-By Thomas E. Brewton
Keynesian macroeconomics, the mythology favored by liberal-progressives ranging from President Obama to New York Times propagandist Paul Krugman, is a rationalization for massive expansion of deficit spending and socialization of the entire economy.
From the Mises.org website, John Maynard Keynes’s introduction to the 1936 German edition of his General Theory:
The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire.
Keynes’s bete noir was individual savings, his so-called liquidity trap, which he identified as the cause of economic depression. His ideology thus calls for displacing individualism with collectivized power of the political state, evidenced by rampant creation of Federal agencies, deficit spending programs, and punishingly higher taxes. This is what the Obama administration is pushing to do today.
President Franklin Roosevelt stated the ideological case in his 1944 State of the Union address in which he proclaimed that the original Bill of Rights, designed to protect individual liberties from arbitrary government power, had proved inadequate. The nation, he said, had adopted a new bill of rights, one under which people looked to the Federal government to provide all their needs. This Roosevelt termed security. Roosevelt’s security spawned our self-centered, hedonistic, and profligate culture in the aftermath of the Baby Boomer student anarchism.
Hilaire Belloc, writing about the early encroachment of this phenomenon in Great Britain, called it the servile state. What Franklin Roosevelt called security is just one form of slavery that corrupts the self-reliance and personal initiative that built the United States before the Great Depression into the world’s preeminent economic power.
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Thomas E. Brewton is a staff writer for the New Media Alliance, Inc. The New Media Alliance is a non-profit (501c3) national coalition of writers, journalists and grass-roots media outlets.
His weblog is THE VIEW FROM 1776 http://www.thomasbrewton.com/
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Thus explains the incompetence of the liberals when it comes to the economy. Savings are the basis for banks to loan money to companies for the expansion of plant and equipment purchases. It should be obvious to all but the most stupid that a bank can not loan money it doesn’t have, therefore individual savings are the source of all investiment. Savings are not the source of an economic slow down, they are the basis of investment in modernization and expansion. The bubble economy was created by excessive spending NOT excessive saving. Excessive consumption is the basis for upward pressure on prices, this is classic supply-demand response. The real problem was the lack of diversification in consumption which leads to excessive spending in one sector of the economy thus causing a bubble. All bubbles burst so the mortgage market was spurred by unsound loans due to BAD legislation by the very people like Obama who are calling for more legislation.
Here’s the real reason why the economy did well under Bush, banks and brokers had money to lend via 401ks and IRAs and companies saw a future where the risk of investing would be rewarded.