Friday, October 29, 2010

A Brief Response on Keynesian Economics

So, last night a friend of mine posted a cartoon from the 1930s depicting the FDR administration as a runaway wagon headed for disaster spilling money everywhere it went, its occupants drunk on power.  My buddy remarked how amazing it was to see history repeating itself in Obama.  And then, the big lie appeared... A friend of my friend stepped in with the usual liberal claptrap, indoctrination that we all received in our US History class:  FDR's New Deal ended the Great Depression.  So, I felt compelled to weigh in:

Well, I think the controversy released herein is a direct result of the big lie that our generation has been taught due to the liberalization of the school system.  That is that FDR was great.  The underlying ugly truth is that the liberals have to lie about FDR because he did more to advance the concept of Statism more than any other American president (until Obama).  There are three theories on what ended the depression: 1.  FDR’s Keynesian government spending policies; 2.  WWII and its associated demand and increased production overturned classical market forces causing an acceleration in GDP; or 3.  The economy self corrected.

I posit that a combination of 2 and 3 is true.  Statists (including Obama) hold to #1 because it empowers their lust for a larger federal government and more control.  Right now, in Europe, we are seeing the results of 50+ years of Keynesian theory destroying the socialist-light welfare policies of the EU.  The US is sprinting in that direction.  GDP is determined by 1. Consumption, 2. Private Investment, and 3. Government spending.  Whenever the Government spends money it has to a. take it out of your pocket and give it to someone/thing else, b. borrow it, or c. print it.  All three of these methods are by definition net losses to productivity.  This simplistic accounting alone should stand Keynesian theory on its head.  True, the Federal Reserve can slow what happens to the economy (ie. Adjust monetary policy to slow the effects of a downturn), but the Government cannot spend its way into prosperity.

The economy always corrects itself.  That is the nature of the market.  The fact that it goes up and goes down, without singular control, is the reason Statists (Marxists, Fascists, ‘liberals’) despise the market economy.  FDR did nothing to spur economic recovery.  If anything, he prolonged the Depression.  But the wonderful thing about the American involvement in the market is that even with tyrannical attempts to control it by Statists, American generally find a way to better themselves, enrich themselves, and turn the economy back on the right course.
After the conservative resurgence of Goldwater, combined with the economic writings of Milton Friedman and the subsequent Reagan Revolution, we, as a country have no excuse for not stomping out the lies of Keynesian economics!  Shhhh!!!, the real reason for it is that there is a sizable segment of the Republican Party that simply want to be the ones in control of this Keynesian spending!

This big lie of FDR is just another example of how the left stays relevant.  They take over our education system, take the place of parents in raising children, and indoctrinate them to take their place.  We, as a nation, will never stamp out Marxist/Statist philosophies (or at least marginalize them) until we address this fundamental fact.  Without the world of academia, they have no method of perpetuation (plus, they don't believe in nuclear families anyway, and with their belief in abortion rights...) so, they would die out from simple attrition.

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