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In this bubblicious world of trillion dollar deficits, sovereign bailouts, and fiscal stimulus measures of historical proportions, there is one economist whose theories and underlying philosophy underpin the foundation of modern macroeconomics.
His name is John Maynard Keynes, and his most famous work, The General Theory of Employment, Interest and Money (1936) has become the playbook from which politicians and central bankers are making their trillion dollar decisions.
Just about every politician knows the name Keynes. Most would consider themselves “Keynesian” in that they believe in government spending as a means to maintain economic stability. Few have actually read his book. And yet even fewer realize that Keynes was a major advocate of Soviet-style central planning.
Among the many fascist viewpoints in his General Theory, Keynes argued that:
1) A high rate of interest which encourages saving is bad for society. Consumption and borrowing must be promoted. In fact, high interest rates are to blame for why “the world after several millennia of steady individual saving, is so poor…”
2) Consequently, the government should make money cheap, controlling interest rates with a target level of zero. Further, the government should never deliberately increase rates as inflation will not set in “until unemployment has completely disappeared.”
Where Keynes Went Wron...
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3) Even if inflation should happen to appear, it’s likely due to the “arbitrary and inequitable distribution of wealth and incomes…” As such, the better solution to control prices and keep the boom going is to simply impose high income and death taxes in order to make a more economically just society.
4) If the boom starts to fade and low interest rates aren’t doing the job, it is the role of the government to step in and ‘invest’ obscene amounts of money to stimulate growth. Only the government is capable of doing this, as “the duty of ordering the current volume of investment cannot safely be left in private hands.”
5) As Keynes favored “a somewhat comprehensive socialization of investment,” he recognized that such complex decisions of investing other people’s money would be “above the heads of the vast mass of more or less illiterate voters.”
6) Not to worry, though, these key decision makers of the state-run economy will have the right “moral position,” so it’s just a question of making sure that the right people are directing the economy.
7) In the event of a crisis, the answer is simple. A government should simply borrow and spend more. In a 1934 article for Redbook magazine entitled “Can America Spend Its Way into Recovery,” Keynes opened with “Why, obviously!”
