Wednesday, December 7, 2011

The Road to Economic Chaos and Ruin is Paved with Keynesian Bricks

Murray Rothbard, in his excellent study of Lord John Maynard Keynes, keenly observed that "Keynes, the man,—his character, his writings, and his actions throughout life—was composed of three guiding and interacting elements. The first was his over-weening egotism, which assured him that he could handle all intellectual problems quickly and accurately and led him to scorn any general principles that might curb his unbridled ego. The second was his strong sense that he was born into, and destined to be a leader of, Great Britain’s ruling elite."

Further, "both of these traits led Keynes to deal with people as well as nations from a self-perceived position of power and dominance. The third element was his deep hatred and contempt for the values and virtues of the bourgeoisie, for conventional morality, for savings and thrift, and for the basic institutions of family life."

Keynes, while at King's College, was a member of a secretive group called the "Apostles." "Two basic attitudes dominated this hermetic group under the aegis of Keynes and [his "friend"}, Giles Lytton Strachey. The first was their overriding belief in the importance of personal love and friendship, while scorning any general rules or principles that might limit their own egos; and the second, their animosity toward and contempt for middle-class values and morality. The Apostolic confrontation with bourgeois values included praise for avant-garde aesthetics, holding homosexuality to be morally superior (with bisexuality a distant second), and hatred for such traditional family values as thrift or any emphasis on the future or long run, as compared to the present. (“In the long run,” as Keynes would later intone in his famous phrase, “we are all dead.”)"

As Keynes himself wrote during his undergraduate days in a letter to his friend and co-leader, Strachey, “Is it monomania—this colossal moral superiority that we feel? I get the feeling that most of the rest [of the world outside the Apostles] never see anything at all—too stupid or too wicked”

This is the man who published, in 1936, his "new" theory of economics, the "GENERAL THEORY OF EMPLOYMENT, INTEREST, AND MONEY." The "Theory" is almost totally fraudulent because it is based upon a "house of cards" system of 'mythological mathematics" (my term) and a set of fallacies, themselves built upon still other fallacies. It is a "dream" handbook for politicians, giving them license to spend, borrow and waste assets that don't belong to them. Further, it is adherence by politicians to this egregiously faulty "Theory" in the "handbook" that has brought the Western World to the edge of economic chaos and potential ruin.

If we do a close examination of his "Theory" we will quickly see its "feet of clay." But we don't have to start from scratch. Henry Hazlitt has already done that for us in his superbly written analysis of the "Theory." To see just how stupid and out of touch Keynes and his followers are, just read Hazlitt's book, "THE FAILURE OF THE "NEW ECONOMICS: An Analysis of the Keynesian Fallacies." Beware though, reading it could change your life.

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