News & Analysis
Shock: Bloomberg Columnist Bashes Keynes ... Dialectic Expands, but Not Far Enough
Deathbed of Keynesian Economics Will Be in U.K ... The U.K. has produced notable economists over the years, but John Maynard Keynes, the guru of government intervention, was one of truly global significance. So it may be fitting that the U.K. will also become the deathbed of Keynesian economics. Britain has been following the mainstream prescriptions of his followers more than any developed nation. It has cut interest rates, pumped up government spending, printed money like crazy, and nationalized almost half the banking industry ... At some point soon, even the most loyal disciples of Keynes will have to admit defeat, and accept that a radical change of direction is needed. – Bloomberg/Matthew Lynn
Dominant Social Theme: Keynes is wrong, very wrong. What we need is technocratic austerity.
Free-Market Analysis: As the West's rolling depression drags on, some good things are happening including the gradual devaluation of the reputation of John Maynard Keynes. Now, Bloomberg columnist Matthew Lynn has penned an encouraging opinion piece criticizing the great British economist.
It is surprisingly strong for an article that appears on Bloomberg. He predicts the death of Keynes's reputation because his Fabian proscriptions don't work and statist monetary stimulation is a dead end.
So far, so good. But then unfortunately, he calls for a kind of IMF-style austerity as the antidote. And thus we are left with the conclusion that this perspective is one more dominant social theme in the making. First promote Keynes and then promote the opposite. From socialism to faux-austerity.
The state itself is the operative element – the most important facility. Bloomberg, after all, is an agent of Money Power and the top elites realize their goals via mercantilism. So long as the state itself is regarded as the main actor, the larger manipulation evolves and global government continues to be realized. Out of chaos ... order. Here's more:
The public debate about the state of the British economy was enlivened last week by a brawl between economists. On Feb. 14, a group that included the former Bank of England policy makers Tim Besley, Howard Davies, Charles Goodhart and John Vickers published a letter to the Sunday Times calling on the government of Prime Minister Gordon Brown to control the ballooning deficit. If it didn't, the stability of the economic recovery would be threatened, and there would be a run on the pound, they warned.
That brought a stinging response from the Keynesians, who are urging the U.K. to spend its way out of recession. Nobel laureates Joseph Stiglitz and Robert Solow were among the signatories to letters written by a group of 67 economists insisting that deficit spending was the only way to salvage the economy. The letters, published in the Financial Times, argued that a "a sharp shock" now "would be positively dangerous."
... So who is right, and who is wrong? It's a debate that matters to the rest of the world. After all, if demand management doesn't work here, it won't work anywhere. The U.K. has been in Keynes overdrive for the past 18 months. The budget deficit is already more than 12 percent of gross domestic product, on a par with Greece. And while the Greeks are cutting spending, the British deficit is widening.
Figures for January showed another fiscal blowout. At the same time, interest rates have been slashed to 0.5 percent. And the pound has slumped in value, which is supposed to boost demand for British goods, and help close the trade gap. Just about everything possible has been done to encourage consumption. The results have been miserable.
Retail sales excluding gasoline in January fell 1.2 percent from the previous month, twice as much as economists forecast. The number of people receiving unemployment benefits jumped to 1.64 million in January, the highest level since April 1997. The yield on U.K. government debt is now higher than on Spanish or Italian bonds, a sure sign that investors are losing faith in the country's ability to pay its debts. The inflation rate has also accelerated to 3.5 percent. In reality, Britain has the worst of all possible worlds: a stagnant economy, a crippling budget deficit and rising prices.
This is strong stuff ... and it gets better still. Cleverly, Lynn combats a potential Keynesian response by anticipating it. He points out that Keynesians will argue that monopoly fiat money printing had made things much better. And then this: "If it's not working, that just proves the stimulus should be even larger ... It is the argument quacks always push: If the medicine isn't working, increase the dosage."
Too bad that Lynn eventually feels the need to propose a solution. What is necessary he tells us, is a "total" shift in policy. Government (it is always government officials) must pare the deficit, raise interest rates and cut taxes.
The part about cutting taxes is not strictly speaking part of the IMF recipe but nonetheless, the acting agent is government and the solution is for government to reverse destructive policies.
One can see the same sort of arguments being made in the US. The Tea Party in particular, that used to call for the abolition or at least significant diminishment of the role of the Federal Reserve, is now almost totally focused on the US deficit and tax reduction.
It is encouraging to see Keynesian nostrums challenged and exposed but the range of solutions is still being severely limited in the mainstream, elite-operated press. Real progress would involve challenging the more substantive problem of money creation itself.
Conclusion: We see encouraging signs that elite information management is gradually losing momentum but there is still a long way to go. Hopefully, what we call the Internet Reformation will take us there.
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Posted by taxesbyanyothername on 02/28/13 02:31 PM
Of course you are right Dave but we don't even have to look to see those cuts. If any programs are actually reduced or ended they will be very carefully chosen. They will be those not entirely in line with the statist agenda.
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Posted by seer on 02/28/13 01:19 PM
John Maynard Keynes,whose economic philosophy has become the most distorted in history by its opponents, would never claim the current western governments were following his guidelines.
Reply from The Daily Bell
Sure, this is one argument, but Keynes was a Fabian. In a larger sense his arguments were incoherent and merely a platform from which he mounted incomprehensible justifications for state action and central bank utility.
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Posted by dave jr on 02/28/13 01:08 PM
"We need to take a good hard look at what actually gets cut."
Freedom, liberty and the ability to be self determinant is what gets cut. I have seen enough to believe it.
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Posted by taxesbyanyothername on 02/28/13 11:11 AM
Dave
You may be on to something there. We need to take a good hard look at what actually gets cut.
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Posted by dave jr on 02/28/13 07:33 AM
sallybluey,
The middle class small business has been the foundation of free markets which the elite oppose. The doctrine of Keynes working through central banking and co-opted governments is designed to crush the middle class by removing all business, reducing populations to consumerism. Market chaos is intentional. Much remaining business is surviving on government subsidy or through government contracts. Austerity and sequestration is a way to target businesses that have been strung out by servicing government programs. It is just the next step. Once the elite have everything they want, then they will give us order. Their order.
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Posted by Abu Aardvark on 02/28/13 06:27 AM
Off topic meme introduction: "Out: Latin American Drug Cartels. In: African Drug Cartels"
Click to view link
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Posted by Chasvoice on 02/27/13 07:48 PM
What the Bloomberg writer won't tell you about Keynes:
The Architect of the US Federal Reserve Bank, JM Keynes, was a Pedophile & Pervert
Click to view link
Reply from The Daily Bell
There are many gay people but only one Keynes. The problem was him, not his sexuality.
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Posted by taxesbyanyothername on 02/27/13 04:27 PM
The British public still want their long delayed and recently repromised referendum on EU membership. It will take a lot of distraction to keep that from happening. "Austerity" might get them to a point where martial law could be "justified". No votes then. It is a long game.
Reply from The Daily Bell
It certainly is.
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Posted by Hugo_de_Groot on 02/27/13 04:08 PM
mmm something went wrong when referring to sites since you make that into 'click to view link' Ill keep that mind for further feedbacks.
To state what I wanted to say;
'Iam not familiar with the source of the site but since it was promoted on the Dutch MSM site 'nujij' (loosly translated by now you (decide the news) that is owned by a bilderberger and trilatist Erkko... .'
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Posted by Hugo_de_Groot on 02/27/13 04:00 PM
Hi DB,
Nice one again. Ive been thinking how to interpret this piece for about 2 hours now Click to view link
A quote from the piece
'Blackwater mercenaries are currently overseeing the police in Greece as rumours of a coup abound. We understand the situation is extremely tense and that the mercenaries are there mainly to protect the Government and parliament should trouble break out either in the form of a revolution or counter-revolution. Already, a destabilisation plot involving the far-right and police has been uncovered.'
With this piece expanding the technocrat meme it starts to make sense now. Government always knows best. Sometimes the smart men and woman in government have to do things that most people dont like. Including police and the army. Hence its good that there are mercenaries... A neutral force for the good.
Later in the piece it's admitted that the current government and Blackwater are not perfect. But sure better then the rest (far right and anarchists) otherwise u have what u have had in Italy with the facists (note how they did not note the Gladio operation that was behind it).
I am not familiar with Click to view link but that it was promoted on the Dutch MSM site Click to view link that is owned by a bilderberger and trilatist Erkko (owner of the 2nd biggest media conglomerate of the world) and known to censor made me look into it (know your enemy).
The first step to deepen the technocrat government hand in hand with private armies / mercenaries meme?
Reply from The Daily Bell
Thanks for digging. Interesting. We saw it too ...
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Posted by sallybluey on 02/27/13 12:07 PM
DB, why wouldn't austerity be the answer to deficits? How does austerity help the Power Elite? I would think reducing spending would be helpful to the free market.
Reply from The Daily Bell
On the surface, yes. But the whole mess arose as a result of central bank monopoly money stimulation combined with corporate multi-nationalism. The solution is to change the system, not to deprive people of resources.
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Posted by Abu Aardvark on 02/27/13 11:23 AM
This looks like a pretty clever limited hangout, in my view, and reminds me of Bloomberg's federal lawsuit in order to "force" the FED to disclose details of who got how much easy money during "the 2007 to 2009 financial crisis".
Click to view link
All in all this reeks of the modus operandi of certain "alternative" websites: expose some wrongdoing for a while as a way of confidence-building in order to become a more effective propagator of disinfo later - when it comes to the REALLY important stuff.
Once the targeted audience took the bait, one may feed them - or omit - whatever the agenda prescribes.
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Posted by 1776 on 02/27/13 11:04 AM
Jan. 17 (Bloomberg) -- In today's "Single Best Chart," Bloomberg's Scarlet Fu displays how inflation has increased in the 100 years since the creation of the Federal Reserve. She speaks on Bloomberg Television's "Bloomberg Surveillance."
Click to view link
