid to Greece and Turkey to assist in their struggles against communist insurgents. In addition, the Marshall Plan, which called for billions of dollars in U.S. aid to help rebuild war-torn Western Europe and strengthen it against possible communist aggression, had also taken shape. As the magnitude of the Cold War increased, however, so too did the need for a more efficient and manageable foreign policymaking bureaucracy in the United States. The National Security Act was the solution.

The National Security Act had three main parts. First, it streamlined and unified the nation’s military establishment by bringing together the Navy Department and War Department under a new Department of Defense. This department would facilitate control and utilization of the nation’s growing military. Second, the act established the National Security Council (NSC). Based in the White House, the NSC was supposed to serve as a coordinating agency, sifting through the increasing flow of diplomatic and intelligence information in order to provide the president with brief but detailed reports. Finally, the act set up the Central Intelligence Agency (CIA). The CIA replaced the Central Intelligence Group, which had been established in 1946 to coordinate the intelligence-gathering activities of the various military branches and the Department of State. The CIA, however, was to be much more–it was a separate agency, designed not only to gather intelligence but also to carry out covert operations in foreign nations.

The National Security Act formally took effect in September 1947. Since that time, the Department of Defense, NSC, and CIA have grown steadily in terms of size, budgets, and power. The Department of Defense, housed in the Pentagon, controls a budget that many Third World nations would envy. The NSC rapidly became not simply an information organizing agency, but one that was active in the formation of foreign policy. The CIA also grew in power over the course of the Cold War, becoming involved in numerous covert operations. Most notable of these was the failed Bay of Pigs operation of 1961, in which Cuban refugees, trained and armed by the CIA, were unleashed against the communist regime of Fidel Castro. The mission was a disaster, with most of the attackers either killed or captured in a short time. Though it had both successes and failures, the National Security Act indicated just how seriously the U.S. government took the Cold War threat.

“Truman signs the National Security Act.” 2008. The History Channel website. 26 Jul 2008, 12:42 http://www.history.com/this-day-in-history.do?action=Article&id=2740.

1775 – A postal system was established by the 2nd Continental Congress of the United States. The first Postmaster General was Benjamin Franklin.

1788 – New York became the 11th state to ratify the U.S. Constitution.

1881 – Thomas Edison and Patrick Kenny execute a patent application for a facsimile telegraph (U.S. Pat. 479,184).

1945 – Winston Churchill resigned as Britain’s prime minister.

1948 – U.S. President Truman signed executive orders that prohibited discrimination in the U.S. armed forces and federal employment.

1953 – Fidel Castro began his revolt against Fulgencio Batista with an unsuccessful attack on an army barracks in eastern Cuba. Castro eventually ousted Batista six years later.

1956 – Egyptian President Gamal Abdel Nasser nationalized the Suez Canal.

1971 – Apollo 15 was launched from Cape Kennedy, FL.

1999 – 1,500 pieces of Marilyn Monroe’s personal items went on display at Christie’s in New York, NY. The items went on sale later in 1999.

Liberian independence proclaimed

The Republic of Liberia, formerly a colony of the American Colonization Society, declares its independence. Under pressure from Britain, the United States hesitantly accepted Liberian sovereignty, making the West African nation the first democratic republic in African history. A constitution modeled after the U.S. Constitution was approved, and in 1848 Joseph Jenkins Roberts was elected Liberia’s first president.

FBI founded

On July 26, 1908, the Federal Bureau of Investigation (FBI) is born when U.S. Attorney General Charles Bonaparte orders a group of newly hired federal investigators to report to Chief Examiner Stanley W. Finch of the Department of Justice. One year later, the Office of the Chief Examiner was renamed the Bureau of Investigation, and in 1935 it became the Federal Bureau of Investigation.

Real-life Psycho Ed Gein dies

On July 26, 1984, Ed Gein, a serial killer infamous for skinning human corpses, dies of complications from cancer in a Wisconsin prison at age 77. Gein served as the inspiration for writer Robert Bloch’s character Norman Bates in the 1959 novel Psycho, which in 1960 was turned into a film starring Anthony Hopkins and directed by Alfred Hitchcock.

Edward Theodore Gein was born in LaCrosse, Wisconsin, on July 27, 1906, to an alcoholic father and domineering mother, who taught her son that women and sex were evil. Gein was raised, along with an older brother, on an isolated farm in Plainfield, Wisconsin. After Gein’s father died in 1940, the future killer’s brother died under mysterious circumstances during a fire in 1944 and his beloved mother passed away from health problems in 1945. Gein remained on the farm by himself.

In November 1957, police found the headless, gutted body of a missing store clerk, Bernice Worden, at Gein’s farmhouse. Upon further investigation, authorities discovered a collection of human skulls along with furniture and clothing, including a suit, made from human body parts and skin. Gein told police he had dug up the graves of recently buried women who reminded him of his mother. Investigators found the remains of 10 women in Gein’s home, but he was ultimately linked to just two murders: Bernice Worden and another local woman, Mary Hogan.

Gein was declared mentally unfit to stand trial and was sent to a state hospital in Wisconsin. His farm attracted crowds of curiosity seekers before it burned down in 1958, most likely in a blaze set by an arsonist. In 1968, Gein was deemed sane enough to stand trial, but a judge ultimately found him guilty by reason of insanity and he spent the rest of his days in a state facility.

In addition to Psycho, films including Texas Chainsaw Massacre and Silence of the Lambs were said to be loosely based on Gein’s crimes.

The very concept of history implies the scholar and the reader. Without a generation of civilized people to study history, to preserve its records, to absorb its lessons and relate them to its own problems, history, too, would lose its meaning.
George F. Kennan

Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.
John Maynard Keynes

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On This Day, 6-28-08: John Maynard Keynes

Keynes predicts economic chaos

At the Palace of Versailles outside Paris, Germany signs the Treaty of Versailles with the Allies, officially ending World War I. The English economist John Maynard Keynes, who had attended the peace conference but then left in protest of the treaty, was one of the most outspoken critics of the punitive agreement. In his The Economic Consequences of the Peace, published in December 1919, Keynes predicted that the stiff war reparations and other harsh terms imposed on Germany by the treaty would lead to the financial collapse of the country, which in turn would have serious economic and political repercussions on Europe and the world.

By the fall of 1918, it was apparent to the leaders of Germany that defeat was inevitable in World War I. After four years of terrible attrition, Germany no longer had the men or resources to resist the Allies, who had been given a tremendous boost by the infusion of American manpower and supplies. In order to avert an Allied invasion of Germany, the German government contacted U.S. President Woodrow Wilson in October 1918 and asked him to arrange a general armistice. Earlier that year, Wilson had proclaimed his “Fourteen Points,” which proposed terms for a “just and stable peace” between Germany and its enemies. The Germans asked that the armistice be established along these terms, and the Allies more or less complied, assuring Germany of a fair and unselfish final peace treaty. On November 11, 1918, the armistice was signed and went into effect, and fighting in World War I came to an end.

In January 1919, John Maynard Keynes traveled to the Paris Peace Conference as the chief representative of the British Treasury. The brilliant 35-year-old economist had previously won acclaim for his work with the Indian currency and his management of British finances during the war. In Paris, he sat on an economic council and advised British Prime Minister David Lloyd George, but the important peacemaking decisions were out of his hands, and President Wilson, Prime Minister Lloyd George, and French Prime Minister Georges Clemenceau wielded the real authority. Germany had no role in the negotiations deciding its fate, and lesser Allied powers had little responsibility in the drafting of the final treaty.

It soon became apparent that the treaty would bear only a faint resemblance to the Fourteen Points that had been proposed by Wilson and embraced by the Germans. Wilson, a great idealist, had few negotiating skills, and he soon buckled under the pressure of Clemenceau, who hoped to punish Germany as severely as it had punished France in the Treaty of Frankfurt that ended the Franco-Prussian War in 1871. Lloyd George took the middle ground between the two men, but he backed the French plan to force Germany to pay reparations for damages inflicted on Allied civilians and their property. Since the treaty officially held Germany responsible for the outbreak of World War I (in reality it was only partially responsible), the Allies would not have to pay reparations for damages they inflicted on German civilians.

The treaty that began to emerge was a thinly veiled Carthaginian Peace, an agreement that accomplished Clemenceau’s hope to crush France’s old rival. According to its terms, Germany was to relinquish 10 percent of its territory. It was to be disarmed, and its overseas empire taken over by the Allies. Most detrimental to Germany’s immediate future, however, was the confiscation of its foreign financial holdings and its merchant carrier fleet. The German economy, already devastated by the war, was thus further crippled, and the stiff war reparations demanded ensured that it would not soon return to its feet. A final reparations figure was not agreed upon in the treaty, but estimates placed the amount in excess of $30 billion, far beyond Germany’s capacity to pay. Germany would be subject to invasion if it fell behind on payments.

Keynes, horrified by the terms of the emerging treaty, presented a plan to the Allied leaders in which the German government be given a substantial loan, thus allowing it to buy food and materials while beginning reparations payments immediately. Lloyd George approved the “Keynes Plan,” but President Wilson turned it down because he feared it would not receive congressional approval. In a private letter to a friend, Keynes called the idealistic American president “the greatest fraud on earth.” On June 5, 1919, Keynes wrote a note to Lloyd George informing the prime minister that he was resigning his post in protest of the impending “devastation of Europe.”

The Germans initially refused to sign the Treaty of Versailles, and it took an ultimatum from the Allies to bring the German delegation to Paris on June 28. It was five years to the day since the assassination of Archduke Francis Ferdinand, which began the chain of events that led to the outbreak of World War I. Clemenceau chose the location for the signing of the treaty: the Hall of Mirrors in Versailles Palace, site of the signing of the Treaty of Frankfurt that ended the Franco-Prussian War. At the ceremony, General Jan Christiaan Smuts, soon to be president of South Africa, was the only Allied leader to protest formally the Treaty of Versailles, saying it would do grave injury to the industrial revival of Europe.

At Smuts’ urging, Keynes began work on The Economic Consequences of the Peace. It was published in December 1919 and was widely read. In the book, Keynes made a grim prophecy that would have particular relevance to the next generation of Europeans: “If we aim at the impoverishment of Central Europe, vengeance, I dare say, will not limp. Nothing can then delay for very long the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the later German war will fade into nothing, and which will destroy, whoever is victor, the civilization and the progress of our generation.”

Germany soon fell hopelessly behind in its reparations payments, and in 1923 France and Belgium occupied the industrial Ruhr region as a means of forcing payment. In protest, workers and employers closed down the factories in the region. Catastrophic inflation ensued, and Germany’s fragile economy began quickly to collapse. By the time the crash came in November 1923, a lifetime of savings could not buy a loaf of bread. That month, the Nazi Party led by Adolf Hitler launched an abortive coup against Germany’s government. The Nazis were crushed and Hitler was imprisoned, but many resentful Germans sympathized with the Nazis and their hatred of the Treaty of Versailles.

A decade later, Hitler would exploit this continuing bitterness among Germans to seize control of the German state. In the 1930s, the Treaty of Versailles was significantly revised and altered in Germany’s favor, but this belated amendment could not stop the rise of German militarism and the subsequent outbreak of World War II.

In the late 1930s, John Maynard Keynes gained a reputation as the world’s foremost economist by advocating large-scale government economic planning to keep unemployment low and markets healthy. Today, all major capitalist nations adhere to the key principles of Keynesian economics. He died in 1946.


Keynes and the Good Life

As the economy collapses and the death toll mounts from COVID-19, economists are bound to ask, &ldquoWhat would Keynes do?&rdquo As two new intellectual histories of the great British economist make clear, that question is about much more than technical issues of monetary and fiscal policy, the Keynesianism found in economic textbooks. The real Keynes was a philosopher in the most profound sense. His was a towering intellect in search of the good society&mdashhuman well-being&mdashon the trail of Aristotle. Keynes today would address not only a searing health crisis and economic turmoil he would instruct us on how the crisis lays bare the rot of our decayed public institutions, and he would bid us to pursue dazzling new solutions for our time.

Both James Crotty&rsquos Keynes Against Capitalism and Zachary Carter&rsquos The Price of Peace show brilliantly how Keynes was vastly more important to modern social thought and today&rsquos politics than the &ldquoKeynesian models&rdquo of aggregate demand conventionally associated with Keynes today. Even in Keynes&rsquos own time, when his magnum opus The General Theory of Employment, Interest and Money (1936) was still hot off the press, Keynes&rsquos philosophical reflections on the social order were turned into a few mechanistic equations in disciple John Hicks&rsquos IS-LM model (1937). As a new economics student almost 50 years ago, I was entranced by the IS-LM model: The economic fate of nations could be determined by the levers of monetary and fiscal policy. Yet this model, accessible even to a first-year enthusiast, did not convey Keynes&rsquos real messages and thinking it diverted our attention from a far deeper and more consequential political agenda.

Keynes indeed emphasized monetary and fiscal policy as tools of recovery from the Great Depression of the 1930s. In the 1920s, he emphasized the need to break with the gold standard to enable war-ravaged Europe to surmount the chaos after World War I. And in the 1940s, he helped to lay the monetary and fiscal foundations for economic recovery after World War II. He was an economic engineer of the greatest brilliance. Yet his financial engineering, dazzling as it was, is not why Keynes was the greatest public intellectual of his era, nor how we should distill his wisdom today. Keynes&rsquos greater importance for us lies in the philosophical realm.

He was, I would argue, the unexcelled master of the moral virtue that the Ancient Greeks called phronesis, or practical wisdom. The Greeks were in search of the good life, or what they called eudaimonia. They believed that the good life could be achieved by cultivating moral virtues, in individual behavior and in politics as well. The leading moral virtues included practical wisdom, courage, moderation of wants, and justice, virtues that were to be pursued by each person in search of a good life, and through the collective life of the polis, or political community.


Is Fed chairman-now incumbent Janet Yellen a bi-Keynesian, too?

Does she have what it takes to carry on the threads set by the Fed’s founder, JM Keynes, the … Bolshevik, Lavender, Pervert, PedophileJohn Maynard Keynes gave us more than just an immoral economic system……he passed on his life of degeneracy, perversion and pedophilia….

SUGAR KEYNES


Convicted Soviet Spy Harry Dexter White
(left) and John Maynard Keynes (right)
at the Bretton Woods Conference

by Zygmund Dobbs

Reprinted from The Review of the News, June 23, 1971

Related: Online free book: KEYNES AT HARVARD, Zygmund Dobbs

John Maynard Keynes [1883-1946]
Lytton Strachey
[1880-1932]

“By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily and while the process impoverishes many, it actually enriches some….The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.” – John Maynard Keynes Economic Consequences of the Peace, 1920

Singing the Red Flag, the highborn sons of the British upper-class lay on the carpeted floor spinning out socialist schemes in homosexual intermission. Sometimes, one of the participants would shout out an obscenity – then, as if on signal, the entire group would join in a frenzied babble of profanity. Here and there individuals would smoke or chew hashish. Most had unkempt long hair, and some sported beards.

The attitude in such gatherings was anti-establishmentarian. To them the older generation was horribly out of date even superfluous. The capitalist system was declared obsolete, and revolution was proclaimed as the only solution. Christianity was pronounced an enemy force, and the worst sort of depravities were eulogized as “that love which passes all Christian understanding.”

The year was 1904, and the participants were destined to become the intellectual and political leaders of the British Empire.

Chief of this ring of homosexual revolutionaries was John Maynard Keynes, who eventually became the economic architect of English socialism and gravedigger for the British Empire. The chief American Fabians, acting as carriers of the Keynesian sickness, were Felix Frankfurter and Walter Lippmann. Covertly, they mobilized their Leftist comrades to spread this pollution in America also. So successful were they that on January 4, 1971, President Nixon announced: “I am now a Keynesian in economics.” What does that mean?

Keynes was characterized by his male sweetheart, Lytton Strachey, as “A liberal and a sodomite, an atheist and a statistician.” His particular depravity was the sexual abuse of little boys. In communications to his homosexual friends, Keynes advised that they go to Tunis, “where bed and boy were also not expensive.” As a sodomistic pedophiliac, he ranged throughout the Mediterranean area in search of boys for himself and his fellow socialists. Taking full advantage of the bitter poverty and abysmal ignorance in North Africa, the Middle East, and Italy, he purchased the bodies of children prostituted for English shillings[See Lytton Strachey, A Critical Biography, Michael Holyroyd, Holt, Rinehart and Winston, two volumes].

Such Leftist hypocrites then, as now, issued loud denunciations against poverty, imperialism, and capitalist immorality. However, for their own degenerate purposes, they eagerly sought out the worst pockets of destitution and backwardness to satisfy their perverted purposes through sexual enslavement of youngsters. While traveling in France and the United States they complained among themselves of the harassment by the police of practicing homosexuals. In degenerate areas of the Mediterranean, on the other hand, they found a pervert’s Utopia where the bodies of children could be purchased as part of a cultured socialist’s holiday.

These Leftist degenerates began to scheme over sixty years ago to secure public acceptance of their depravity. Havelock Ellis, a founder of the Fabian Society, compiled a massive erotic work entitled, Studies In The Psychology Of Sex. Ellis was a sexual pervert and drug user. He and a group of fellow Leftists even pioneered in the experimental use of hallucinogens in private orgies. Ellis was definitely a pathological case. He drove his wife into Lesbianism and drug addiction, securing additional erotic excitement by urging her to recite her Lesbian experiences. Mrs. Ellis eventually went insane and died in utmost misery after denouncing her husband as a sexual monster.

The Fabian socialists used the writings of Ellis as a wedge for sex education in the schools. They started in the colleges and gradually eased into the high school level.

Ellis complained to his fellow socialists fifty-five years ago that he found wider acceptance for his books in the United States than he did in England. In fact, he was arrested and tried for obscenity in England, whereas his books were sold here without serious interference by the authorities. Today, his perversions are standard reference material for the sex educators, and Havelock Ellis is popularly called “the father of social psychology.”

Keynes and his cohorts seized upon the works of Ellis as justification for their depravities. They were also greatly bolstered in their campaign by the theories of an Austrian Leftist named Sigmund Freud. Dr. Freud acknowledged in private correspondence that he copied the thesis of sex as the central determinant in human action from Havelock Ellis. Echoing Ellis, he laid down the premise that homosexuality and carnal depravities are not a matter of abnormality, but merely a case of personal preference. This, plus his declaration of atheism, overjoyed the socialist Keynesian crowd. John Maynard Keynes audaciously proclaimed, “Sex Questions are about to enter the political arena.” He inveighed against “the treatment of sexual offense and abnormalities,” adding the charge that “the existing state of the Law and of orthodoxy is still Mediaeval – altogether out of touch with civilized opinion and civilized practice and with what individuals, educated and uneducated alike, say to one another in private.”

During the same period (1925) Keynes struck out against drug control. He laid down the line which has been pursued by Leftists to the present day in demanding that distribution of narcotics be unrestricted. Homosexuals find drugs a useful adjunct in loosening moral inhibitions to perversion. And this ravisher of little boys feigned sympathy for the masses by urging universal rights for users of narcotics. He declared: “how far is bored and suffering humanity to be allowed, from time to time, an escape, an excitement, a stimulus, a possibility of change?”

Keynes and his conspirators projected homosexuality and drug addiction as an intrinsic part of their collectivist society of the future. His male sweetheart, Lytton Strachey, wrote privately that they would corrupt the whole population, “subtly, through literature, into the bloodstream of the people, and in such a way that they accepted it all naturally, if need be without at first realizing what it was to which they were agreeing.” He boasted that he intended “to seduce his readers to tolerance through laughter and sheer entertainment.” He pointed out that the object was “to write in a way that would contribute to an eventual change in our ethical and sexual mores – a change that couldn’t be done in a minute, but would unobtrusively permeate the more flexible minds of young people.” J. M. Keynes put it in the terms of Marxist economics:

“When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many pseudo-moral principles which have hagridden us for two hundred years….”

Keynes and Strachey used their malignant writings to help contaminate the entire English-speaking world. In the United States they both found expression in the New Republic, the New York Times, and the Saturday Review Of Literature.

In 1939, a comrade of Keynes and Strachey named Bertrand Russell came to America to push their obscenitarian socialism and was (he says in his Autobiography) legally charged as “lecherous, libidinous, lustful, venerous, erotomaniac, aphrodisiac, irreverent, narrow-minded, untruthful, and bereft of moral fiber.” His aborted object had been to permeate the College of the City of New York with the corruption of the British Fabians. Immediately, John Dewey and other American Fabians organized to cry that “Academic Freedom” was under attack. The National Education Association (NEA) and the whole Leftist educational complex began to percolate pervasive degeneracies as being “Liberal” and “progressive.”

The works of Keynes, Lytton Strachey, and Bertrand Russell have been, and are today, required reading in almost every college and university in the United States and Canada.

In the spring of 1905 Keynes and his lavender cohorts had been thrilled by a conference of Russian revolutionaries in London. British Fabians and Joseph Fels, an American soap manufacturer who was also a Fabian, had financed the Russian gathering and furnished them a hall in a Christian church. Key revolutionaries at this London conference included Nikolai Lenin, Leon Trotsky, and Joseph Stalin. The future slaughter of fifty million civilians, and the conquest of one-third of the earth’s surface. rested within the shelter of this gathering. Shivers of excitement rippled down the spines of the socialist homosexuals when they heard that Lenin had openly defended the slaughter of bank guards and stealing of bank funds for the bolshevik coffers. During this time Strachey wrote to one of his intimates: “At this moment Keynes is lying on a rug beside me.”

Keynes and his fellow debauchees became active pacifists and conscientious objectors during World War I. The socialist position against military service dovetailed perfectly with the homosexual aversion to any kind of physical danger and the manly requirements of military training. Yet, in spite of Keynes’ sheltering of “queer conchies,” and his own refusal to serve his country, he was made the head of an important division of the British Treasury. During March of 1917 he confided privately that he supported the bolshevik group among the Russian socialists after the overthrow of Czar Nicholas.

The seizure of power by the bolsheviks in November of 1917 elated Keynes and the rest of the Fabian coterie. At Leftist parties in London, Keynes and his fellow perverts celebrated by dressing in women’s clothes and performing lewd dances. He had as his consort an eighteen-year-old-boy who was ensconced as his assistant in the Treasury Department.

Just before the Bolshevik Revolution, Keynes had made a hurried trip to the United States for the British Government. Here he had a chance to make contact with the American Fabians who were similarly entrenched, via the Frankfurter-Lippmann group, in key positions of the Wilson Administration.

Even the House of Morgan in New York City’s financial district trotted out its sissies to welcome Keynes to this country, and gave him an office just for himself. The international grapevine had established the nature of his proclivities. The urbane air of Keynes sent thrills of excitement through the ranks of the financial “giggle gang.”

Keynes’ deviate socialist circle was almost completely pro-bolshevik. One month after the Revolution, J.M. Keynes wrote his mother”

“Well, the only course open to me is to be buoyantly bolshevik and as I lie in bed in the morning I reflect with a good deal of satisfaction that, because our rulers are as incompetent as they are mad and wicked, one particular era of a particular kind of civilization is very nearly over.”

On February 22, 1918, Keynes proudly boasted of “being a bolshevik.” Yet the British Government blindly sent Keynes to the Versailles peace talks. There he joined forces with his Fabian American comrade, Walter Lippmann, who was among those representing the equally blind U.S. Government. The ensuing pro-bolshevik and anti-American machinations were largely responsible not only for laying the basis for continuing Red victories, but also for setting off the chain of events that eventually brought Hitler to power.

In 1919 Keynes authored The Economic Consequences Of The Peace, which was promptly acclaimed from Moscow by Nikolai Lenin, himself. The Red dictator declared: “Nowhere has the Versailles treaty been described so well as in the book by Keynes.” A special edition of The Economic Consequences was printed under the label of the Fabian Society and, Frankfurter and Lippmann brought the manuscript to the United States and arranged with Harcourt and Brace to publish it here. The volume became required reading among American socialists and Communists.

However, Keynes’ value as a hidden Red was in danger. The Fabians had developed the posture of “respectability” to a fine art and the value of Keynes’ book as an “impartial work” was in jeopardy. With Keynes’ future usefulness in upper-class circles at stake, Lenin had personally come to the rescue. He pulled the classic Leftist double-twist, praising Keynes’ book as a model for Communist revolutionaries and at the same time covering for Keynes by labeling him as “anti-bolshevik.” Nikolai Lenin rose before the Second Congress of the Communist International and declared:

“I will quote another economic source which assumes particularly great significance, the British diplomat Keynes, the author of The Economic Consequences Of The Peace, who on the instructions of his government, took part in the Versailles peace negotiations, watched them directly from the purely bourgeois point of view, studied the subject step by step, and took part in the conference as an economist. He arrived at conclusions which are stronger, more striking and more instructive than any a Communist revolutionary could advance, because they are conclusions drawn by an acknowledged bourgeois….”

Thus was launched the career of Fabian leader Keynes as a “non-Leftist” and “non-Communist.”

In 1925, John Maynard Keynes was married. It was a bizarre performance. His best “man” was Duncan Grant, his male lover for many years, and initiates swear that Keynes held Duncan’s hand as the marriage vows were spoken. But, the background of the bride was equally odd. She was Lydia Lopokova, the premiere ballerina of the Diaghilev Ballet. She was an habitué of Leftist circles, and had at one time been engaged to Heywood Broun, the well known socialist and confidant of Leon Trotsky, but had broken the engagement to marry a dwarf named Barocchi. In 1917 Lydia had disappeared in Paris with the top Cossack general of the White Army, returning to the ballet when the general returned to lead his troops against the bolsheviks. The bolsheviki had by now, however, acquired advance information and used it to defeat the Cossacks.

Following the wedding to Comrade Lydia, Mr. and Mrs. Keynes were the special guests of the Soviet Government. He and his Russian wife were allowed free access to the Soviet hinterland, even to the extent of visiting her relatives. This was a privilege unheard of at the time, since even members of the Communist International were not then allowed such unlimited travel. It was a time of mass killing of civilians, and ordinarily a Russian national traveling with an Englishman would have been arrested and shot. But, Soviet officials were effusive in their thanks to Keynes for designing the first Soviet currency for them while he was still a member of the British Treasury.

The marriage was definitely an “arrangement,” as Keynes continued to enjoy his amours with men. This was often the case with upper-class homosexuals who needed a legal wife as a facade. They both had separate living quarters, and did not interfere with the personal lives of one another. Lydia was very useful as a go-between since Keynes was in frequent contact with Soviet officials both in Britain and the United States.

Meanwhile, the perversion continued apace. It was quite a pace. As I have noted in the new edition of Keynes At Harvard:

Keynes had relations with Strachey Strachey had affairs with Duncan Grant Keynes stole Grant from Strachey Lytton’s brother James Strachey adored Rupert Brooks but so did Keynes Strachey reports to G.E. Moore on seduction of new boys Keynes steals Edgar Duckworth from Lytton Keynes and Lytton agree that homosexuality is, “that love which passes all Christian understanding” Strachey emulates Oscar Wilde with absinthe and drugs He also declares that, “the whole truth is the Devil” He predicts that in one hundred years, “everyone will be converted,” to homosexuality Strachey and Keynes promote obscenitarian talk in colleges Lytton lives with Dora Carrington, a Lesbian Carrington solicits homosexual partners for Lytton Keynes, Lytton and Carrington have orgies involving Lesbian and sodomistic interchanges Keynes and Strachey dress in women’s clothes and dance Keynes and Strachey give a sanctuary to homosexual objectors to military service thus frustrating the authorities Keynes defends the use of drugs and Strachey smokes hashish Carrington married several men so they could be Strachey’s boy-friends Lytton stole Sebastian Sprott from Keynes (the tables were turned) Lytton excuses his drug taking as a liberation from, “this wrong world.” Finally, there are engrossments by Keynes and Strachey with sadistic beating of young boys, “compulsive pre-occupation with male reproductive and excretory organs” and voyages to the most depraved dens of perversion throughout Europe, North Africa and Asia.

The Fabian homosexual circle was incredibly successful in gaining influence and control in a wide area of activity. They staked out the entire British Empire and the United States as well. Lytton Strachey wrote to Keynes:

Oh dear me!, when will my heaven be realized? – My Castle in Spain? Rooms, you know, for you, Duncan and Swithin, as fixtures – Woolf of course, too, if we can lure him from Ceylon and several suites for guests. Can you conceive anything more supreme! I should write tragedies you would revolutionize political economy, Swithin would compose French poetry, Duncan would paint our portraits in every conceivable combination and permutation, and Woolf would criticize us and our works without remorse.”

This projection was incredibly prophetic. J. M. Keynes became the mastermind behind the economic structure of British and American socialism. Strachey was responsible for writing books that undermined the Christian ethic of the Nineteenth Century and set the tone for the pornographic and depraved literature of today. Leonard Woolf worked out the details of the socialist drive for World Government. He was not only the architect of the League of Nations but outlined the structure of the United Nations.

Others of this perverted group of Keynesians have set the tone in art, music, education, and religion. Today [1971], alas, even the President of the United States says: “I am now a Keynesian in economics.” It is disgusting!


Economist's View

On a whim, I went to This Day in History at the History Channel web site. This is what I found:

Keynes Predicts Economic Chaos, June 28, 1919: . By the fall of 1918, it was apparent to the leaders of Germany that defeat was inevitable in World War I. After four years of terrible attrition, Germany no longer had the men or resources to resist the Allies, who had been given a tremendous boost by the infusion of American manpower and supplies. In order to avert an Allied invasion of Germany, the German government contacted U.S. President Woodrow Wilson in October 1918 and asked him to arrange a general armistice. Earlier that year, Wilson had proclaimed his "Fourteen Points," which proposed terms for a "just and stable peace" . The Germans asked that the armistice be established along these terms. On November 11, 1918, the armistice was signed and went into effect, and fighting in World War I came to an end.

In January 1919, John Maynard Keynes traveled to the Paris Peace Conference as the chief representative of the British Treasury. The brilliant 35-year-old economist had previously won acclaim for his work with the Indian currency and his management of British finances during the war. In Paris, he sat on an economic council and advised British Prime Minister David Lloyd George, but the important peacemaking decisions were out of his hands, and President Wilson, Prime Minister Lloyd George, and French Prime Minister Georges Clemenceau wielded the real authority. Germany had no role in the negotiations deciding its fate.

It soon became apparent that the treaty would bear only a faint resemblance to the Fourteen Points that had been proposed by Wilson and embraced by the Germans. Wilson, a great idealist, had few negotiating skills, and he soon buckled under the pressure of Clemenceau, who hoped to punish Germany as severely as it had punished France in the Treaty of Frankfurt that ended the Franco-Prussian War in 1871. .

The treaty that began to emerge was a thinly veiled Carthaginian Peace, an agreement that accomplished Clemenceau's hope to crush France's old rival. According to its terms, Germany was to relinquish 10 percent of its territory. It was to be disarmed, and its overseas empire taken over by the Allies. Most detrimental to Germany's immediate future, however, was the confiscation of its foreign financial holdings and its merchant carrier fleet. The German economy, already devastated by the war, was thus further crippled, and the stiff war reparations demanded ensured that it would not soon return to its feet. .

Keynes, horrified by the terms of the emerging treaty, presented a plan to the Allied leaders in which the German government be given a substantial loan, thus allowing it to buy food and materials while beginning reparations payments immediately. . President Wilson turned it down because he feared it would not receive congressional approval. In a private letter to a friend, Keynes called the idealistic American president "the greatest fraud on earth." On June 5, 1919, Keynes wrote a note to Lloyd George informing the prime minister that he was resigning his post in protest of the impending "devastation of Europe."

The Germans initially refused to sign the Treaty of Versailles, and it took an ultimatum from the Allies to bring the German delegation to Paris on June 28. . Clemenceau chose the location for the signing of the treaty: the Hall of Mirrors in Versailles Palace, site of the signing of the Treaty of Frankfurt that ended the Franco-Prussian War. At the ceremony, General Jan Christiaan Smuts, soon to be president of South Africa, was the only Allied leader to protest formally the Treaty of Versailles, saying it would do grave injury to the industrial revival of Europe.

At Smuts' urging, Keynes began work on The Economic Consequences of the Peace. It was published in December 1919 and was widely read. In the book, Keynes made a grim prophecy that would have particular relevance to the next generation of Europeans: "If we aim at the impoverishment of Central Europe, vengeance, I dare say, will not limp. Nothing can then delay for very long the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the later German war will fade into nothing, and which will destroy, whoever is victor, the civilisation and the progress of our generation."

Germany soon fell hopelessly behind in its reparations payments, and in 1923 France and Belgium occupied the industrial Ruhr region as a means of forcing payment. In protest, workers and employers closed down the factories in the region. Catastrophic inflation ensued, and Germany's fragile economy began quickly to collapse. By the time the crash came in November 1923, a lifetime of savings could not buy a loaf of bread. That month, the Nazi Party led by Adolf Hitler launched an abortive coup against Germany's government. The Nazis were crushed and Hitler was imprisoned, but many resentful Germans sympathized with the Nazis and their hatred of the Treaty of Versailles.

A decade later, Hitler would exploit this continuing bitterness among Germans to seize control of the German state. In the 1930s, the Treaty of Versailles was significantly revised and altered in Germany's favor, but this belated amendment could not stop the rise of German militarism and the subsequent outbreak of World War II.


John Maynard Keynes: Can the great economist save the world?

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John Maynard Keynes: Can the great economist save the world?

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John Maynard Keynes: Can the great economist save the world?

75581.bin

John Maynard Keynes: Can the great economist save the world?

75582.bin

Some years ago, I was present when Bill Clinton visited Warwick University, during the dying days of his presidency. The faculty were awkwardly lined up, each of them holding a book as a gift. I noticed that Big Bill wasn't excessively interested in geology, and he didn't do much better with Germaine Greer and her volume of women's poetry. Things were different when he encountered Robert Skidelsky, author of the definitive Maynard Keynes biography. "Keynes!" the President exclaimed, as if recalling a long-lost crony. He told us all how he had always loved the boldness of the man.

"Keynes had the idea of using government money to spend your way out of a depression," the President explained. "That was a major discovery." I realised that Clinton, like myself certainly, had come to comprehend capitalism through the work of Maynard Keynes. And Keynes, like FDR, whom he met and admired, had been right. There really was nothing to fear, least of all fear. Humans need not think of themselves as victims of impersonal economic laws, suffering stoically. With luck, and the due exercise of brilliance, we could learn to save ourselves. Who knows, we might even come to fathom the "dismal science" of economics.

John Maynard Keynes, as his Russian wife Lydia remarked, was "more than economist". He stood at the crossroads of the modern movement, and he moved freely among the competing worlds of Cambridge, Bloomsbury and the Treasury. Keynes was also (at various times, often simultaneously) a civil servant, a collector of paintings and books, a speculator, a farmer, the begetter of British policy towards the arts (he created the Arts Council), and editor and publisher – and of course, a thinker of great originality. He wrote many books, pamphlets and articles, mostly in great haste, and he was a great exponent of simple ironical prose.

In a very English way he combined a socially conservative appearance – he wore silk underwear and tailored grey suits, he sat on interminable committees and didn't care much what he ate – with the readiness to entertain any proposition. Unless they were established by him, he abhorred rules. When he died in 1946, Keynes was given full honours by the British establishment. And yet he was never really one of them: Keynes was too lacking, like Winston Churchill, in "soundness", or indeed "bottom", and much too conspicuous in his cleverness. A bizarre contribution to the debate over his reputation came from the former editor of The Times, William Rees-Mogg, who suggested that Keynes' obsession with the short-term was motivated not by humanitarian, welfarist considerations but by the fact that as a homosexual he could have no real appreciation of the passing of values (or indeed wealth) from generation to generation.

I first encountered Keynes in 1973 on the Central Line, between the power cuts during the miners' strike. In 1970s Britain the over-used adjective "Keynesian" came attached to many less-than-pleasant things. It described what governments did when faced with economic nonperformance and extortionate claims from trade unions. For many critics of Keynes, the term implied a posture frequently adopted in the class war: a disposition to surrender, camouflaged by elaborate technical arguments.

And yet Keynes, as I rapidly discovered, wasn't the man painted by his detractors. He was most easily taken in short doses, often at his best when provoked by some instance of conspicuous stupidity. "I agree with everything in this if 'not' is put in front of every statement," is how he once judged the work of a civil servant. "When the facts change, I change my mind," he is said to have quipped. It is hard to love great and unyielding intelligence. It is also hard to tolerate those who are consistently right while always seeming to change their views. But Keynes freaks are helped along by the biography, which exists, for hard-core addicts, in three stout volumes, but has recently been released in a shorter, 1,000-page single-volume version. Robert Skidelsky's book is one of the great biographies of our time, an account not just of a man's life, or indeed an age, but of the flourishing and decay of a very English style of radically sceptical intelligence. It makes you long to possess even the smallest micron of Keynesian brain power. I've bought and lost several copies, usually on the back seats of cabs in far-off places.

John Maynard Keynes was born in Cambridge, in 1883, at the high-water mark of British world supremacy, and on the fringes of what the Cambridge historian Noel Annan called the "intellectual aristocracy". His father was a less than wholly successful economist who took refuge in university administration, and his well-educated mother came from a Nonconformist family. Keynes went to Eton (the best school of the day, also the most snobbish) on a scholarship. There he debated, discovered he was a homosexual and grovelled in mud. At the Fourth of June (the annual gala day at Eton that celebrates the birthday of George III) the young Keynes wore "a perfect dove" of a waistcoat. Keynes' impregnable self-assurance is an Eton trait, so indeed is his arrogance. He remained faithful to the school even as his ideas changed. In 1944, when he was very ill, he spent weeks in the bursar's draughty office, rescuing the school's finances. Briefly, however, during the post-war New Jerusalem, Keynes seems to have believed that Eton should be reconciled with egalitarianism, taking in poor boys.

From a young age, Keynes was convinced that he was ugly, but this didn't stop him from enjoying love affairs with other "buggers" from his own social milieu. At King's College, Cambridge, he read philosophy and joined the exclusive Apostles' society, through which he met and began his tempestuous friendship with the writer Lytton Strachey. It was Keynes who seduced Lytton's great love, the painter Duncan Grant. In my office I have a full-size replica of Duncan Grant's portrait of the beady-eyed Keynes at the writing board he used, pen raised and ready for business. "We entirely repudiated a personal liability on us to obey general rules," is how Keynes remembered this pre-war homosexual Arcadia. "We repudiated entirely customary morals, conventions and traditional wisdom."

Keynes is often thought of as a Bloomsbury figure. In reality, the relationship was often mutually hostile, not least during the First World War. The Bloomsbury religion consisted of a coterie of bourgeois-bohemian artiness in which private states were exalted and good cleaning ladies much prized. Keynes thrived in the public sphere. He proved to be able to support his Bloomsbury friends financially, while sleeping with some of them, and they in their turn tended to patronise him. Virginia Woolf's diaries are filled with allusions to Keynes' vulgarity. (She described him once as a "gorged seal, double chin, ledge of red lip, little eyes, sensual, brutal unimaginative", though she did also acknowledge his "queer imaginative ardour about history, humanity".) The pacifist Bloomsberries abhorred Keynes' wartime work at the Treasury. They were happy to be found war-exempt jobs (in most cases they became rose gardeners), while resenting the fact that Keynes' astonishing financial skills were making the fighting possible. For his part, Keynes was resentful of the corrupt uses to which his talents were put.

Keynes' first and best book, The Economic Consequences of the Peace, was published in 1919. It came to influence thinking about 20th-century politics as no other book did, with the possible exception of Mein Kampf. It is the work of a whistle-blower, expressing Keynes' fury at the wasted peace. At Versailles, where he represented the British government, Keynes became outraged by the stupidity of the aged men around him. Dishing the dirt on French and British politicians, Keynes pleaded for a non-Carthaginian peace that wouldn't be the pretext for a second war. Although his pleas were in vain, progressives in the United States and Europe later accepted his view that not just the war but the peace that followed it had been in vain.

Keynes might have withdrawn from the world in the 1920s, as indeed did many members of the British rentier class, travelling courtesy of the overvalued pound and generally amusing himself. But he declined to behave according to type. Instead, much to the alarm of the Bloomsberries, he married Lydia Lopokova, a diminutive and wacky ballerina from St Petersburg (her adoring nickname for poor, ugly Keynes was "lanky" "I want to be gobbled abundantly," the great economist wrote to her), and lent his genius to an understanding of catastrophe.

Before Keynes, economic activity was thought to be governed by a set of rules derived from those that the deity had imposed on mankind and that were enshrined in the gold standard, a totem manipulated by the theologians of the Bank of England. Inflation was interdicted on moral grounds, because it destroyed sound bourgeois finance and the surplus workforce could always be sent off to the colonies, or left to starve in Ireland. One tampered with such regular occurrences as slumps and mass unemployment only with the greatest imprudence.

But laissez-faire appeared absurd, as well as morally abhorrent, to Keynes. He began to treat economics as if it were any other type of narrative from physical science or modernist fiction. This led him to reject the notion that the operation of financial markets was moral or necessarily beneficent. But it also caused him to reject Marxist economics, just then becoming fashionable among the British intelligentsia.

In the 1920s Keynes visited Russia, where he was able to meet some of his wife's impoverished relatives. Unlike his friends Beatrice and Sidney Webb, or the dramatist George Bernard Shaw, Keynes wasn't impressed by Stalin's Russia. "How can I accept a doctrine," he asked, "which sets up as its bible, above and beyond criticism, an obsolete economic textbook which I know to be not only scientifically erroneous but without interest or application for the modern world?" But Keynes was barely more enthusiastic about capitalism as it was practised in the contemporary world. "Such a system," he wrote, "has to be immensely, not just moderately successful to survive." The Great Slump made it clear that capitalism was neither.

It was Keynes who advocated Britain's quitting the gold standard in 1931, a measure that did bring some relief while earning the opprobrium from the advocates of "sound" money. He wasn't joking when he said that instead of paying out dole money it would have been better for the British government to print a great number of five-pound notes, paying people first to bury them and then to dig them up. And yet Keynes – this is important, given the orthodoxy with which his name came to be associated – never suggested that he had all the answers. What he said, again and again, through the darkest years, was that there was no mystery. Horrendous events could stem from trivial causes, but might require only the most trivial remedies.

Gadding from one conference to another in the 1930s, Keynes occupied a place in the public imagination normally reserved for left-handed tennis players or erratic minor royalty. He was spotted by Bloomsbury cronies telling housewives on the newsreels how they must abjure the thrifty habits of generations. In Washington he alarmed a pundit of conservative views by tipping a pile of washroom towels to the floor in an attempt to show how increased consumption generated work and therefore would aid economic recovery.

"In the long run we are all dead," was how he responded to those who still thought the Crash would go away of its own accord. "But I could have said equally well that – in the short run we are still alive. Life and history are made up of short runs." Keynes speculated in currency, only sometimes successfully. He was a canny investor. The money he made was spent freely – on a secondhand Rolls-Royce and in various not wholly successful artistic ventures of which Lydia was often the central attraction. Less and less appreciated by Bloomsbury, she and Keynes became the odd couple of the decade. Lydia's mots were much appreciated by Keynes. "I had tea with Lady Grey," she once remarked. "She has an ovary which she likes to show everyone."

In 1937 Keynes suffered a heart attack. The remaining nine years of his life consisted of a series of wars: against a recurring series of terrible attacks against the "bandit states" of Europe and against the bureaucratic, Brit-hating wartime culture of Washington. Returning to the Treasury, Keynes once again conducted life-saving negotiations, criss-crossing the Atlantic by plane until the poor state of his health obliged him to travel by boat. The Empire was going fast and Britain had hocked everything in its efforts to survive. But there were those among the anti-imperialist lobby in Washington (well represented among the internationalists who now fashionably styled themselves Keynesians) who considered bankrupt Britain as great a threat to peace as Stalin's Russia. "May it never fall to my lot to have to persuade anyone to do what I want, with so few cards in my hand," Keynes exclaimed. He believed, or at least acted as if he did, that some portion of Britain's enormous debts should be forgiven. No one agreed with him.

In the wartime creation of the post-war world institutions at Bretton Woods – many of which had been Keynes' idea – he behaved as if he were not the representative of a now-humbled power. Too impatient to be a good negotiator, the dying Keynes none the less cut a fine figure in Washington, and at Bretton Woods he appeared to contemporaries as a near-magical figure equal in totemic significance to Churchill. But he had failed in his primary objective, which was to arrest the post-war slide of Britain. Already within months of Keynes' death, the nearly $5bn American bailout had been spent unsuccessfully shoring up the overvalued pound, or vainly shoring up the idea of Empire.

The most penetrating criticism of Keynes came from Friedrich von Hayek, an Austrian lecturing at the London School of Economics, who famously became Mrs Thatcher's favourite economist. Hayek had witnessed the catastrophe of state during the hyperinflation of the 1920s. He had his own, purely economic reasons for disagreeing with Keynes but he also suggested that the Keynes style of liberalism, by increasing the scope of state power, would end by extinguishing the bourgeois freedoms it purported to save. Somewhat unconvincingly, Keynes responded that "dangerous acts" were all right so long as they were perpetrated by the right people – ie, by the progressive, socially congenial elite educated at Oxbridge or Harvard. Keynes remained a statist who believed that "moderate planning" was better than laissez-faire.

But in Britain, above all, the continuation of government intervention tended to produce mediocrity, as was clearly revealed in the 1970s. With the worldwide dismantling of government powers, he appeared redundant, and the Keynesian lessons were rapidly forgotten in the whirlwind of deregulation. It has taken another banking failure and the prospect of a worldwide slump for them to be aired again. After the panicked bailing out of Wall Street, laissez faire once again seems less than wholly attractive, though there are still those each week who write letters to the Financial Times deploring the way in which, yet again, the resources of the state have been mobilised to save the practitioners of contemporary capitalism from their own follies.

I've often wondered whether my lost, scribbled-over, broken-backed copies of Keynes still exist. If they do, I suggest that I and their possessors should meet. The sort of Keynesian venue I have in mind is not a gathering of economists and power brokers but a scarred piece of earth in some not-favoured part of the world. Here we might discuss not such tedious matters as "the marginal propensity to consume", nor the niceties of "demand management" (questions that probably bored Keynes even as he formulated them) but what, exactly, capitalism is for, and whether, as Keynes periodically hoped, it could ever be significantly modified or superseded.

Never much attracted to the prospect of Utopia, in 1927 Keynes none the less set out to describe the ideal society in an essay entitled Economic Possibilities for our Grandchildren. It would be a hippyish post-Bloomsbury place where no one worked too hard and people would be able to value today over tomorrow, the good over the useful. "We shall honour those who can tell us how to pluck the hour virtually and well, the delightful people who are capable of taking direct enjoyment in things," he said, less than wholly convincingly, concluding meanwhile, "we must go on pretending that fair is foul and foul is fair."

Within the wealthy bubble bohemias of Carmel or Notting Hill, in any High or Main Street, you can find hour-plucking aplenty, though not of course in the workers' barracks of Guangdong Province or the Hoovervilles of Johannesburg. But the shoppers of the West are going home, emptying the world's malls. I learn from CNN that nine out of 10 workers in America are kept awake by anxiety in relation to economic upheavals. We'll survive as long as the planet allows – because as Keynes ruefully acknowledged, raw capitalism is tenacious, filled with animal spirits. So we will continue to pretend that foul is fair. It is even more difficult now to imagine capitalism vanishing than it was in Keynes' day. But I suspect that this wouldn't have surprised, or excessively bothered him.

"We do not know what the future will bring," he said, "except that it will be different from any future we could predict." Whereas others might have despaired at so much uncertainty, Keynes, happily for the rest of us, rejoiced. And that is why we still need the real Keynes, not for the obsolete doctrine, which we can safely discard, but as the sceptic and visionary he was.


Michele bina: Explorations

When I was a young 17 year old economics student I read John Maynard Keynes’ “The Economic Consequences of the Peace”. It was a book that made a lasting impression on me.

I have picked it up again recently and my admiration for JM Keynes is only augmented by his masterful grasp of, not only the economic facts of the time, and his ability to see it all in the perspective of history, but also for being able to draw important lessons from it.

He not only had incredible foresight as to the consequences of Versailles for Europe, but also put forward the idea of the Single Market as a countermeasure to such dire predictions, much before anyone.

If someone only had 5 minutes to summarise the entire book, I would recommend a sequence of pithy paragraphs in chapter VII, “Remedies”, which I reproduce below.

“A Free Trade Union should be established under the auspices of the League of Nations of countries undertaking to impose no protectionist tariffs whatever against the produce of other members of the Union, Germany, Poland, the new States which formerly composed the Austro-Hungarian and Turkish Empires, and the Mandated States should be compelled to adhere to this Union for ten years, after which time adherence would be voluntary. The adherence of other States would be voluntary from the outset. But it is to be hoped that the United Kingdom, at any rate, would become an original member.

By fixing the Reparation payments well within Germany’s capacity to pay, we make possible the renewal of hope and enterprise within her territory, we avoid the perpetual friction and opportunity of improper pressure arising out of Treaty clauses which are impossible of fulfilment, and we render unnecessary the intolerable powers of the Reparation Commission.
By a moderation of the clauses relating directly or indirectly to coal, and by the exchange of iron-ore, we permit the continuance of Germany’s industrial life, and put limits on the loss of productivity which would be brought about otherwise by the interference of political frontiers with the natural localization of the iron and steel industry.

By the proposed Free Trade Union some part of the loss of organization and economic efficiency may be retrieved, which must otherwise result from the innumerable new political frontiers now created between greedy, jealous, immature, and economically incomplete nationalist States. Economic frontiers were tolerable so long as an immense territory was included in a few great Empires but they will not be tolerable when the Empires of Germany, Austria-Hungary, Russia, and Turkey have been partitioned between some twenty independent authorities. A Free Trade Union, comprising the whole of Central, Eastern, and South-Eastern Europe, Siberia, Turkey, and (I should hope) the United Kingdom, Egypt, and India, might do as much for the peace and prosperity of the world as the League of Nations itself. Belgium, Holland, Scandinavia, and Switzerland might be expected to adhere to it shortly. And it would be greatly to be desired by their friends that France and Italy also should see their way to adhesion.

It would be objected, I suppose, by some critics that such an arrangement might go some way in effect towards realizing the former German dream of Mittel-Europa. If other countries were so foolish as to remain outside the Union and to leave to Germany all its advantages, there might be some truth in this. But an economic system, to which every one had the opportunity of belonging and which gave special privilege to none, is surely absolutely free from the objections of a privileged and avowedly imperialistic scheme of exclusion and discrimination. Our attitude to these criticisms must be determined by our whole moral and emotional reaction to the future of international relations and the Peace of the World. If we take the view that for at least a generation to come Germany cannot be trusted with even a modicum of prosperity, that while all our recent Allies are angels of light, all our recent enemies, Germans, Austrians, Hungarians, and the rest, are children of the devil, that year by year Germany must be kept impoverished and her children starved and crippled, and that she must be ringed round by enemies then we shall reject all the proposals of this chapter, and particularly those which may assist Germany to regain a part of her former material prosperity and find a means of livelihood for the industrial population of her towns. But if this view of nations and of their relation to one another is adopted by the democracies of Western Europe, and is financed by the United States, heaven help us all. If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp. Nothing can then delay for very long that final civil war between the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the late German war will fade into nothing, and which will destroy, whoever is victor, the civilization and the progress of our generation. Even though the result disappoint us, must we not base our actions on better expectations, and believe that the prosperity and happiness of one country promotes that of others, that the solidarity of man is not a fiction, and that nations can still afford to treat other nations as fellow-creatures?”


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This whole article is about the government's opinion. They don't actually know what happened. anon942251 March 26, 2014

In other words, just print money? anon357114 December 1, 2013

I just scanned the article and the comments. I don't have the time right now, and until I read more I really don't know if I fundamentally agree or disagree with his core economic philosophy. One thing that jumped out at me was his insight concerning giving financial assistance to low income families and/or individuals. I agree, they are more apt to spend it than save it. No judgements, I just have seen this to be true.

So, if giving away (redistributing) wealth to the lower income Americans just might be a good thing simply because of Keyes' observations regarding that that money will most likely be spent and go right back into the economy. Interesting. There may be something to that. I haven't read enough to know if I generally believe all his concepts to be sound, or at least make sense to me. anon348308 September 15, 2013

I have enjoyed the posts and discussions in the marketplace of supply and demand of ideas. anon328305 April 2, 2013

Communism is an equilibrium, but an unstable one. If you want an ideal society with ideal people, you need a society that is balanced out of its natural animal state. All life on earth is in natural competition with itself for resources.

If you have any reversion to primitive drives, which are literally central to the human brain, you have a dystopia. And as unpredictable as resources are, you'd have better luck balancing a pencil on its tip in the middle of a windy plain. anon325882 March 18, 2013

The difference between socialism and communism is that the first one is a transitional phase in between capitalism and communism. The world, as a matter of fact, has never experienced real Marxist, theoretical, communism, since it is supposed to represent the peak of human development and evolution.

The real communism is like Nirvana: an ideal society with ideal people. People are perfect, there are no states, no hate or wars. Everyone works for pleasure and for the sake of personal and social development. There is no greed or envy, everyone is equal, even when they compete among themselves. Yes, it is utopian, but not malicious.

What we had as a system, was socialism, Leninism and Stalinism. Karl Marx never predicted that socialism would be achieved in feudal societies, like Russia was. He predicted that socialism would be achieved in Great Britain, USA, Germany and similar economically developed countries and the societies where the working class was established.

As for Keynes, I appreciate his work and the idea, being a staunch social-democrat. There should be less personal greed among the super wealthy individuals who influence governments the most. Distribute the wealth, not simply by feeding the poor, but by educating them, giving them a chance and the opportunity. Lift the wages of the poorest, and substantially. People do not need personal planes, luxury yachts 200 m long or gold plated toilets. Profit and greed are to be blamed for the worldwide crisis.

How many rich people pay their fair duties and taxes to their countries? How many offshore accounts are there, as well as safe heavens to avoid taxes? That's the ugly face of liberal capitalism. The rich are richer, the poor are poorer, and the middle class is disappearing. anon316755 January 30, 2013

Keynesian economics, by supporting government intervention, leads to: Confiscatory taxation redistribution of wealth a nanny state class warfare low interest rates leading to increased speculation and risk (since you get little return from traditional savings) the destruction of national sovereignty increased immigration of unskilled labor endless wars and militarization of society (since defense spending leads to the cycle of monetary flow) consumerism (read materialism and narcissism) Bloated and intrusive government bureaucracy.

Government is never the solution. Never. What is government but a cabal of people given power? Huh? Power corrupts and absolute power (which is what we are heading towards) corrupts absolutely.

What a bogus economic policy. Reward the the rabble at the expense of the productive populace. Pure communism at its basic tenets. anon287161 August 23, 2012

Keynesian Economics is good on paper, and just like communism, in practice it does not work. Are there any European countries about to go under? Keynesian economics, like communism requires someone in power and as we know, even the well intentioned get corrupted by power and money.

What strikes me in many of the posts is the desire to put people in classes. I am not wealthy, but I am in the same “class” and the so called upper class. Just because some have lots of money is far from saying they are better than I am. For those of you persisting in putting people in “classes,” you are putting yourself over someone, or putting yourself under someone.

Those who believe in the benefits of Keynesian Economics are those who don't care about the future. Those are the only ones who can possibly accept its ideas. Real free market capitalism (not crony capitalism) is the only proven system that can provide wealth and opportunity to all. In a real free market, monopolies, corruption and all other evils are unable to exist. anon272464 June 1, 2012

The people who commented how great things were when Clinton was president, truly have not done any research whatsoever. Most of the laws passed by Clinton did not take effect until after he was out of office. (Imagine that!)

While in office, Clinton cut over 10,000 border patrol jobs then later opened 1,000 border patrol jobs and had the media make out like he was creating jobs and such a great guy. (Not) He cut most of the remaining aid to our farmers which destroyed many of our remaining small farmers who could not compete against corporate farms. (Thanks to Willie Nelson for trying to help with Farm Aid for years).

Clinton also cut welfare, which is barely a speck of our actual spending, but if you go back to originally setup, our federal funds were to pay for education, aid to the poor and poverty stricken (here not in other countries), some military protection and support (not for other countries), infrastructure and churches. Well they have cut churches, and most of the aid to the poor and infrastructure.

As of 2013 we will have a huge cut to the infrastructure (which is crumbling) and education (which is crumbling) and to military/defense, while a privately owned banking cartel controls our money in order for them and the banking industries to earn huge profits (called the Federal Reserve). Just research Federal Reserve and what the Americans should know about it. You will start learning what really happened to our economy. anon266689 May 7, 2012

The GOP wanted the economy to tank under Obama's watch. It is common sense if we had put money into infrastructure, the jobs created would have put money in peoples pockets, and they would have spent it.

I own a business. If my taxes were zero, it would not cause me to hire more help. What made my business successful was the line of customers who had money to spend. I've been in business for 25 years, Clinton time was fantastic, and things were good until Bush destroyed the economy in his quest to break the social commitments we have to our fellow human beings.

Business now is completely different, all due to the GOP. anon261273 April 15, 2012

The root of all these problems is usury and fractional reserve banking. Both are unethical and immoral.

We live in a system that enslaves the population while enriching the nonproductive elite bankers and wall street speculators.

Money is supposed to be a store of value, but we have "decreed value" "paper units of exchange" that are constantly being debased / inflated, which equals theft. Cennedig9 February 18, 2012

I must ask all future readers to pardon my American perspective. Perspectives resulting from accidents of birth are, of course, such poor marks on an individual's credibility as a thinker.

I've noticed an extremely disturbing trend on both sides of the Atlantic. People act as if Keynesian Economics and laissez-faire capitalism are distinct theories. They say that the two are opposed to each other, and pretend that one must choose between them instead of taking the enlightened, educated route, and extracting the grains of truth present in each.

Keynesian economics is quite plainly right in its statement that spending supports earning. The only two businesses that can survive without business are subsistence farms and hunter-gatherer societies. Any other form of business depends entirely upon the fair trade and beneficence of its customers, and more importantly, they depend upon the continued ability of those customers to trade fairly and buy beneficently. When businesses destroy the wealth of their customers, they lose their potential for business.

Laissez-faire capitalism is also quite plainly right in its statement that individuals will not work if they do not have to. I think we must all recognize our inner drive to export our problems. Most people, for example, will not build themselves a home by hand if they have the money to pay for the home of someone else. Rich people find it easier to pay for a maid than to vacuum their floors. The American poor found it easier to buy from China/Walmart than from now-extinct American competitors.

Since it is true that wealthy consumers create healthy economies, and since it is true that work is the only just prerequisite to wealth, the primary goal of economics should be twofold:

First, for the sake of the business of the individual, it must ensure that the total population has a high median purchasing power, in order that there may be enough business to support free enterprise, and it must do it without robbing the rich to feed the poor.

Second, for the sake of the broader society, it must ensure that all people are working to their highest potential, in order that there may be enough labor to fill the needs of all individuals, and it must do it without relying upon the desperation of the destitute.

Speaking generally, America is easily recognized as having heavily failed the first goal. As a poor proletarian, I can personally attest that an American-sized wage disparity is not the result of a similar disparity in the effort put forth by the poor as compared to the rich. It can only come from an injustice in the system of distribution, a system in which some are paid more money for doing less work, and for accomplishing less for society. In a way, this puts America in severe danger of failing the second goal, because a society which rewards labor with poverty cannot possibly inspire the maximum potential of work.

Again speaking generally, Europe is easily recognized as having failed the second goal. When laws are passed demanding that individuals be given inordinate amounts of time away from work, that aspect of justice fails in which one earns one's rest. In a way, this puts Europe in severe danger of someday failing the first goal. Individuals who do not each earn the cushion of luxury they enjoy are unable to maintain collectively a stable and sustainable society.

What we need most dearly in the Western world is a justice which encompasses both individual rights and societal responsibilities. The leaders of Europe must learn to reward labor and not mere existence, while the leaders of America must learn to reward labor and not mere power. Without such justice, the pan-Atlantic Euro-American society will fall together into the oligarchic feudalism of the past, through debt to commerce and to the triple giants of government responsibility, economic prosperity and national security.

The three biggest lies I've ever heard are that we must guard the purity of justice only against Washington's corruption, only against Wall Street's greed, or only against West Point's control. The heart of this matter is that the three are one, and that their power to destroy true justice here on earth has the potential to surpass all but God alone. You may believe if you wish that the powerful have worthy goals, that they are enlightened, that they are doing their best to work for the good of all, but look around you! They are not doing the good of all! It matters not whether the source is corruption or mere incompetence, for the two have identical effects and solutions: despotism removed by revolution.

Anyone still reading this post is sure to be familiar with the fairy tale of the American Revolution. I call it a fairy tale because I sincerely doubt the rhetoric on both sides of the American aisle, which grants it some kind of regal, idealistic fantasy, instead of the realistic sense of revolutionary desperation which we down here in the real world can easily understand.

The American Revolution should never have become a starting point on which we built our present society it should have been the entire society, summed up in a document and re-enacted by every generation. Stable peace lies at the heart of a good economy, but Pax Romana can never lie at the heart of a just one. If justice is to reside in the West, then we all must ensure that the rich are not allowed to use the power of their money to gain more economic power, in the same way that we must ensure that governments are not allowed to use the power of their authority to gain more authoritarian power.

What we need is a Revolution. No, not just another revolution of the American, French, Bolshevik, or Glorious kinds, for all of these were revolutions of power, in which individuals hoped to gain the power and authority to liberate man. What we need is a new kind of revolution, one against the very idea of power, a revolution of the heart and mind in which individuals recognize the need for justice in all facets of society.

Unfortunately, such revolutions are in short supply, so here's what I propose for America:

Low individual taxes, few government welfare programs, high funding for education and moderate funding for health per individual, but cuts to both the health and education bureaucracies.

Military cuts and a Constitutional amendment which forbids the president from sending troops beyond the national borders except in time of war.

An amendment setting term limits to two for all public offices except the President, who would be restricted to a single six-year term.

Ban on political advertising during campaign years, except by the candidates themselves, who would be limited to a set amount of total campaign spending, regardless of the amount they actually raise.

Banning all registered lobbyists from the grounds of the U.S. Capitol, even apart from professional duties, during times when Congress is in session.

High corporate taxes, but tax breaks for companies that meet certain criteria, such as low wage disparity, high median and lower-quartile incomes, and high total domestic employment.

These are the original ideas of a poor teenage product of education at a public institution. Most Congresspeople were educated at great expense by their upper-class families. Why then, are they the ones who must be called extremists? kxl February 14, 2012

To the anon below, in country do you live? Also, allow me to ask: Do you believe in independence or dependency in every day life? Do you believe that conduct has something to say with how a person's life turns out?

Do you believe that government - without question always corrupt through all time - can regulate human behavior to good conduct?

And do you believe that the use of logic supporting a belief is racism? A renowned professor argued in a paper that it was.

Before answering the last question make sure you know the correct definitions of "racism," "bigotry," and "prejudice."

Just making sure we're on the same page. anon247127 February 12, 2012

Great article on Keynesian economics! Laissez-faire capitalism doesn't work. If you Yanks can't see that yet, you are doomed to sink even farther than you are already. I hope you enjoy civil war. Remember, your poor still have the second amendment. Look at what is happening in Latin America. They are starting to recover from the disaster that was Milton Friedman and they are doing just fine. anon236483 December 23, 2011

OK. There is no consensus that "Keynesian Economics" and "Macroeconomics" are interchangeable. Any high schooler in an economics class can tell you that. anon234234 December 11, 2011

It is interesting that, even in the current climate, the majority of comments below are rather right-leaning. Watching from across the atlantic, the feeling is that America has lurched a little too far to the right in recent years and may be developing some serious long-term social problems.

It is also interesting that ethics is so rarely raised by the Americans. Allowing people to work hard and get rich, even if they are gambling or taking advantage of other people is rather at odds with the popular European view of how economics should work. Economic policies have a very important influence on society, and surely we should aim for an ethical society?

Post 71 at least delivers some clarity and balanced perspective. I would recommend reading it. anon231555 10 hours ago

What does hoarding mean? Do people stash money under their mattresses? How is greater savings not equal greater investment? And if it is investment, how is it not wealth building and employment generating?

It would be reasonable to say that when there is an economic bubble burst, people become more cautious, less certain about the stability of the “system” (think about how much we rely on trust that those we transact with are not cheating us, how much we rely on predictability of institutions, etc.). Maybe more to the point, they doubt reliability of information [transmitted to them in prices of goods and services]. Everything looks riskier and they become more conservative in their investments. When fewer economic risks are taking, the growth is going to be slower. Not exactly hording or liquidity trap, the money is still going into the financial system, but it's definitely something to address. Yet…

Keynesians assume that this drop in "confidence" is not justified, that the reason for the initial bust is an irrational panic. For that to be true, whatever we call a “bubble” must not be a bubble at all. Keynesians must be implicitly viewing pre 2008 run up in housing prices real, not the result of the Fed’s loose monetary policy, but real sustainable (economic) demand for housing. This however, is hard to believe given the rate of housing appreciation relative to productivity, per capital GDP or income measures in the same period of time, particularly in the context of other sectors of the economy not slumping at the same time (so it wasn’t like people switched from spending money on food to housing.) It is then also hard to then understand by something real would burst like a bubble.

It seems much more plausible that there was a speculative unsustainable run up first – a bubble, which upon running of steam (the Fed couldn’t loosen the money supply any more), burst in an accelerating sell off (a panic, much like what would happen when a Ponzi scheme runs out of people to sell it to.)

If that is the version of the events, then the resulting increase in conservatism of individual investors is well justified and reflective of reality in at least two ways:

1. Real wealth was destroyed the waste of resources was real. Resources poured into building houses, from building materials to machinery producing building materials, from construction labor to training of construction workers, were configured and used and to a large extend irreversibly used up without any ultimate payoff (improvement in the standard of living). When people find themselves poorer than before, on average they take fewer investment risks than before (in a casino, one would gamble more freely with yesterday’s slot machine winnings than with the savings one had before that).

2. The fundamental cause of the bubble -- government manipulation of the money supply -- is still there. The opaque nature of the fed-financial industry complex is still in place. And so is the high uncertainty about the future. Is the XYZ investment looking attractive because it fundamentally is, or is it part of another bubble?

So then, how does trying to fool investors again help the economy? anon216724 September 22, 2011

I would disagree with the wise geek that a military economy is Keynesian economy or that Keynesian policies were unpopular in the 1930s. FDRs mammoth public works projects were essentially Keynesian and did not work. Post 103, you exemplify a basic misunderstanding of wealth. Wealth is nothing more then what people desire and are willing to sacrifice to get. It is the act of producing something that people desire that is the essence of creating wealth. As in a insurance company, it sells peace of mind.

Intangible things like peace of mind and enjoyment are products people are willing to pay for just as much as food and clothing. If people desire it and are willing to pay a price to get it then it is a product. Everything starts with producing a product. Only if there is something desirable can there be exchange. As far as businesses that loose money, they do not stay around very long. anon206815 August 17, 2011

Redistribution of wealth doesn't have to be a "give-away." Under Keynesian economics, the stimulus money could be used to give the unemployed jobs. In the case of our economy, we should have a stimulus that promotes infrastructure. We know that we have crumbling infrastructure around the country, so that would be a net gain, and by paying more construction workers, they will be able to go out and buy products, thereby increasing demand, causing companies to hire in order to keep up, thus creating more jobs, more demand, and around and around we go.

While this sounds great, I know that it's only a principal and doesn't necessarily work as well in practice, but then again nothing does. All I know, is that I would rather provide middle and lower class people with jobs, when I know that they are going to spend every single dime they earn, than give greater tax breaks to the rich who may or may not spend the money. anon204454 August 9, 2011

I've read post 82 as directed and do not agree.

Of course, income is a function of spending.

Where else is it you think the income would come from?

Production does not equal income. This assumes everything produced will be sold at profit.

It is pretty easy to find examples where produced goods are not sold at all or not at profit.

It is also easy to find examples of income where no production exists - insurance company profits for example. No. Profit comes from spending, not production. anon186079 June 14, 2011

If spending = income then the government could simply make the minimum wage to be $100 per hour and print some money to meet that. Spending is not income, production = income. Keynes was an idiot in his own right. He thought that if you call something "the general theory" then it will automatically work (I guess since it worked for Einstein). anon181889 May 31, 2011

For those of you who don't understand, read post 82. anon181715 May 30, 2011

Either side can claim simplicity of argument. Supply siders will say that low taxation and deregulation will free up capital and allow the rich to produce the products that will entice demand for consumption. The demand siders will claim that with higher taxes on the rich public investment will free up expendable income from the middle class and poor, and that will drive consumption. Both sides have some evidence to back up their claims.

The next step is to look at historical examples of these arguments in context with today.

The argument that lowing taxes on the rich creates more capital and therefore more supply, which creates a need to jobs, is valid, as long as you have a producer class that A. Employs people here in America (which is not the case) and B. Is already taxed at a high rate, which is not the case. The wealthiest people in America pay about 15 percent in taxes, which is lower than the middle class tax rate of 28 percent.

The demand side logic finds more traction. People in this country have only seen wages decrease in comparison to the costs of living for the last 40 years. The vast majority of Americans are getting poorer. Real unemployment numbers are difficult for nail down, since once people give up using government assistance we don’t track them. Let's just say the number is high, and there are a lot of people out of work, that would like to work. There are record high foreclosures on homes, and in general people are hurting. There’s not enough money on the demand side to drive commerce.

The last thing we want to do now is take away programs that are freeing up capital on the demand side.

Business owners don’t want a tax break as much as they want more customers. anon177821 May 19, 2011

To the question on the difference separating socialism from communism, the answer: not much.

Except the governments who proudly call themselves communists make sure that the pursuit of happiness, or property, is not a goal of individual citizens. anon177817 May 19, 2011

John Maynard Keynes never addressed that a mountain of evidence shows economics procedures work the same way whether in government handling or individual handling of money. In other words, it's hard to dig out of debt by increasing debt, wouldn't you agree?

Not forgetting, as in the Great Depression, wealthy big American companies - including banks, all of high regulation - dance to the tune of the federal government pulling its powerful levers in order to maintain high profits.

So, you see, big companies to continue making high profits sell their soul to the devil, and the devil happens to be an enlarging federal government.

Principles of money and power are used to trump principles of character. Eventually everyone in a free nation loses.

As a professor, I tell my students that problems are easily recognizable, and the remedies - as hard to swallow as they might be - are really quite simple.

Nothing is as complicated as made out to be. anon177800 May 19, 2011

In nearly all circumstances, if the poor aren't to blame for their own poverty, who is?

Everyone in life in America is born into a family of a measure of wealth or a complete lack of wealth, or poverty.

Yet regardless of luck in birth, in traditional America, a free-enterprise capitalistic society opportunity is always available for people to make of themselves what they desire to be.

I suppose then, that the flaw isn't found in the free-enterprise concept, rather the flaw ruining people in poverty is found in the people themselves.

So in general, could poverty be a character issue? anon177265 May 17, 2011

Redistribution of wealth doesn't seem fair to me. Whether wealth is acquired by the individual or inherited, someone in the family worked hard, took a risk and got lucky, or both in order to earn their money.

I'm not saying that the poor are to blame for their own poverty, but giving them someone else's money is hardly a solution. That reminds me- can anyone explain what the difference is between socialism and communism? anon174140 May 9, 2011

Burn the stagnant worthless model economics books to clutter the minds of college students, and decimate the corporations that took the jobs away from america and gave them to foreign outsourcing. Deny these bards profits, restart our own production, encircle their oil and energy supplies, and charge them taxes so they pop into oblivion. Then, getting rid of all the bankers and corrupt investors is a spanking good bloody revolution! anon168752 April 18, 2011

"if the poorer segments of society are given sums of money, they will likely spend it, rather than save it, thus promoting economic growth."

Not possible when the banks received all the bailout money. They get rewarded for producing no goods or services and tax the public through interest. What? nicpearcenrs March 8, 2011

It's not at all a new idea, blaming the poor for their own poverty. That same sort of belittling of the majority kept the guillotine busy for a large part of the 18th and 19th centuries. --Nic anon152322 February 13, 2011

Keynesian Economics was never meant to be use for long periods of time, but rather it was only suppose to "jump start" the economic system. I believe it did just that, albeit because of a war, though it continued to be used in the sense that government grew exponentially over the next few decades.

There should be a healthy balance with everything. anon150472 February 8, 2011

Well, he really was a genius. Just think if he would have not given these reasons and findings you all would have no base/matter to argue on. At least he showed some path. On those assumptions and theories, we can modify to suit to the conditions. anon145743 yesterday

I think it's wrong to say that no regulation = capitalism. Captialism, regulated or not, is just an economic system based upon the use of money for the trading of goods and services.

It seems to me that laissez-faire (unregulated) capitalism is a detriment to free trade, because it breeds collusion among owners and creates trusts and monopolies and it exploits workers to work for the lowest possible wages. It eliminates the middle class and returns us to the Middle Ages. anayatullah January 21, 2011

this is very good and comprehensive explanation of keynesian economic theory. however, there is the issue of interest rates, which keynes used as a liquidity trap on which the demand for money based is important. anon138414 December 31, 2010

Why do you all use politically motivated reasoning to explain why you agree or disagree with an economic rationale? Surely the important thing is whether the theory works and can be tested then if it agrees with your political views. Is this why America cannot see the problem and then solve it as it has in the past. anon136697 December 23, 2010

To the post on 71. It is not ethical for the government to take from one and give to another to "spur" on the economy (which has not and does not work) under guise of Keynes justification.

The role of the federal government is to provide national protective and infrastructure services. At the point they started giving my money to someone who did not earn it is the point where they legalized theft, created a nanny state, started legalized bribes for political votes, and started us on a spiral that only those with real intestinal fortitude on the Hill (like Ron Paul who has been saying this for 30+ years) can stop and reverse and eventually abolish these practices Constitutionally (which will be great when congress starts adhering to it). anon136688 December 23, 2010

Keynes was a math man. Not an economist. He is looking at the economy as a math problem that needs a formula to make it make sense to him. (Ulterior motives are worth investigating and in fact have been!)

"All Spending = All Income" is a math formula. It is not an economic principle.

Economic principles are the explanations of the cause and affects surrounding the forces of demand and supply and more importantly the general finding of Mises in one of man's greatest books ever written "Human Action" (free online in pdf now!).

Economies are driven by humans acting. The less incentive they have to work, the less they work. The more incentive they have to spend, the more they spend.

Though the same money is often used in the labor and consumer activity, it is not the case that all spending - equals - all income. If that theory were true, then why do we have the highest government spending and debt rate and we have doubled our unemployment rate? It doesn't "add up."

It would have been better if Keynes tried to cross pollinate his knowledge into biology or the chess club. At least he would not have had such a negative affect on the economy.

In addition, Keynes had many conflicts of interest himself. Pun intended.

If you want real economic understanding you have to move away from math formulas and toward the Austrian School of Economics. This will open your mind to the truth you have watched unfold before your eyes in this age. anon130190 November 27, 2010

Sometimes I wonder if economics is just a fairy-tale story. I am losing respect for this discipline and its limitations.

It might be time for me to switch to a more useful major. Who's with me? anon128504 November 19, 2010

If this is the richest country in the world, why can no one afford to live here anymore? anon120074 October 20, 2010

I think most of the people who have commented here are ignorant and should read their text books again. Friedman was not a proponent of free trade and capitalism and did not recognize greed? Give me a break! He was the one who said greed marks the upward surge of innovation.

Without greed, there is no reason to work hard and get ahead of everyone else because the government otherwise will always be holding your hand and taking money out of your pocket and giving it to people who don't have the motivation and drive too work for themselves. anon119813 October 19, 2010

Capitalism without strict regulation, in fact with no regulation is capitalism, i.e., a free market.

Capitalism with strict regulation is economic fascism, not capitalism and not a free market.

Poor USA, capitalism, and free market: an example not to follow worldwide.

USA and its military budget will bring the country to bankruptcy.

If Bush was still there, I believe USA would disappear from the maps. anon113729 5 hours ago

Money, like water has no value unless it is moving. Keynes would love that statement. Friedman and the pure free market proponents did not consider that people exhibit greed and foster fraud in their efforts that are not at least observed if not regulated by an entity that has no vested interest in the outcome. It is too bad that the US government doesn't qualify in that capacity. It has just as much of a vested interest in the outcome as did Bernie Madoff.

I do support the Keynesian concept of government intervention in the economy since the economy is not a purely disinterested entity. It is made up of people, of all things. People need to eat.

I work in the public transportation planning industry and we have a tongue-in-cheek saying, "If it weren't for all our customers we would always be on time." If it weren't that people live in those investments, the mortgage industry would be purely mathematical.

While we argue the politics of economic policy, we must not ignore that that without the people earning and spending money there would be no economy in which to invest and become wealthy without labor.

Yes, I sound socialist now, but we must exist in a system that both makes it possible to live without labor and live by our labors.

We must face the facts that the economy as it is does not support everyone having productive gainful employment. This is good if you are approaching an age where you would like to retire and live off your prior labors. Our economy makes this possible through a combination of SSI and private wealth accrual.

If you want to know who really cares for the poor and downtrodden, just look at the amounts of charitable contributions that Joe Biden and Obama made (before running for Pres.) and that of John McCain and other wealthy people. And look at the money that the Democratic and Republican "progressives" spend on themselves at taxpayer expense.

Term limits are the only solution to curtailing government corruption, a national sales tax instead of income tax the only fair way to "tax" everyone, and not voting for lawyers and academics for office the only power left to the American people. anon111032 September 14, 2010

@anon 67: about two percent of what you said happened to be true. keynes was an idiot and the only reason his theories are so widely accepted by our government is because they rationalize the expansion of government power in an economic form on paper.

This makes the government's power growth "OK" when, in fact, it truly is not. And to address your comment on trickle down only causing temporary economic gains, well most of that is not because "trickle down" doesn't work, it's because the Keynes theory allowed for the government to have too much power over the private sector, stifling the "trickle down" idea once it is implemented via regulations and allowing super companies to be formed via kickbacks and turning the cheek to some companies and not others.

keynes leads to out of control power and corruption of government. don't mind my spelling. it's late, I'm tired and not punctuating. anon110979 September 14, 2010

It is interesting that in all the discussions, not one word concerning ethics was mentioned. Some say that redistribution is rewarding the lazy and unproductive. Others claim that through hard work anyone can become rich. Neither argument implies that there is any role for ethics in economics.

If people gain wealth through injustice, how are they worthy of that wealth? And if a society has an obvious uneven playing field is government socialistic if it intervenes and affords redistribution to support those who have been abused by a system that supports the growth of wealth, regardless of the tactics used to acquire that wealth?

No system of economics can function outside the realm of human realities. Capitalism without ethics is cannibalism. I believe the American model has morphed into cannibalism as capitalism.

Redistribution of wealth at least affords some recognition of ethics, and that the playing field needs to be leveled because it benefits all.

I do not reject a mans ability to gain wealth. I do, however, reject that ability if it is based on the deliberate and forced poverty of others. There is nothing noble about wealth acquired by these means, and economics without a moral or ethical code is merely survivalism at any cost. Any economy that fosters barbarism is a failed economy.

And lastly, can Capitalism truly flourish under oligarchy? Economies must work for all within society or society ceases to exist. anon108551 September 3, 2010

"Keynesianism" is a religion.

It relies on the ignorance and unquestioning obedience of its followers, because asking questions immediately exposes the absurd fallacies upon which it is based.

Anyone with a modicum of the capacity for ratiocination (the ability to reason), can immediately see the absurdity of the premises, the foolishness of the conclusions, and can deduce why it is, in fact, that Keynesianism is good for parasitic governments, and bad for people.

Keynes, of course, was always and ever on the side of, and in the pockets of, parasitic governments (learn about his life), and his sycophancy towards them is all that is required to explain the origin of his nonsensical axioms and the absurd conclusions which result from them.

Read "Human Action", or "Man, Economy, and State" if you want to understand economics. Read the "General Theory" if you want to get a laugh - but whatever you do, don't apply it in your own life, or you will unquestionably be impoverished. anon108345 September 2, 2010

Critics are missing a valuable point as far as Keynesian theory goes. It's been tried, tested and relied upon since the depression of 1929.

We have neither a complete free market economy, nor have we had a complete control economy. We have a balance of both. We've been operating under Keynesian principles since the Great Depression, and it's only in recent years that a rebirth of classical theory- a.k.a. trickle down supply side, was reintroduced.

The result of this has led to record deficits preceded first by immediate temporary economic gains.

So we know two things about Keynes at least:

1) His model has been used since the depression and thus responsible for the steady economy in the US and abroad, e.g., The prosperity of the 1950's was due to Keynes. So yes, it's been tested, implemented has has been working.

2) For ideological purists and fans of laissez- faire, any government involvement in the markets is socialism and therefore wrong, just as for a communist any involvement of the free market is wrong. Both ideas miss the mark, and have repeatedly in practice. Keynes is a balance of both.

3) Even opponents of Keynes uses Keynesian tactics. Bush's advice after 9-11 was to go shopping. He propped up banks and bailed out companies to avert a greater catastrophe, abandoning his "markets know best" philosophy when it came to brass tacks because he knew better than to gamble the US and world economy on ideological purity- much to his party's dismay.

4) It's stabilized markets and created and strengthened the middle class. The great society and prosperity of the 1950s happened under Keynesian principles, and the economic prosperity of the 60s and 90's as well- so please don't discount the importance or effect of this man's ideas and work.

Investing in the infrastructure, schools, higher education, support of new technologies- like the internet, happened from the government, not just the market.

Ideological purists would let the middle class disappear rather than appear socialist- and really the ideological purist is Keynes' greatest enemy, just as history is his greatest friend. anon108320 September 2, 2010

There has always been a balance between that which government must spend in order to create the infrastructure the free markets need for growth. That is why Cash for Clunkers failed so badly. Keynesian economics is meant to support growth.

Used any other way it not only must fail but is certain to. Government will never be able to usurp the role of the free markets and the same is true in reverse. It's a balancing act and right now the whole system is out of balance.

Wonder who's to blame? History pointed to the greed of the stock market back in the 1930's. I suspect the real estate market this time. But so far the feds have not handled things very well. And they should have hanged Bernie Madoff for treason. anon107207 August 29, 2010

The Keynesian economic theory is a lot like the socialist government theory. It sound good on paper but doesn't work in reality. After all it is a theory and theories don't actually have to work -- after all they are just theories, not practice.

John Maynard Keynes starts with “one person's spendings”. However in order to have money to spend one must have a job or business to generate revenue and profits. Maybe a “redistribution of income” addendum to his economic theory would make it work for a while in a socialist nation, but ultimately like socialism, Keynesian economics can not sustain itself.

It isn't perpetual motion, which also sounds good in theory, but has never worked.

I agree with the first comment here by anon9418. The article on Keynesian economics is an excellent starting point for those who want to learn more about the subject.

The main conflict between Keynes and the Austrian School of Economics has been referenced in the comments about the article.

I would add that the the left-leaning politicians (Obama and most Democrats in America, New Labour in Britain, some prominent EU politicians) support the Keynesian theory. But I also believe that they are abusing the teachings Keynes brought into the British government. They are clearly using his name and theory for cover for excessive amounts of borrowing, debt and big government that have little to do with Keynes's original vision.

I read somewhere that the British government was actually paying off debts when Keynes first came into politics (a completely different position to now where Britain is already drowning in a sea of red ink).

Now on to their opponents.

The right-leaning politicians (the Republicans in America, the Conservative-Liberal Coalition government in Britain and some politicians in Germany) are more closely aligned to the Austrian School. The general priority for policy-making among these groups at the moment is restoring confidence in the running of the economy by government, as well as confidence in the currency and credible plans to keep inflation muted so that interest rates stay as low as possible for as long as possible.

This means taking aggressive fiscal consolidation measures such as the £113 billion total currently envisaged by the British government. Republicans in America issued an Alternative GOP Budget, which proposes a significant fiscal consolidation, although it seems unlikely in my view that this will be enough.

I may be wrong here but I heard the German government took action last year on a fiscal consolidation that involved cutting the deficit starting from 2010. And in the second quarter GDP growth for Germany at 2.2 percent (quarter-on-quarter). Is fiscal consolidation supporting export recovery in the German economy? My guess is yes.

I oppose the bogus "Keynesianism" left-leaning governments espouse today. I don't think it adheres to his original vision and that governments are using his name as a scapegoat.

I think the bogus "Keynesianism" will lead America down a lost decade just like Japan unless someone turns off Obama's borrowing taps very soon.

The depth of the recession was made longer by bogus "Keynesianism" in my opinion and is the reason why the global recovery is fragile. Obama, the Federal Reserve, the Bank of England and New Labour all think that the problem is that there is not enough money in circulation and that the answer is to create more (via borrowing, printing directly from the Central Bank, or by the latest Federal Reserve policy of buying government bonds using interest from mortgage bonds on its portfolio).

This money printing exercise is counter-productive at every turn. I'll give the British example. In Britain, the Bank of England lowered its base rate from more than five percent in mid-2008 to just 0.5 percent in 2009. That's stimulus number one.

The British government implemented a budget that increased the deficit from less than £90 billion in 2008-09 to more than £140 billion in 2009-10. That's stimulus number two.

The Bank of England was pressured by the government to create a Quantitative Easing Scheme. A massive £200 billion was created, none of it backed up by anything at all. That was stimulus number three.

But there's more. There was a massive slump (on average 25 percent) in the value of the pound against other currencies back in late 2008. You might expect the result of this enormous stimulation to have been exponential economic growth right? Well, Britain's GDP slumped by 4.9 percent in 2009.

The Com-Lib Coalition is taking fast action in Britain to stop us from the "lost decade" prospect of Japan and Italy. I hope for America someone comes along to do the same there. My friendly advice - get rid of O'barmy and quick. kmarazik August 10, 2010

The Keynesian income-expenditure model assumes that the macro economy can be fine tuned and controlled in the same way as an engine in a car. Can anyone evaluate the validity of this assertion, please? anon101473 August 3, 2010

The "golden age" of Keynesian economics was actually 1933 to 1940 and it was not successful. Some historians actually claim that the Kennedy tax cut was Keynesian in principle. Can someone please explain that to me?

Letting people and businesses have some of their own money to improve their own standing and prosperity is more like Milton Friedman. We have gone from a national deficit of 170 billion in 2007 to 1.4 trillion in 2009.

I understand that we had the TARP bailout and a recession, but the original plan was for the TARP money to be a safety net for the financial markets. I'm afraid it has become a permanent expense.

Also one of the arguments for TARP was that a large amount would eventually be repaid or never used. Good luck on ever seeing that money again. The economic stimulus has not worked. Obama says unemployment could have been worse. Really?

John Keynes believed that money needs to circulate for economic growth to occur. Today consumer confidence is at historic lows. People and business are afraid to spend. Even Keynes might be a little worried. Why the pessimism? With the anti-business rhetoric, out of control spending and the threat of increased taxes, why should anyone be confident? anon100856 July 31, 2010

@anon92964: The Great Depression, Economic Recovery following World War II, hell. the entire era from the 1940's to the 1970's is considered the Golden Age of Keynes and saw much greater economic growth and expansion than either the short-lived monetarist era or Reagan's voodoo economic theory known as supply-side economics. anon97593 July 20, 2010

Hey we have two wars going on and yet we are in the worst (The Great) recession since the depression in 1929 and it's not pulling us out. Who's paying for the war? The banks have billions on their books but won't lend enough out to small businesses in order to create or maintain business.

So just what is it we are waiting for in order to get this economy rolling? The people scream for Obama to get the banks to loan us some of that money and they (banks) get an attitude when Obama pushes them to do what the people are thinking.

The people haven't forgotten about the last voodoo economics plan and it's a trickle down theory. The people want something that will last. Bush was tricked by the banks with its mortgage/banking industry scams supposing to stimulate the economy and it turned into an economic slaughter and we've yet to recover. anon92964 July 1, 2010

Regardless of political philosophy, name a time when, in a Keynesian psychosis, wild uncontrolled government spending pulled a nation out of recession and whizzed it on to economic prosperity.

One proven philosophy, however, is that the one consistency learned from history is that most people never learn.

An added historical reminder: In a nation of government controlling and regulating more and more establishing a soft tyranny, there's only one direction for the tyranny to go - to a harder one. anon92789 June 30, 2010

I'm not sure, anon85758, which two forms of economic policy you're referring to, but it really doesn't matter. Look at this way:

An organization like a well-run crime mob is corrupt, yet economically prosperous.

On the other hand, an everyday decent American family spends money like it's going out of style, but without enough income flowing in to cover the spending. anon92625 June 29, 2010

Is American sluggishness today from the introduction of Keynesian economics, or is it from a president who despises traditional America. anon92563 June 28, 2010

Article 1 most definitely existed before 1896. anon85758 May 21, 2010

Either form of economic policy would work if we weren't ravaged by corruption. kxl May 17, 2010

You've hit it, anon8445. As I'm also up to speed on economic principals of various economic systems, I - without hesitation - oppose every policy Obama proposes. He does not hide his contempt for the spirit of the everlasting Constitution. anon84445 May 15, 2010

In 1896 we had a depression almost as bad as 1929 and if that's not enough we can go back all the way back to 1794 when there was a lot of speculation on the market. It caused a dip in the economy and almost brought down the newly formed US government until Alexander Hamilton stepped in and used US securities to stabilize it. Oh, and by the way, the Articles of Confederation didn't allow the government to levy taxes and it failed.

When we adopted the Constitution in 1787, we did give the government the right to levy taxes but not income taxes, which the government got when we passed the 16th amendment.

By the way, there will always be recessions even in a pure capitalist economy. I'm an economics major and have been studying it for six years. I know what I'm talking about, and just so no one can call me a liberal, I'm a massive ronald reagan fan and don't agree with obama on anything. anon73242 March 26, 2010

I have some intelligence, but what in the hell is anon72432 talking about? - glenda anon72432 March 23, 2010

This Keynesian economics is sure a pretty excellent idea because we all need money to finance our basic needs and why can't we spend it when we have it because we all know that one day we'll die and live what belongs to the world to remain where its meant to be. Thumbs up to Keynesian. anon70715 March 15, 2010

Let's see if this clarifies, whether discussing Obamacare, or an economic system, or a government system, or practically anything.

A definition of "intellect" is the ability to grasp concepts quickly and manipulate them until an idea forms.

But not all ideas are good ideas. So, intelligence comes into play, which is taking an idea and assessing it to an understanding of human nature or an understanding of history in order to test to a realistic result.

Simply put: "intellect" + "judgment" = "intelligence."

Got it? So, I suppose that socialism, or social justice, or Obamacare, or marxism doesn't seem to equate to a very nice result, does it? anon70712 March 15, 2010

Contrary to a common belief, World War II did not end the Great Depression in the United States. Of course, unemployment naturally slid down, to near two percent, however, consumer production and consumer spending remained dismally low.

The Depression ended after Roosevelt died and after World War II, when President Harry Truman turned a friendlier face toward business and receded the government from the economy, and the economy resumed doing its thing. anon70438 March 14, 2010

“Capitalism without strict regulation will destroy any nation--including ours--and the real culprit, fundamentally, is that old enemy of any democratic country …” - anon25152

Capitalism without strict regulation, in fact with no regulation is capitalism, i.e., a free market.

‘Capitalism with strict regulation’ is economic fascism, not capitalism and not a free market.

“A nation requires a government which serves its citizens to survive--and to thrive.”

Such a government is that which the founding fathers devised in the Constitution of the United States.

I have listened to the massive ignorance, or perhaps lies, of recent years which claim diversity is the source of the greatness of America’s achievements. What incredible nonsense.

Diversity is everywhere. Take any group of people anywhere in the world and you have diversity, even in the most oppressive nations on the face of the earth like North Korea or Iran.

What fueled America’s success and hence her magnificent economic achievements, was the freedom for the individual to pursue his or her own dreams, his own self-betterment, his own self-interest. The rejection of altruism by the Founding Fathers provided the basis for that freedom.

It is derived from the seemingly simple idea expressed in the phrase, “… life, liberty and the pursuit of happiness …”

What is destroying America is the consistent and concerted efforts of collectivist career politicians on their forced march to a totalitarian collectivist society.

They have already in place for many years three major Communist stepping stones to that end: the progressive income tax, the inheritance tax and the ‘free education in a public [government run and controlled] school”. anon67262 February 23, 2010

Response 41 says there were no recessions or depressions in the 1800s. What have you been smoking? anon66131 February 17, 2010

To anon63486: You are spot on for the most part, but Article 1 Section 8, Para 1 gives Congress the power of taxation. Section 9 gives some restrictions on that taxation and Amendment 16 defines Income Tax.

I think the current administration has, hopefully, proven that Keynesian economics does not work. Supporters will point to FDR's use of it to end the Great Depression, but the U.S. entry in World War II played an enormous role in that. The public sector, in order to fill its role in the Keynesian model, must have a purpose. That purpose under FDR was preparing America to go to war. We do not need that now as we are already equipped and executing war on two fronts. If we want to use the Keynesian theory to help the economy, we need to look at it from the private side as the public side is maxed out. anon63856 February 3, 2010

Keynesian economics and a twenty-five-hundred page health-care dossier proves a point: Life is simple, it's people who complicate. kxl anon63486 February 2, 2010

Most of you need to do more homework. Many of the so-called "facts" spouted in these comments are utter nonsense.

Since classrooms can no longer be trusted not to distort historical facts to further political agendas, I recommend you spend some time in your libraries with simple little books chock full of facts. They're called "almanacs." For each year they show the federal budget, tax rates, actual tax revenues and outlays, and legislation affecting all of these. They also have elections and office holders for both federal and state legislative bodies as well as top administrative offices.

If you load a couple of decades' worth of this data in a spreadsheet, you'll see what I saw twenty years go. You might also realize that Democratic economic theory has shifted dramatically to the left since the 1960's. Jack Kennedy's economic policy was equally as supply-side as Reagan's and it was equally successful. It was Carter's "share the wealth" goals that broke the economic engine of America--just like Obama is doing now.

But both could only accomplish that with Democrats heavily dominating both Senate and House which were intent on increasing tax rates beyond what the American public could tolerate.

These macroeconomic theories are bunk because they leave out consideration of the fundamentals. These fundamentals have held true for every economy since at least the middle ages, whether run by kings, feudal lords, native village chiefs, or presidents of socialist dictatorships or democracies.

One, if you take too much of what people earn, they will stop earning by going on the "dole" or moving away or going underground. Two, the size of the economic "pie" is never fixed--it's either growing or shrinking. Keynes' macro theory completely leaves out the affects of taxation levels. It also ignores that most people are smart enough to realize when they're being robbed or cheated.

Even a 3-year-old will react if he "earns" two pennies and you come along and "take" one of them away. I dare you to test that.

The government cannot "fix" the size of the pie in order to share "too much" of it without causing shrinkage. That is, if it tries to share too much of my hard-earned wealth, I'm leaving. Bye-bye. Then your economy shrinks. We only have to look at the collapsed Soviet and Chinese economies of 20 years ago to see that Obama-Pelosi-Reid-onomics will follow the Soviet and Chinese "controlled" economies.

In fact, you only have to look at California over the last five years to see where OPR-onomics is taking us. That is simply because overtaxed economies fail--just like the pre-revolution economies of France (when Louis lost his head), Britain (King Charles lost his head, King George lost America, King John was forced to sign the Magna Carta), and all of the European countries that followed similar patterns.

The great waves of immigrants to America were driven by the economies they were running from and not the one they were running toward. Or simply look at Mexico.

From the "kingdom" of Maximilian to modern corrupt governments and drug lords, the Mexican economy has been burdened to the point that it has never thrived. Not for any period in 200 years. That's not because the Mexican people are lazy or stupid. It's because they never band together to "throw the bums out."

Keynesian or any other economic or monetary policies or manipulations cannot overcome the basics that make economic activity grow or shrink.

Too much theft through corruption or too much taxation by governments destroys individual economic drive. Period. No amount of monetary manipulation can convince people to work for nothing--or next to nothing.

The American Revolution was due solely to overtaxation and corruption. If you don't believe that, you need to read the correspondence among the founding fathers. They also did not include in the constitution the "right" of the federal government to levy taxes--not even to fund General Washington's army. They debated the issue and felt strongly enough that it was a "Pandora's box" that should not be opened even a crack, they decided to deny the federal government they were creating the right to levy taxes--even though they knew they would soon be facing the mightiest army the world had ever seen.

The liberal Supreme Court that "overrode" the Constitution did us a disservice and danced on the graves of our founding fathers. Please note that we had no recessions or depressions throughout the 1800's. Why? When was the federal income tax first enacted? We've had nothing but boom and bust every since.

What do we do now? I suggest we switch to a national sales tax (not on foods or medicines) that is the same for everyone. That will eliminate the overhead cost of running the IRS (at $20 Bil each year as of 20 years ago), lobbying costs to businesses trying to sway politicians for "tax breaks," accounting costs of businesses and individuals so that more people can be hired to produce goods or services instead of counting the beans for the government and looking for loopholes, ad infinitum.

I predict that if such a thing is ever accomplished, we'll see another 100 years of economic growth without boom or bust.

"Absolute power [to tax] corrupts absolutely." Always. powerstation January 9, 2010

Poor Monty’s commentary: Stop and think! What important factor did Keynes leave out from his all two simple explanation of what caused or lengthened the great depression, that is people cutting back on spending their money, or this so called “hoarding”?

Answer: Keynes fails to answer the question of Why people significantly cut back their spending during the Great Depression. As was said in the “Matrix Reloaded” movie, “Why” is all important because knowing “Why” gives a person power and not knowing the “Why” or Why’s of a thing means not having the power to find the correct solution to a problem.

So what makes people either increase or decrease their spending? What makes a person in the private sector or a person in a business increase or decrease their spending?

It is so simple that I should not even have to say it, but I feel compelled to say it because people are being brainwashed into a new government dependent mode of thinking that is blocking all too many minds from thinking and reasoning critically people increase their spending when they feel that the status of their own personal economic situation is either good or getting better and people rightly begin to decrease their spending when the opposite seems true to them.

Poor Monty’s commentary: Stop and think! If government spending on a massive scale, either by direct spending or by inflating a country's currency (inflation) could create real and sustaining wealth creation (and create worthwhile jobs), then how is it that we still have any economic problems at all?

Since the 1930’s we have experienced many serious economic recessions and downturns in the United States, and many people are saying that the current recession or downturn which started in or around 2007 or 2008 is the beginning of another Great Depression or that, at a minimum, it could turn from a recession into another world wide Great Depression.

So how is this even possible when the governments of the world have so completely adopted the Keynesian economic philosophy and model as fact, and have followed his advice so completely? The US government has, in recent years, greatly expanded the money supply (inflation), and has greatly increased government spending and yet our economy continues to lose jobs and lose wealth. So how is this possible? Why is this happening and what is the correct answer to this very important “Why”?

It is so simple. Read about Japan's lost decade, where the government of Japan tried to fix their troubled economy by dumping billions of dollars (paper and electronic money created out thin air) into their economy.

Japan tried a separate bail out type, stimulus type, helicopter drops of money into their economy and in Japan it did not do any good to their economy except to lengthen their recession from the normal year or two to a recession of over a decade!

In economic circles, this recession within Japan’s economy, which lasted over a decade, is called “The Lost Decade”.

And read books about the Great Depression of the 1930’s, and such books as “Roosevelt’s Follies”, or “The Forgotten Man” or “The Great Depression” will explain in detail the incontrovertible proof that: Socialism and big government solutions to problems, government bailouts of businesses, and government’s outright take over of businesses, government make work type programs like Roosevelt’s WPA program, high taxes, excessive and burdensome over regulation of people and of businesses, inflation (government expanding the money supply and creating money out of thin air) all make people who have the capacity to produce and the capacity to create wealth and create jobs nervous!

These types of unnecessary and damaging government interventions cause people both rich and poor, employer and employee, to slow their production down and cause them to take a very defensive position towards protecting the little wealth they have from further loss.

Then governments who are manned by power hungry people who for the most part just want more and more control over people cry, “Our economy is in trouble, we need more government spending to jump start our economy”. And then more paper currency (or electronic money, or money which is nothing more than numbers in a banks computer) is created or printed out of thin air and then this money is dumped into the economy in order to bring the economy out of its recession / depression and this in turn causes the need for more taxation and more re-distribution of wealth and more regulation of people and upon businesses.

Then, the very people who do know how to produce wealth will further retrench themselves into their defensive “Protect what you have mode of thinking”, causing more and more job loss and more and more loss of wealth. And this in turn causes more and more people who do not know how to create wealth or jobs, the common man who simply works for his wage, to spend less and less as he or she retrenches himself into his defensive position.

This is exemplified in the statement “I’ve just got to hold on to what I have as best as I can and wait for things to get better”. And then this decrease in consumer consumption causes more businesses to experience lost revenue and causes the socialists (Political leaders who believe in the fantasy of Keynesian Economics) in government to cry for more of the same policies which have created these problems in the first place.

And this all goes on and on, until some kind of balance is achieved in the economy, but this balance where things stop getting worse but where things don’t get appreciably better, will not be at a country’s true optimum level of production (job and wealth creation).

Instead this level of economic job and wealth production at that time will be at the country's “Good enough for now in these times” level, and will not appreciably improve until the damaging government interventionist policies are removed, or at least reduced enough so that the profit motive or the “What’s in it for me” motive can cause the people within the country who know how to create and to produce jobs and wealth to want to put their labor and their capital at risk again.

And this natural cycle of recovery is not shortened by government interventionist policies, rather it is greatly lengthened by it and the histories of all the world, including the history of Japan’s lost decade and the histories of America’s Great Depression prove it.

Governments do not create wealth, and when they take more wealth from people than they need to in order to fulfill only their legal or legitimate and limited roll then this taking of wealth begins to be seen for what it is and that is theft.

And it is this very theft of freedom and property from people which causes the speed of an economies recovery to slow down and or to keep it from recovering at all! The end. anon55498 December 7, 2009

To, again, anon54931: I'm a national reporter and columnist. I don't call myself a conservative one or a liberal one. I call myself a fact-finding one. anon55489 December 7, 2009

To anon54931: Where do you get the figure that middle-class workers in Canada work 200 hours more annually than the wealthy do? Do the business owners there punch a time clock? kxl December 7, 2009

To anon54024: Let me help you understand.

President Roosevelt followed an understanding of Keynesian economics, but he was more driven by his own experimentation, as he said. He had a "Brains Trust" in his administration, made of academia. And the President and his Brains Trust came up with a jobs program under the Works Progress Administration (WPA) in 1935, creating federal jobs for infrastructural projects, replacing the Federal Emergency Relief Administration (FERA) of 1933, which created welfare and zapped the spirit of the unemployed who quit looking for work and instead settled on government nurturing. In effect, a government patch over government patch. When has that ever worked?

The two programs profoundly changed the American work ethic. They caused an abandoning of self reliance to government reliance, like the extended unemployment compensation of today.

At first glance, the New Deal's works program seemed a solution to unemployment. But in government laundering, nothing comes out in the wash. Some of the built WPA public works projects added value, but many dismally built projects of the WPA, also mockingly known as Workers Piddling Around, had to be torn down and rebuilt. The works program wasn't a mending, after all. High unemployment remained high unemployment.

Stop and think. Government creates nothing with the exception of more problems, very rarely solutions. Who paid for the WPA government laborers? The taxpayers of course, which means they had less money to spend on goods like coats, washing machines and refrigerators.

When consumer demand drops, production drops. Businesses either lay off workers or go out of business. Don't forget, the WPA laborers were paying extraordinarily high taxes too, and so were the business owners, who paid $700,000 in taxes for every $900,000 profit.

WPA was all of a tempting carrot, a tight leash, a whip, and far worse, Roosevelt's work program used the federal laborers. Two dollars per paycheck was taken from the laborers to fund Democrat campaigns. Roosevelt then tossed a few extra dollars their way, if the laborers campaigned for his reelection in 1936.

Something good though seemed to be peeking out of the workers program. By late 1935, unemployment from a previous high of 25 percent dropped below 15 percent, just in time for the 1936 presidential election.

Roosevelt magically created 300,000 WPA jobs, sure to gain sympathy for the New Deal, reduce unemployment, and gain votes for FDR. Soon after the election, the 300,000 WPA jobs vanished.

By 1939, unemployment had climbed back up to nearly 21 percent. At the time, the United States ranked 13th in the world in economic recovery.

Though unemployment dropped to near 2 percent in World War II, statistics reveal that both consumer consumption and the production of domestic goods remained low.

The United States didn't pull out of the depression until after World War II and after Roosevelt died, when President Truman became friendlier toward the private sector, and the American economy resumed doing its thing. kxl December 7, 2009

The poor stay poor and the rich gets richer -- what a grand idea. In a free-market economy in a free society people have the choice to become whatever they want. It's up to their ambition, absent Keynesian economics.

Yet utopian Keynesian economics only functions in some twisted manner in a tyranny. Even John Maynard Keynes knew that just a little too much government interference creates uncertainty, a rod in the spokes of a free-wheeling economy.

He indeed warned President Roosevelt of that outcome. The President didn't listen. Since when has any government limited itself to small doses of stimulus to spark a fledgling economy.

Government limiting itself is not in its nature. Eventually it wants control. Does that sound familiar? Economics is certainly complex - I know, I study it all the time - but like everything in life its principals are simple, for those who have a simple aptitude. anon55074 December 4, 2009

#23: Starvation may have been the threat used to force people into factories and bring about the industrial revolution, but we clearly don't need to operate on those principles anymore.

Did you know that 50 percent of wealth is inherited, and 25 percent is won through 'lucky' speculation? And remember that most of that wealth stagnates.

Sure, there's the odd famous, hyper-rich philanthropist like Bill Gates (and I'm not belittling his example in any way). But in general, it's the poor who spend their welfare checks and keep the economy from stagnating. The rich sponge up wealth and keep it with unfair tax breaks.

The trickle-down theory has never proven true, you know.

Where I'm from, in Canada, the wealthiest 1 percent of the population controls 25 percent of the country's wealth. Yet the average middle class wage earner works 200 more hours a year, and makes less than a decade ago. And American income inequality is a good deal more extreme even than ours.

Are the lower classes just lazy? That's like saying muslims are just terrorists. Your viewpoint is so skewed and biased toward te stereotype that I wonder if you have any education at all, aside from your happy-happy Bible.

I don't believe that the ability to afford health care, education, nutritious food, housing, and respect should depend on what name you were born into or upon 'luck'. If we could overcome our own greed and recognize that it is possible for us all to share and still have enough, we could stop the re-shaping of society through income inequality and perhaps approach some level of trust for one another.

Work is social, and it's proven by studies that work means more to people than earning money alone. "Laziness" is not what we need to eliminate, it's greed and the quick-fix creation of unstable employment positions. anon54024 November 26, 2009

Regarding FDR´s spending on stimulus to get America out of the depression of the 1930s and 40s. Is it known if the infrastructure improvements were valued at a net gain or a net loss?

It would seem to me that if valued at a net gain, then this would prove that the basic concept of Keynse has worked.

What is the definition of wealth in Keynesean terms?

From what I have read of Keynes (The General Theory of Employment, Interest and Money), national wealth is defined (functionally) as a nation of consumers willing and able to consume -- but I could be wrong. Please help a poor public-educated observer understand what national wealth is by 21st century (post-classical) standards. anon42584 August 22, 2009

Hey - anon24225. What if there is no war to generate government demand and it is left up to the unwilling or timid consumer? Private sector spends money for economic gain. Government spends money for political gain. What if certain sectors of the country cannot benefit from government stimulus? anon38905 July 29, 2009

No. 23. *Exactly.* Thank you for reminding me. anon38151 yesterday

Just look at the failure of Nixon, Carter, and FDR. FDR's stimulus failed, unemployment didn't change much for seven years. We can also look at the failure of the Bush Stimulus!

It doesn't work for one major reason: the money government spends comes from the very source it's trying to fix - the people. Redistribution of wealth doesn't create wealth, it only changes who has the money. anon36446 July 12, 2009

I know that this will bring a firestorm, but if you apply God's economics to our society, you will find that all of man's attempts to deal with social and economic issues, fails miserably. The intrinsic law of loving God and serving each other totally obliterates the ugly traits of a fallen humanity, i.e., hate, greed, lust. Wealth is not a problem, if it is come by honestly, and used to help others. I would rather see a wealthy person give freely to help those in need, rather than the government stealing it from the wealthy to redistribute to those who think that "a welfare state" owes them a comfortable life. It is amazing how quickly you can get a person to work, when their stomach is rubbing against their spine! Those that are incapable of working, need to be assisted those that refuse to work, ought to suffer hunger pains.

The only problem with "Laissez-faire" is that you must have severe enough consequences for abusing the system, or the system will be abused. Integrity is lost in our society if a person thinks they can cheat the system, and only pay a small price if they get caught, they will cheat the system! If there are no absolute standards for right and wrong, then who cares about getting caught?

We are a consumer-driven society because sex and violence sells. Planned obsolescence was introduced to force us to continually spend our resources on goods that don't last. Don't save up for a "rainy day", because the government will guarantee that you'll always have sunny days! Yeah, Right! anon35596 July 6, 2009

So let's have a rousing war and get out of this mess. the Government can ration everything and in a few years all will be better.

Your views are just a Keynesian joke . anon35267 July 3, 2009

Keynesian economic theory is based on the rash assumption that wealth is a fixed quantity. wealth, however, can be created. let me use this anecdote. say there's 2 people. one of them creates something- let's say they're a farmer. they can raise livestock, and grow vegetables.

the other person is not a farmer, and cannot sustain himself without the farmer's help. the farmer requires something to trade for his food. the other person could build a house, or make clothing, etc. and each thing he creates has its own value. money is only symbolic of the value of something else- it holds no value itself, which explains the idea of inflation. if more money is added to the economy without more *value*, measured in goods and services, that money only serves to devalue existing money. taking money from those who have earned it and giving to those who have not (redistribution) causes inflation because no value exists where it's being relocated to. also, it provides less of an incentive to have a large sum of it- because those who do will get it taken from them without receiving anything in return. without a reason to have that position, they will cease to employ others under them, causing unemployment to skyrocket.

keynes suggested that if more demand than supply exists, there should be a tax to decrease demand.

on the other hand, supply side theory proposes a different course. reducing tax on the supplier, increasing potential supply (hence the name supply side).

this allows room for the creation of more wealth, as is natural in laissez faire capitalism. stagnation of wealth only matters if no more wealth is being created by producers- money does not have a circular flow unless the economy has stagnated.

economic regulation should only exist to prevent taking advantage of the government for the purpose of your own personal gain. the intervention of government in the economy is the only reason for any major economic disaster, including the great depression. "robber barons" only existed because they were helped by the government.

and i leave you with a quote from John Maynard Keynes that sums up his position- the polar opposite of mine.

"Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of reasons, will somehow work for the benefit of us all." - John Maynard Keynes anon34748 June 27, 2009

I'm not so confident on the WWII comments, however in world war *one* (where a treaty of Versailles was signed the year after the armistice), the American lending to Germany was really quite like a global stimulus. It basically went (my understanding goes) that by the US giving money to Germany, Germany could afford to pay some nations she owed, who could then pay their own lenders. This created a cycle by which America did eventually end up getting all of its money back, not just from Germany but from other nations also. It really was a clever piece of economics. anon32241 May 18, 2009

Just so you have a few facts straight about WWII. The treaty of Versialles, was written to bankrupt Germany, so that American corporations could come in and purchase the country for nothing. Rockefeller, actually sold the fuel additive needed for the Luftwafer to bomb Britain. Henry Ford adored Hitler and GM sold him engines and technology. Also do not forget that Preston Bush, helped the Thyssen corporation make purchases that otherwise would have been impossible.

So before you start writing, do a little research. Just so you know I am 23 and never went to university but even I have found this info, and this is just a scratch of the surface. anon30175 April 14, 2009

It seems to me that our cash has been spent on goods from "other" countries (imports) without the resulting payment of wages to our labor pool. This reminds me of the old time barber who "bled" people in order to lower fever. We have "bled" our currency to China and to Saudi Arabia. Fix that Mr. Keynes! anon29327 March 31, 2009

If you're looking for "proof" that an economic theory like Keynes' can work, then you'll never find it. Economics cannot be truly tested in a scientific manner - you can never establish a control group - so "proof" is not really forthcoming. Even if the current usage of Keynes' ideas work, it's still not really proof. Economies can be influenced by too many things, sometimes from very obscure sources, and as is typical with economies - chaos abounds.

In today's economy, currency wealth of individual/business consumerism forms the foundation for world economic wealth. The degree of separation between the amounts of currency distributed to each individual is not accounted for in modern economic theory. Some countries have attempted to address the issue of individual distributed monetary inequality with varying results, but there still remains great inequalities in many of these countries. The root of this vexing economic problem lies in assumption that the holders of the pools of currency, which are controlled by major economic institutions e.g large corporations, governments, banks, other financial lending businesses, will operate egaltarily with a minimum of regulation. The assumption of egalitarianism for profit across the full spectrum of the public has never been part of the economic history of the world. But that doesn't mean that we shouldn't try. 21st Century humans are evolutionarily capable of it. Past attempts, such as Sweden, come close, but fails in the long run because taxes limit personal/business accumulation of currency. The current pseudoism that "the market should/will regulate itself" has proven that egalitarianism has been left out of economic action on the marco scale. A true turn to build in egalitarianism into economic policy should be the foundation of any new economic efforts world wide. Large degrees of currency separation between the populace lie at the root of most social problems inflicting our world today. We need a new model, neither Keynesian nor Austrian. anon28167 March 12, 2009

The "pragmatic" redistribution of wealth theory here is insulting and degrading to the poor. It's basically saying the poor are too stupid to save money, so spending it will boost the economy. (That's all fine and good if they were purchasing U.S. made goods). At some point the poor are going to realize how the government views them and why it's important for a segment of our population to remain poor. anon26841 February 19, 2009

No, it was not the spending of military goods during WWII that pulled us out of the Great Depression. Is was the sole fact that the good 'ol USA was the only industrialized nation left untouched by the war in an infrastructure and manufacturing sense.

The world came to us for the recovery because we were the only ones capable at the time to rebuild the world.

The world bought our goods we enjoyed a great economic boom, built the interstate, the middle class expanded, the Great Society polices created, etc.

Now, the world has caught up in the last twenty years and we must shrink our spending to a degree or be crushed under the budgets and entitlements created in the past. Unfortunately, Obama will not bring that change.

What was WWII? It was a government spending program of a magnitude never seen before. It broke the back of the depression. The country devoted itself to defense and military (paid by the government).

After the war the industries created by the government defense spending converted to consumer goods (cars, appliances, etc.) to meet the pent up demand of the American people giving birth to a golden economic age that crashed and burned with Reaganomics and GWB. Maybe the bailout is not big enough. anon26221 February 10, 2009

Boom/bust was also a feature of the Golden age of Keynes, only less severe than it's malevolent neo-liberal counterpart.

neither explain why crises occur. anon25152 yesterday

I agree that the article is a good and simple brief introductory definition of Keynesian economics.

I do not agree with the oft-repeated nonsense that Roosevelt's programs would not have allowed our citizens to dig themselves out of the Great Depression (--as opposed to what has not been done to date regarding the present Depression, and the mini-depression created by Reagan--) without the advent of WWII. It is clear that FDR's Government WPA, CCC, etc., ignited a rebirth of art, science, theater (also cinema), knowledge of and appreciation of American culture and history--and allowed opportunities (i.e., Hope with Foundation)for many previously excluded economic and ethnic groups in our nation. We would have lost WWII without the abilities developed by these "interventionist" Programs.

A nation requires a government which serves its citizens to survive--and to thrive. Otherwise, we might as well have anarchy--a form of which is the "cycles" cited by academic economists and privileged politicians. It was the greed of the Robber-Barons, Bankers, and the very closed tier of the most wealthy and socially and politically connected individuals who caused the Great Depression in this country and the Depression--and, yes, it is a Depression-which is currently tormenting the working class. I also must point out that Obama and all the rest speak of a middle class that does not exist. Someone who has an income--not including assets other than current, liquid income of $250K plus has no relationship to the median income of around $50K for a family of 4. Nor does it speak to those who make much less than that, i.e., The People.

Capitalism without strict regulation will destroy any nation--including ours--and the real culprit, fundamentally, is that old enemy of any democratic country--COLONIALISM--what we mistakenly call Immigration, Out-sourcing, etc. Economists of any ilk--Keynesian or otherwise--have not faced this fact. If Obama doesn't, our country will not survive with any ghost of our fundamental values and promise. We cut police, fire and we spend tens of millions on Colonialists. Colonialism is the twin of Genocide and no friend to any democratic, regulated capitalistic, just Nation--ours. anon25110 January 23, 2009

Keynesian economics is a joke. The notion that saving money for tomorrow is a bad thing is illogical. If you want to learn about real economics, study Austrian economics. anon24850 January 19, 2009

Keynesian economics have never worked. Never has this theory been able to rescue any foundering economy. Yet its detractors will argue that it "hasn't been tried", or "the Government didn't spend enough". So don't expect its proponents to come up with any success stories.

An utter failure everywhere. And Keynesian economics didn't get us out of the Great Depression. (economics 101) Hitler and Hirohito did. FDR made our economy worse. tsimmy688 January 18, 2009

24112: Obviously, the people that hoarded the money were the people who had some money to hoard. Elaborate on the idea that about how this theory makes it easier for banks. I fail to see how a bank is a required component of a Keynes transaction. anon24225 January 9, 2009

The Depression caused what is now known as a "liquidity trap", where the price of money is 0% interest and still no demand. GOVERNMENT came in and spent on work projects and then the war. that in turned created demand for goods and services which got up out of the depression: conclusion: Keynesian Economics works! and they can explain the real world conditions of the economy better then classical economics. anon24112 January 7, 2009

Who hoarded money? The banks, it's called interest and credit. Keynesian economics makes the banks hoard money even easier, and hides inflation till the money finally hits the poor. anon22696 December 8, 2008

There is no proof it ever works. anon9876 March 15, 2008

Poor stays poor, rich gets richer, grand idea. anon9418 March 5, 2008

I really like this article on Keynesian economics, it is short and to the point. Exactly what I needed to get a general understanding of the main ideas of this theory. thanx!


A Brief Economic History of Time

Capitalism changed how humans perceive the passage of hours, days, and weeks. This made people more productive, but did it make them any happier?

What is an economy? You might say it is how people who cannot predict the future deal with it.

People save money to protect themselves from calamity. Banks charge interest to account for risk. People trade stocks to bet on the earnings trajectory of a company. The first taxes were levied to support standing armies that could fight in the event of an invasion.

Time’s unknowable perils contributed to the flourishing of economic thought. But then something interesting happened. The creature became the creator: The economy re-invented time. Or, to put things less obliquely, the age of exploration and the industrial revolution completely changed the way people measure time, understand time, and feel and talk about time.

Just think: What do you look forward to when you’re at work? Maybe it’s a happy hour, the weekend, or, in the more distant future, retirement. Each of these are distinct periods of time, and each is an invention of the last 150 years of economic change.

The word weekend is a creation of the industrial revolution, since a discrete working week doesn't make much sense on a farm that needs constant tending. Retirement, as a term, dates back to the 1600s, as it relates to army service, but its modern usage only became mainstream after the move to an industrial economy. Happy hour is a neologism from the 1950s, a heyday for workplace optimism. The equally hopeful T.G.I.F. acronym comes from the post-World War II era.

Three forces contributed to the modern invention of time. First, the conquest of foreign territories across the ocean required precise navigation with accurate timepieces. Second, the invention of the railroad required the standardization of time across countries, replacing the local system of keeping time using shadows and sundials. Third, the industrial economy necessitated new labor laws, which changed the way people think about work.

1. The Emperor’s New Clocks

The history of timepieces is a history of empires.

Long before the modern clock used springs and familiar markings, just about every great civilization had attempted to measure time, with each one failing in its own special way. In ancient Egypt, China, and Mesopotamia, sundials, or “shadow clocks,” all required bright sunlight to count the hours, which wasn't of much use on overcast days. To work around this problem, some of these ancient civilizations used a “water clock,” or clepsydra, a device that steadily dripped water through a small hole into a container with lines painted around the side to represent the passage of time. But slight changes in temperature could change the viscosity of water and the rate of drips. On a cold day, the water might freeze, and so would time.

The most important breakthroughs in the history of horology required the incentives and resources of a global empire. Toward the end of the Exploration Age, the great powers like England, France, and Spain struggled to navigate the oceans, because they couldn’t accurately measure longitude, or their progress east or west of their site of departure. As a result, they would crash into rocks or get lost and run out of food.

To some, this seemed like a problem of orientation. To John Harrison, an English carpenter, it was clearly a problem of time. Imagine that a ship departs from London for Jamaica with two clocks. The first clock keeps perfect London time throughout the journey. The second clock is reset to noon each day on the ocean when the sun reaches its highest point in the sky. As a result, the time difference between the two clocks grows as the ship sails toward the Americas. As you know, the earth rotates 360 degrees every 24 hours. That means 15 degrees every hour. So, for each hour that the two clocks were apart, the ship had traveled 15 degrees west—or about 900 nautical miles, which is roughly the distance between New York City and Missouri a time zone.

The scenario above isn’t a hypothetical it’s precisely the calculation that Harrison made. The subject of the classic book Longitude by Dava Sobel, Harrison became famous for building the two most advanced clocks (technically: chronometers) of all time. His timepieces didn’t rely on the dripping of water, flow of sand, or even the swinging of heavy pendula. They were precise and durable enough to withstand the ricketty journey across the ocean. For his pains—he spent about 30 years designing and tweaking the timepieces—he won a luxurious prize from the British government.

The British Empire didn’t merely help perfect the modern timepiece but also helped to popularize the watch. In the late 1800s, watches were considered to be feminine jewelry men kept their timepieces tucked away in pockets. But in colonial campaigns like the First Boer War and the Third Burmese War, British commanders tied little clocks to their soldiers’ wrists. Going into battle with feminine jewelry might have struck the men of war as uniform malfunction. But the innovation proved extremely useful for coordinating troop movements.

By World War I, watches were standard-issue gear for soldiers in the trenches. When the men who survived came home, they retained the habit. Thus the wristwatch, conceived as a piece of jewelry for women, was re-marketed through colonial warfare as a thoroughly masculine fashion. By the 1930s, wristwatches were the norm and the pocket watch was an anachronism. Time, itself, had become a human appendage.

2. Time-Zone Travel

Time and space are connected, not only in the fabric of the universe, but also in our idioms. We talk about time as an interval applying both to moments (“It’s fifteen minutes to five”) and to geography (“I’m fifteen minutes from Five Guys”). Perhaps this is why the invention of a machine to zoom through space, the train, inspired the idea that a machine might travel through time.

The rise of the railroad in the 1800s startled the era’s scientists and inspired a new ecstatic language of progress. In 1864’s Journey to the Center of the Earth, Jules Verne imagined a machine that, rather than navigate the circumference of the earth, departed along the perpendicular axis to travel inward through the mantle of its sphere. In 1895’s The Time Machine, H.G. Wells’ protagonist embarks along another dimension, time, as if history itself were a navigable rail line stretching from past to future. Humans had been trying to predict the future since before the Oracle of Delphi. Only after the invention of trains did they imagine visiting it.

The discovery of machine-power was, in many ways, the discovery of the future. “Travelers riding in steam-driven railroad trains looked out their windows onto a landscape where oxen plowed the fields as they had done in medieval times, horses still hauled and harrowed, yet telegraph wires split the sky,” James Gleick writes in Time Travel, his wondrous interdisciplinary history of the subject. (Those interested in a simpler history of time might also enjoy the delightful young-adult book This Book Is About Time.) “This caused a new kind of confusion or dissociation,” Gleick wrote. “Call it temporal dissonance.”

Dissonance is right. The railroad created a crisis of time management unlike anything human beings had ever experienced. In the pre-train age, all time was local, divined mostly by the angle of the sun in the sky. If Philadelphia and Harrisburg had different times, nobody noticed, because a Philly resident couldn’t reach Harrisburg by phone or rail to tell the difference. As a result there were hundreds of local times in the United States.

Local time was perfectly suitable for a local agrarian economy. But for a railroad company and its customers, it was a nightmare. Imagine walking through an airport terminal (already logistical chaos) and learning that Delta and United now operate by entirely separate time schedules: A United flight that takes off, on-time, at 1pm leaves at the same time as a Delta flight departing on-time at 2pm, and the clocks on the wall correspond to neither Delta nor United.

That sounds ludicrous. But for the first railroad travelers, this scenario was commonplace. In Buffalo’s train station, each railroad company used its own time schedule. The New York Central Railroad ran on New York time. The Michigan Southern Railroad schedule ran on the local time of Columbus, Ohio. And both of those clocks were distinct from the clock that represented local Buffalo time.

As Gleick writes, “railroads made time zones inevitable.” The railroad companies finally got together in the 1880s and decided to divide the U.S. into four standard time zones: eastern, central, mountain, pacific. This required local communities to forfeit their control of time, which didn’t go over well in a country founded on federalist principles. To many, the standardization of time seemed like a national takeover. Others accused jewelers of orchestrating the time-zone revolution to make people buy new clocks and watches.

The four zones were set on November 18, 1883. The precise times were dictated by another new technology that seemed to pierce the boundary of space and time, the telegraph. The following year, the International Time Conference established the plan for global time zones, which included an International Date Line. And so, wristwatches and standard time—perhaps the two most famous icons of horology—were both children of travel.

Nobody complains much about time zones any more, unless they’re whining about jet lag. Instead, we reserve our hate for Daylight Saving Time (DST). Initially instituted by Germany to save fuel during World War I, DST was first proposed in the U.S. during the same war. Contrary to the popular idea that daylight saving time was a carrot to farmers, it was urban retailers looking to save artificial light costs who were among the staunchest advocates. Farmers actually led a national effort to repeal national daylight saving time in 1919. Year-long DST returned in 1942, when President Franklin D. Roosevelt instituted “War Time,” two months after Pearl Harbor, and only returned to normal standard time in 1945. Time waits for no man, but when a nation is at war, it gets pushed around quite a bit.

Beyond standard time, the subtler impact of railroads was their invention of the 21st-century concept of a career. The word itself comes from the French carriere, meaning a racetrack. To achieve its modern meaning, however, work required an element of vocational progress. Farm workers reached peak earnings as early as their 20s. But it took decades for railroad employees to earn their highest wages even in the late-1800s, as late as their 40s.

As the economy shifted from plows to rails, it changed the shape one’s lifetime earnings. Rather than a wage progression resembling a great plain—a flat, unchanging (or, perhaps, unpredictable) salary for many decades—the industrial revolution delivered the familiar curve of income that modern workers recognize, with gradually rising wages until middle-age followed by a slow decline. And so, the industrial economy invented the very concept of a modern career, making the passage of time a materially significant matter for turn-of-the-century workers. (In fact, even the term “turn of the century” was only invented at the dawn of the 20th before that, presumably, the centuries faded, like the shadow of sundials, or ran dry, like water clocks.)

3. Working for the Weekend

It is one of the most common questions imaginable in a modern workplace. But if you asked somebody in the 1400s or 1700s, she would have no idea what you were talking about. The English word schedule dates back to the middle ages, when for hundreds of years it merely signified a slip of paper. But the modern definition—an orderly sequence of events and times—is a far more recent invention, coming from the late 1800s. The word first applied to a railroad company’s list of train departures. (As does the word commute, derived from a “commutation ticket” or a season pass to a streetcar or railroad.)

For the next half century, American industrialists become obsessed with optimizing, well, schedules. If the late 19th century turned time into a cultural fascination, the 20th century turned it into an economic denominator.

The 1910s saw Henry Ford’s Model-T assembly line and Frederick Winslow Taylor’s The Principles of Scientific Management. Taylor’s productivity treatise divided labor into discrete activities—open the mail, hammer the nail—and encouraged maximizing production over time (while often minimizing wages over time). The first use of time clocks to mark workers’ hours of arrival grew in tandem with Taylor’s scientific management theories. Once a tool of military coordination, watches had become keepers of factory efficiency. Even their manufacturers advertised time-clocks as tools for a “profitable” employee.

As for the workers, the long history of the U.S. labor movement has been in many ways an attempt to move from an open-ended commitment to work as long as possible to a legal framework to limit the workday and workweek—a protest to reclaim time. Some of the first American labor protests called for a 10-hour work day, something today’s workers would consider horrific.

But they had to start somewhere, since it wasn’t uncommon for early-1800s textile employees to work 12 hours daily. In 1840, Martin Van Buren signed an executive order for a 10-hour day. By the 1860s, the Grand Eight Hours Leagues and the Knights of Labor were pushing to shave another two hours off the workweek. In 1868, President Ulysses S. Grant signed a proclamation instituting an eight-hour work day for government employees. It was extended to railroad workers in 1915 and then to the entire private sector under the Fair Labor Standards Act of 1937. Soon the labor movement’s attention turned from the workday to the workweek, advocating for a two-day weekend. Between 1920 and 1927 the number of large companies with official five-day workweeks increased by a factor of eight.

All told, in the last century and a half, the workweek has shrunk from 10 hours a day, six days a week, in the 1880s, to eight hours a day, five days a week—a 33 percent reduction. Where did the extra time go? Much went to leisure. The whole mountain of media that has grown in the last century—including weekly magazines, movies, radio, television, cable, and social media—relies on a resource, mass attention, that became abundant only as work declined as a share of the week.

4. The House of Time

The quantum physicists say that past and future are illusions. They say time is more like space. It something that merely exists rather than unfolds. Imagine a house. All of the rooms are simply there, and it is an illusion that one room comes “after” or “before” another room. Instead, each individual’s consciousness passing through the house creates the illusion that there is an inviolable sequence of rooms.

The quantum theory of time would seem to have nothing to do with our economic history of horology. Some scientists say time doesn’t technically exist? you might think. Who cares, it sure as heck exists for me! Normal people experience time as a flow, an infinite cascade of falling dominos, a chain of cause-and-effect events that neither leaps forward several moments nor suddenly reverses, but rather passes with the predictable click-click-click of now moments falling into the next with a steady cadence.

The purpose of an economy is to manage the perils of the future, to make sense of time, to make it work for us. In the 1930s, the economist John Maynard Keynes predicted that future economic productivity would reduce the long workweek to just 15 hours. So it’s ironic that after several millennia of economic thought and evolution, some of the richest Americans haven’t used their wealth to buy downtime. They’ve used it to buy more work. The richest Americans now work longer hours than they did a few decades ago.

As I’ve written, rich American men, in particular, are the world’s chief workaholics, putting in longer hours than both rich people overseas and lower-income Americans. It’s hard to say why. Perhaps mobile phones are an unbreakable leash. Perhaps the hunt for status and wealth among the plutocracy is yet another tether. Or perhaps rich people just love working (“building wealth to them is a creative process, and the closest thing they have to fun,” as the economist Robert Frank wrote).


John Maynard Keynes The Economic Consequences of the Peace: An Analysis of the Versailles Treaty

The Treaty includes no provisions for the economic rehabilitation of Europe,—nothing to make the defeated Central Empires into good neighbors, nothing to stabilize the new States of Europe, nothing to reclaim Russia nor does it promote in any way a compact of economic solidarity amongst the Allies themselves no arrangement was reached at Paris for restoring the disordered finances of France and Italy, or to adjust the systems of the Old World and the New.

The Council of Four paid no attention to these issues, being preoccupied with others,—Clemenceau to crush the economic life of his enemy, Lloyd George to do a deal and bring home something which would pass muster for a week, the President to do nothing that was not just and right. It is an extraordinary fact that the fundamental economic problems of a Europe starving and disintegrating before their eyes, was the one question in which it was impossible to arouse the interest of the Four. Reparation was their main excursion into the economic field, and they settled [ 227 ] it as a problem of theology, of politics, of electoral chicane, from every point of view except that of the economic future of the States whose destiny they were handling….

For the immediate future events are taking charge, and the near destiny of Europe is no longer in the hands of any man. The events of the coming year will not be shaped by the deliberate acts of statesmen, but by the hidden currents, flowing continually beneath the surface of political history, of which no one can predict the outcome. In one way only can we influence these hidden currents,—by setting in motion those forces of instruction and imagination which change opinion. The assertion of truth, the unveiling of illusion, the dissipation of hate, the [ 297 ] enlargement and instruction of men’s hearts and minds, must be the means.

In this autumn of 1919, in which I write, we are at the dead season of our fortunes. The reaction from the exertions, the fears, and the sufferings of the past five years is at its height. Our power of feeling or caring beyond the immediate questions of our own material well-being is temporarily eclipsed. The greatest events outside our own direct experience and the most dreadful anticipations cannot move us.

From John Maynard Keynes, The Economic Consequences of the Peace (New York: Harcourt, Brace and Howe, 1920), pp. 226-227, 296-297.


Watch the video: 97% Owned: How is Money Created. Documentary Film (January 2023).

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