The Keynesian Cult Has Failed: “Emergency” Stimulus Is Now Permanent, by Charles Hugh Smith
Keynesian economics has no predictive ability, but continues to be followed and revered because it provides cover for the growth of the state and its expanding control of the economy. From Charles Hugh Smith at oftwominds.com:
Can we finally admit that eight years of following the Keynesian coloring-book have not just failed, but failed spectacularly?
What do we call a status quo in which “emergency measures” have become permanent props? A failure. The “emergency” responses to the Global Financial Meltdown of 2008-09 are, eight years on, permanent fixtures. Everyone knows what would happen if the deficit spending, money-printing, zero interest rates, shadow banking, asset purchases by central banks and all the rest of the Keynesian Cult’s program stopped: the status quo falls apart.
Keynesianism Vs The Real World
Let’s start by reviewing the core contexts of the economy.
1. The dominant socio-economic structures since around 1500 AD are profit-maximizing capital (“the market”) and nation-states (“the government”).
2. The dominant economic theory for the past 80 years is Keynesianism, i.e. the notion that the state and central bank must aggressively manage private-sector consumption (demand) and lending via centrally planned and funded fiscal and monetary stimulus during downturns (recessions/depressions).
Simply put, the conventional view holds that there are two (and only two) solutions for whatever ails the economy: the market (profit-maximizing capital) or the government (nation-states and their central banks). Proponents of each blame all economic and social ills on the other one.
In the real world, the vast majority of Earth’s inhabitants operate in economies with both market and state-controlled dynamics in varying degrees.
This entry was posted in Economics
and tagged Keynes
. Bookmark the permalink