A collection of quacks and shrewd self-promoters sold millions of Americans on exotic theories of financial ease. Instead of a promised land of sustained prosperity, we’re left with an enormous mess to clean up (at best) and probably a full economic meltdown on the horizon. For starters, we might want to try looking for better advice.
If the stars align just right, each generation may witness one or two radiant figures who achieve such dazzling advances for totalitarian authority that our ruling elites can speak no ill of their personal and public failings, no matter how dramatic. Abe Lincoln, Franklin Roosevelt and Michael “Martin Luther” King serve as worthy members of that ignoble pantheon, if we can look past so much Hollywood, state media and public school adulation. (Some may question the inclusion of MLK on this short list of super-villains. But providing rhetorical ammunition for three generations of arbitrary racial revenge, hounding millions of European Americans from their U.S. urban homelands, chasing manufacturing jobs out of city environments with nationalized union fascism, spawning the scourge of black welfare dependency, neutralizing non-governmental black progress of the 1940s and 50s, and riling up his followers so greatly they would riot in over 110 cities the week after his death—while helping to seed a staggering 750 race riots from 1964 to 1971—settles it for me.)
The Right Honorable Lord John Maynard Keynes (1883–1946) is another such example.
The distinguished British salesman of international “free lunch” economics was a master of pandering to politicians’ short-term desires for instant gratification at someone else’s expense. His eloquence in advocating fallacious but soothing positions empowered ruling establishments and their corporate facilitators for decades. For that, he is celebrated by many, despised by a few, yet emulated by nearly everyone in the halls of high finance.
The section headings for this essay are as follows:
- The Economic Crisis at Hand: Who Taught Us to be this Dumb?
- ‘Free Lunch’ Fantasies: 1930s – the Decade of Economic Insanity
- Keynesian Influence on the New Deal
- Maynard ‘Feasting with Panthers’: The Making of a Megalomaniac
- Keynesian Alchemy Finds a Home at Subsidized Colleges
- The ‘Stimulus’ Ruse: Putting a Positive Spin on Wealth Destruction
- Academic Effrontery Becomes the New Normal
- Recap on Banking Basics
- The Original Fraud of Modern Banking
- The Fickle, Futile and Fanatical Opposition
- I Hate the Same People You Hate: Please Buy My Newsletter!
- Left-wing Economic Crack Up
If the flawed ideas of J.M. Keynes had rested merely with his colleagues at school or perhaps some avid book readers, the world might have been spared some of the economic calamity from the Depression era that still haunts us today. But in America, its four-term President and his stable of academic wizards—known affectionately as the Brain Trust—latched on to Keynesian “stimulus” folly and other aromatic but implausible notions. Immediately after World War II, and largely to this day, college economics departments cling to his theories as well. Political and institutional supporters of Keynesian principles now control nearly all positions of power in the West, which helps explain the dire financial conditions we now face.
While Franklin D. Roosevelt was instrumental as the front man for many fantastically failed political programs, his personality and background have already been thoroughly analyzed by others. This essay will offer a recap of New Deal economic highlights, but it will not further evaluate FDR, the Man, other than this brief synopsis: he was a shallow, eager-to-please aristocrat with remarkable acting abilities and a gigantic ego, hopelessly in over his head. Accordingly, no one teaches or believes in “Rooseveltism.” (Spell check doesn’t even recognize it as a word.)
On the other hand, most Wall Street, media and college economics experts treat Keynesianism as a serious governing philosophy, even if some may disagree with elements of his positions. As such, Mr. Keynes will receive more attention in this essay.
How was, and is, John Maynard Keynes influential? For starters, the student and lecturer from Cambridge University who went on to various governmental advisory positions led the charge from the 1920s to mid-40s against the political constraints of the gold standard and gave rhetorical cover for cheap and easy credit to fund rampant social spending that made him the darling of FDR, his disastrous New Deal and subsequent deficit chicanery.
Other notable accomplishments of the dashing economist include a clueless oblivion to harmful fiat inflation while promoting the concept of public servitude under the ruse of “full employment.” The professed expert on everything—who held a semi-valid job for a scant two years—also promoted a farcical “paradox of thrift” which further encouraged wasteful government spending while attacking the virtues of individual saving and investing. Those enduring legacies of raw political quackery enabled the debt and inflation explosions we suffer from today.
Keynes’s appeal rested on a mix of talents common to any successful court suitor. The Dr. Feelgood of economic theory used a mix of charm, refined British manners and fanciful jargon on “liquidity preference”, “aggregate demand” and other pretentious tripe to compel fellow intellectuals and witless politicians to gullibly buy his tarnished wares.
Regarding his relentless assault against individual “thrift”—made futile now by ongoing inflationary debasement—the hedonist Keynes loved public adoration and hated anything that required patience and self-control. Accordingly, he championed an ideology that merely reflected his own personal preferences at the expense of everyone else. And the imperial command in Washington D.C. has been infatuated with Keynesian promises ever since.
Meanwhile, flustered conservative critics have failed since the 1930s to make any traction against Keynes’s flawed prescriptions in particular and to counter runaway debt in general. Instead, this hapless gang of right-wing and libertarian book-thumpers and pamphleteers have settled for turning Keynesian into a meaningless epithet interspersed with chants of “end the Fed” or some unintelligible noises about “globalism.” Hardly a valid alternative for anyone to rally around.
The Economic Crisis at Hand: Who Taught Us to be this Dumb?
Which brings us to some important preliminary considerations. Many economic commentators have drawn attention to the growing wealth disparity between rich and poor in America. The fact that the top 0.1% of Americans now own more wealth than the bottom 80% (here’s a nice graphic on that from C.H. Smith and the Washington Post) is disturbing in itself, even if most critics of that destabilizing wealth gap offer no sensible advice on what to do about it.
Others focus on the massive \$1.6 trillion of student debt or the gargantuan \$26 trillion of national debt. Still others point to the real annual inflation rate of 8-10% over the last two decades (based on traditional accounting measures tracked by ShadowStats) of which our government claims is only about 1-2%.
I would agree that all of those issues are legitimate concerns. And I also think that most mainstream (and some internet) attention given to those problems amounts to convenient excuses to breed discontent and impose more socialist government programs—or in the case of libertarians, to bash the Federal Reserve and exonerate their beloved private-sector Debt Dealers.
In a more general sense, I think we should be asking: How did all this happen? How did a supposedly “educated” populace of functioning adults allow such malfunction to occur without any effective opposition (or arguably, any semblance of a counter-strategy)?
When faced with such staggering long-term incompetence, my first thought is to ask: Who is teaching us history, economics and other political matters? The answer to that should be obvious, but doesn’t get much objective attention in mainstream media. Unfortunately, education in America—the leading source of ostensible “experts” on practically everything—has largely been corrupted by government subsidies (nearly \$1.3 trillion as of FY 2020) and is now run predominantly by control freaks, charlatans and sycophants who (in addition to their smorgasbord of PC pig vomit) think monologue books and lectures are the only way of learning (as opposed to a more balanced mix of mentoring and apprenticeships that worked for centuries without subsidies, hair-trigger censorship or student rioting).
This scholastic cult of empire worship naturally concludes that central planning is the answer to every problem in society. And they teach that skewed opinion as a fact to be memorized and recited like some quasi-religious catechism that feigns to be “science.” This is actually nothing new. The crude method of monologue indoctrination—as opposed to a more mentally sharpening dialogue approach or dynamic learning experience under a competent “master” in some chosen profession—has always been central to the university model.
In higher education, less than 10 of the 4,300 colleges in the U.S. (as of 2017) decline federal subsidies along with their anti-social and legalistic strings attached. The college and university system in America—a \$671 billion industry as of the Fall 2017 to Spring 2018 school year—is dominated with over 98% of revenue going to tax-favored governmental and “non-profit” schools, removing any pretense of independence.
What we have left is an atmosphere of pampered elites jostling for attention and knee-jerk conformists trying to appease the increasingly angry mobs. Even back in 1944, economist F.A. Hayek in The Road to Serfdom warned of the easy step “From the saintly and single-minded idealist to the fanatic” being common to the ideology of central planning. Two years later, economist Henry Hazlitt, in his popular book Economics in One Lesson, criticized the academic tendency of “exhibitionistic straining for novelty and originality.” Since then, college theatrics have gotten immeasurably worse. At that time, neither man (both lifetime thinkers and writers) seemed willing to concede that the very nature of college prepares people to be single-minded extremists and unbalanced fanatics, with an official “degree” at the end of the process to falsely signal one’s theoretical achievement in some narrow field of interest.
Among other things, college in America is not driven by consumer needs or market efficiency. This “consumer-be-damned” attitude reveals itself with the Publish or Perish mentality where the English-language academic world now cranks out over 28,000 “scholarly peer-reviewed journals,” which scarcely few people bother to read. Little, if any, of that cryptic research improves student learning. But it does boost the school’s prestige and help secure more corporate and federal R&D grants, which now combine to over \$60 billion annually just in the U.S. (Chasing after grants doesn’t offer much benefit to teaching either.)
As a result of the excessive reliance on monologue books and lectures, the institutional setting of a passive audience held captive by oppressive “degree” requirements, the dependence on outside political subsidies and constant groveling for attention, the conflict of interest to speak kindly of government programs—no matter how much obvious failure exists—permeates everything that oozes out of that decrepit environment. Shabby economic teaching is just one such deficiency.
‘Free Lunch’ Fantasies: 1930s – the Decade of Economic Insanity
When it comes to slovenly economic instruction, few topics bring out the malignant nature of subsidized academia like New Deal apologetics. It’s hard to imagine a more consistent record of failure that has received almost nothing but breathless adoration from people who should know better.
For this section, I’ll look primarily to the condensed record of what Keynesian and New Deal “stimulus” policies gave us—most of which has been whitewashed by fawning federal broadcasters and the rest of Hollywood story telling. Thanks again to educational incompetence, many in America are calling for a repeat of those disastrous measures with a ruinous Green New Deal.
After the stock market correction of 1929 (when very few Americans owned stock) President Hoover took radical measures to increase taxes and spending and to convince companies to keep wages high—although this made business survival more difficult and rendered new hiring nearly impossible. (Less than a decade prior, political leaders in Washington allowed the severe 1920-21 depression to naturally work itself out, with no “stimulus” spending shenanigans.)
While running for his first term in the 1932 election, Franklin Roosevelt openly ridiculed Hoover for his reckless spending, crying “Stop the deficits! Stop the deficits!” at campaign rallies, as recounted in John Flynn’s book The Roosevelt Myth. During that same bait-and-switch presidential race, FDR attacked Hoover’s spending as “the most reckless and extravagant past that I have been able to discover in the statistical record of any peacetime government anywhere, any time,” as quoted in Robert Murphy’s Politically Incorrect Guide to the Great Depression and the New Deal, page 55.
When President Roosevelt took the reins of power in March 1933, his campaign lip-service to fiscal restraint would vanish before Washington D.C.’s famous cherry blossoms could fall to the ground.
Owing to his aristocratic upbringing and weak constitution, FDR chose to surround himself with a cast of little men with Big Ideas and a dangerously inflated view of their own abilities. These academic nudniks concocted one ridiculous scheme after another, all failing miserably, and all extending what should have been a brief market correction and liquidation of empty banks (guilty of rampant counterfeiting, protected by local laws against branch banking) into an extended state of misery. Thanks largely to the power of fiat credit—along with masterful stage management and forcibly silencing the opposition—New Deal accomplishments included:
1) thirteen consecutive years of usually massive deficit spending with outlays averaging 60% over revenues even before the FY 1942 war spike (a big win for bankers who financed that debt) whereas the entire decade of the 1920s had seen consistent budget surpluses
2) abandoning the domestic gold standard a mere 1 month and 1 day into office, on April 5, 1933, despite campaign promises to the contrary (triggering instability in business planning while opening the hydrants for more fiat spending)
3) paying farmers to throw away mountains of good food and cotton via the 1933 Agricultural Adjustment Act (struck down by the Supreme Court in 1936); a pro-farming website recounts the AAA as follows:
in the late spring of 1933, the federal government carried out “emergency livestock reductions.” In Nebraska, the government bought about 470,000 cattle and 438,000 pigs. Nationwide, six million hogs were purchased from desperate farmers. In the South, one million farmers were paid to plow under 10.4 million acres of cotton.
The hogs and cattle were simply killed. In Nebraska, thousands were shot and buried in deep pits.
Intentional waste and inflated food prices became a New Deal virtue. Keynes openly praised the AAA writing an open letter to FDR in December 1933 saying “I should strongly support in principle… [your] various schemes for agricultural restriction.”
4) pushing millions of people into long-term debt and houses they couldn’t afford with his 1934 National Housing Act (another big win for bankers)
5) concocting the overtly fascist NRA industrial cartels (unanimously struck down by the Supreme Court in 1935) that crushed small businesses and elevated labor strife
6) enticing old people to quit working entirely (thereby juicing employment stats, which treat unemployed elderly as “non-persons,” while politically dividing young and old people)
7) encouraging millions of middle-age people to join Civilian Conservation Corps and Works Progress Administration patronage “jobs” programs (further manipulating employment stats while hurting employers by tightening the labor pool)
Year U.S. Unemployment Rates (%) Percent on CCC or WPA “relief” jobs Based on private-sector jobs Including gov’t “relief” jobs as work 1929 3.2 3.2 0.0 1932 23.6 22.9 0.7 1933 24.9 20.6 4.3 1934 21.7 16.0 5.7 1935 20.1 14.2 5.9 1936 16.9 9.9 7.0 1937 14.3 9.1 5.2 1938 19.0 12.5 6.5 1939 17.2 11.3 5.9 1940 14.6 9.5 5.1
Source: Economists S. Lebergott and M. Darby, summarized by Wikipedia.
About 25 million Americans participated in one of the New Deal federal jobs programs steered towards loyal Democrats, according to contemporary research compiled by historian John Flynn (The Roosevelt Myth, pages 122-127).
8) encouraging widespread union trespassing and violence with his 1935 NLRA that crippled thousands of businesses and radicalized the formerly reasonable union movement; this period is still celebrated by the mainstream media, commies in this detailed analysis and Socialist Worker.org who praise the unionized “class struggle” as depicted below:
Long before cops appeased BLM and antifa militants, government law-enforcement turned a blind eye to pervasive union violence and trespassing. Provoked by earlier abuses from FDR’s National Recovery Act of 1933 (that created industrial cartels) and widespread mistreatment from monopolistic railroad, steel and other industries before that, organized labor went wild in the mid-1930s. Thanks to New Deal union interference, “the number of ‘strike days’ doubled in one year, from 14 million in 1936 to 28 million in 1937.” Backed by the new powers of the federal government to stifle management resistance, union membership soared “from 13 percent of the work force in 1935 to 29 percent in 1939.” Needless to say, the heavy-handed union thuggery (including blockades, damaging plant equipment and mass squatting) all hurt American economic conditions. (stats from Robert Murphy’s P.I. Guide, page 108)
9) transferring power from elected officials to swarms of unelected bureaucrats that write, enforce and judge their own rules (now millions of them) with virtually no checks or balances—nothing less than the illegitimate birth of our menacing Deep State
10) creating wage controls during World War II that became the basis of our coercive corporate “benefits” explosion in subsequent decades; skyrocketing medical costs would soon follow
A truly breathtaking record of incompetence, by any objective measure. But academic Quislings are not paid to be objective.
Instead, the sharpest minds from Roosevelt’s Brain Trust—mainly lawyers from Columbia and Harvard Universities—crafted speeches and legal arguments to sell their programs to the public and to skeptical judges (who would soon be bullied into submission). FDR’s penchant for praising himself and his unprecedented battalions of hundreds of employees in media relations fed loyal news agencies press releases touting wondrous benefits of “relief” and “assistance” and “progress” and “security” and other manipulative slogans that federal broadcasters have dutifully repeated to this day.
The glitch that the federal government has no legal authority to interfere in any of items #3 through 10—the Constitution says nothing about farming, housing, labor relations, retirement, etc.—never mattered to those in Washington who loved (and still lust) to forcibly impose their opinions on others. To defend their lawless crusade, New Dealers and their modern supporters reduce the entire Constitution down to trite bumper stickers of “general welfare”, “interstate commerce” and a few other simplistic concepts. Their frenetic zeal for social “uplift” could never be restrained by mere legal wording from the distant past.
In many regards, these were religious fanatics out to “save” the nation—not by any personal sacrifice of their own, but by the “shared sacrifices” of others. And with heavy public tribute.
Throughout the Great Depression, following Keynesian stimulus principles, “Roosevelt was able to raise the average income tax from 1.35% to 16.56% during his tenure—an increase of 1,100%” according to economics writer Doug Casey. All of this failed to “stimulate” the economy and just planted seeds of division that crass politicians would harvest at the polls every couple of years since then. Yet, remarkably, federal broadcasters and government educators still mischaracterize fiat spending as “stimulus” as if the latter was an established fact.
Then more inflationary spending on tanks, bombs and battleships—financed by fiat lending and massive tax increases—brought us ever greater Soviet-style austerity conditions during World War II. Shoddy economic historiography has consistently minimized the fact that during FDR’s and Churchill’s bloodbath in Europe and Japan, private-sector upheaval was masked because nearly everyone was now working directly or indirectly for Uncle Sam.
The U.S. economy only recovered after its ridiculous leader ceased his rule in 1945, wasteful government spending subsided and the economy was spared additional New Deal abuses that had created so much instability.
In total, the 10 major “stimulus” acts outlined above (and many more like them) were the undertakings of inept Washington officials who obsessed over their own personal image at the expense of the public—with most programs harming the country to this day. This was an early version of “virtue signaling” which is usually associated with “psychopathic, manipulative, and narcissistic people” who excel in traits like “self-promotion, emotional callousness, duplicity, and tendency to take advantage of others.”
Naturally, government enthusiasts celebrate FDR and his reckless New Deal and deceitful dragging of America into World War II without a hint of apprehension. PBS’s slick 7-part docudrama “The Roosevelts – An Intimate History” (carried recently on Netflix for over a year) leads off with a court historian offering the gushing assessment: “These two Roosevelts were exceptional with a capital ‘E’, underscore.” Other federal broadcasters offer only glib platitudes on FDR’s efforts for “saving” the nation and providing “relief” and “aid” for the common man. The jingoistic propaganda is reduced to that level of childish banter.
Keynesian Influence on the New Deal
To what extent J.M. Keynes figured into all that “stimulus” folly is perhaps open to debate, but by all accounts I can find, his influence was significant. Admirers of both FDR and Keynes openly share the credit between those two “giants” of Big Government. For instance, Business Insider says “Keynes’ approach, and one that FDR bought into, was that somebody had to step in and start buying stuff.” An Econ 488 outline effuses that “Roosevelt’s execution of Keynesian economic policy through the New Deal brought the United States out of one of its darkest eras.”
The FDR library makes no qualms about linking New Deal programs to the famed British economist:
At the end of FDR’s first year in office, in December 1933, Keynes was comfortable enough with Roosevelt that the economist wrote an open letter to the president (published in the New York Times) opining that:
You have made yourself the Trustee for those in every country who seek to mend the evils of our condition by reasoned experiment within the framework of the existing social system.
… I do not mean to impugn the social justice and social expediency of the redistribution of incomes aimed at by N.I.R.A. and by the various schemes for agricultural restriction. The latter, in particular, I should strongly support in principle. But too much emphasis on the remedial value of a higher price-level as an object in itself may lead to serious misapprehension as to the part which prices can play in the technique of recovery. The stimulation of output by increasing aggregate purchasing power is the right way to get prices up; and not the other way round.
… I put in the second place the maintenance of cheap and abundant credit and in particular the reduction of the long-term rates of interest.
The world-renowned economist ended his letter:
With great respect,
Your obedient servant
J M Keynes
This is a good representation of the “exhibitionistic” pseudo-intellectual “straining”—and political appeasement—that made Keynes a darling to the economic royalty of London, the budding Deep State in Washington and the academic elites in the New Deal administration.
Maynard ‘Feasting with Panthers’: The Making of a Megalomaniac
Keynes had already begun his journey to distinction decades before Franklin Roosevelt won the White House. From an early age, J.M. Keynes, known as Maynard to his friends and colleagues, was a prolific thinker and writer with high aspirations. As such, he earned a living like any academic celebrity with a flexible moral compass: by relying on corporate and political sponsors for most of his adult life. And his lofty ideas, not so much new as opposed to newly packaged, paid huge dividends to his public investors.
In 1908, at age 25, he was appointed as an economics lecturer at King’s College in Cambridge, England, where he had begun undergraduate math studies in 1902. For years there, Keynes polished his rhetorical skills in public debating, practicing the art of pretending to passionately support or oppose any given topic, a talent that trial lawyers and politicians find indispensable. As the son of a Cambridge University administrator, back when such status meant considerable privilege, the intellectually sharp Keynes disdained anything that resembled honest work. Personally implementing any of his opinions via offering services to willing customers never interested him at all.
Keynes’s early adult personality was molded through his membership in two proudly anti-social cliques: the secret society of the Cambridge Apostles and the London avant-garde club known as the Bloomsbury Group. Murray Rothbard’s 1992 biography Keynes, the Man deals extensively and critically with both groups; the prior sentence provides links to Wikipedia’s also unfavorable take on each. Artist and literary critic Wyndham Lewis’s 1930 satire The Apes of God called Bloomsbury “elitist, corrupt and talentless” according to Wikipedia. In both groups, it can reasonably be concluded that Keynes fostered his disgust for Victorian values while developing a conceit for his own manicured opinions.
From late-1906 to June 1908, Keynes worked for less than two years remotely planning Indian finances as a bureaucrat in London, his closest lifetime encounter with anything resembling a real job. During this time, the Cambridge intellectual showed no concern for British imperial abuses to the populous subcontinent, according to Rothbard. After that short stint in the civil service workforce, Keynes returned to teaching at Cambridge then moved on to further government employment for the British Treasury in 1915. During the 1920s, Keynes sold his enlightened opinions to corporate advertisers and loyal readers of the left-wing Manchester Guardian newspaper and the American socialist magazine The Nation.
By 1930, Keynes—an archetypical expert with no experience—had already authored A Treatise on Money as well as earlier books The Economic Consequences of Mr. Churchill (a screed against the gold standard in 1925) and The Economic Consequences of the Peace (1919). The latter book correctly argued against “punitive reparations payments imposed on Germany by the Allied countries after World War I,” as one economic admirer put it. This touch of youthful boldness and bracingly frank yet reasonable analysis would fade away when Keynes later took center stage among economic monarchs.
Then in 1936, with most Western capitals desperate to latch onto any scheme that put a scholarly spin on deficit spending, the opportunistic Keynes authored his rambling The General Theory of Employment, Interest and Money to quench their thirst. Politicians and government economists gobbled it whole.
The content and style of this legendary book is mostly disorganized and bland. But it is interspersed with academic banter like Keynes’s professed “emancipation from preconceived ideas,” his “struggle of escape from habitual modes of thought and expression” and his “divergence from received doctrine.” Keynes’s target audience was explicitly “my fellow economists” who reveled in such sophistry.
After wearing out the reader with over 60 pages of such pedantic but occasionally florid prose, the British aristocrat landed his first of many sucker punches against thrift—a veritable Academic Rope-A-Dope as so many book-thumping welterweights are prone to do. Keynes absolutely hated the middle-class values of the West that didn’t sufficiently appreciate a Man of Leisure and Letters (and adventurous bisexual) like himself. First, I’ll address the most likely reason why he despised conservative values. Then, I’ll make a go at how this attitude played out in his public mission.
In any serious discussion of J.M. Keynes, one cannot overlook the two great passions that animated his life: political exhibitionism in service of the state and having sex with random men, boys and the occasional child slave. On the latter predilection that Keynes once described as “feasting with panthers,” we don’t need to rely on tawdry gossip from foggy memories of partisan combatants (e.g., the elaborate smear campaigns against Supreme Court nominees Clarence Thomas and Brett Cavanaugh) or the wild accusations of an attention-seeking porn whore named Stormy attacking President Trump, all to the media’s delight. In the case of Master Keynes, we have remarkably candid admissions in his own words from two surviving diaries.
The relevance connecting Keynes’s promiscuous sexual appetite (which may possibly have subsided when he married Russian ballerina, Lydia Lopokova, in 1925) and childless status to his public policy impositions would seem apparent and noncontroversial: Keynes favored instant gratification and paid little heed to long-term ramifications. Hence, his most famous quote, “in the long run we are all dead” and the rest of his short-term panaceas that left long-term damage. Hans-Hermann Hoppe’s book Democracy, The God That Failed (p. 59) briefly touches on this theme, noting the continuum of “Keynes’s personal philosophy of hedonism and present-orientation” to his free-spending economics and chaotic anti-gold stance.
While sexual escapades usually make for sensational headlines (even among Kennedy and FDR admirers, long after their deaths) most mainstream accounts of Keynes conspicuously leave out his sordid lifestyle, any discussion of which might tarnish their economic hero. Two rare exceptions are a snarky liberal at The Atlantic poking fun in a 2008 blog post on “Keynes’s ‘Jew Boy’ Quickie” and the left-wing U.K. Independent newspaper in 2015 going into some detail on his conquests of “rent boys” and over 100 other recorded sexual encounters. The latter publication drew only positive conclusions that such random sexual behavior allowed Keynes to “meet people from less privileged backgrounds and less clever than he – which may have made him more liberal and tolerant.” The Independent’s salacious 2015 article on Keynes’s “shocking… sex life” was generously subtitled “his bedroom antics were as interesting as his theories.”
Wikipedia’s account of Mr. Keynes praises his economic theories and mentions none of his degenerate behavior, instead spinning a counter-offensive that “Political opponents have used Keynes’s sexuality to attack his academic work.”
The evidence that both left-wing admirers and many right-wing critics have dutifully gone along in covering up this bizarre and likely criminal conduct (not to mention savagely incompetent economic advice) shows the power of statist media and educational institutions in enforcing taboos defending their allies. Keynes, the self-described “immoralist,” was knighted by King George VI in 1942. After that, for the next two or three generations the high priests of government authority and academic effrontery offered nothing but rapturous praise for their counterfeit saint.
How Keynes manifested his personal worldview into involuntary public policy is of greater importance, even if it does seem less “interesting” to many in corporate media. Any reasonable person should certainly understand his desire to push back against the smothering conformity of early 20th century English culture—in many aspects of life, not just sexuality. But Keynes fought back by attacking personal thrift and doing so in the crudest language displayed in his roughly 240-page General Theory. And these hostile attitudes were, at Keynes’s enthusiastic urging to any politician who would listen, forged into weapons that would harm hundreds of millions of people within his lifetime.
In Keynes’s 1936 manifesto, thrift is “obstinately orthodox” and “Obstinacy can bring only a penalty and no reward.” He warns of a “sudden outbreak of thrift in the working classes.” Then Keynes hides behind the approving quote from another contemporary economist who claimed widespread “belief in the utility of luxury and the evil of thrift.”
After highlighting government’s role in the “great art to make a nation happy” via centralized employment policy, Keynes takes a sarcastic swipe at any remaining doubters, writing:
No wonder that such wicked sentiments called down the opprobrium of two centuries of moralists and economists who felt much more virtuous in possession of their austere doctrine that no sound remedy was discoverable except in the utmost of thrift and economy both by the individual and by the state.
This was classic Maynard snobbishness. With these quotes and many others beyond his 1936 book, Keynes made it clear—if one could stay alert through scores of pages of meandering mush—that he hated personal thrift. This attitude fit neatly with his personal lifestyle forged in the London intellectual community that openly despised mainstream values, as Murray Rothbard’s biography on Keynes extensively documents.
Aside from his personal disgust with thrift, Keynes (like FDR) prided himself on being far too sophisticated to be enslaved to any particular ideology, that is, any principles that might limit his flexibility to embrace the next soothing public policy remedy he stumbled across. In General Theory, he mocked liberal economic activist Henry George—whose popular writings during the 1880s and 90s are attributed to having sparked the Progressive Era that Keynes expressly agreed with—for creating a climate of “semi-religious fervour.” This was his polite way of calling George a Neanderthal. Keynes sniffed at another liberal economic activist, Silvio Gesell (1862–1930)—not claiming any error in Gesell’s teachings (again, which Keynes largely agreed with)—but for being “the revered prophet of a cult with many thousand disciples throughout the world.” Finally, Keynes also rejected Marxism, in which he found evidence of “some beastliness in the Russian nature” following his 1925 visit to the USSR (the last item is quoted by Rothbard).
Yet the narcissistic, omnipotent scholar liked to insert his ideological opinions (without any supporting logic or data in most cases) particularly in the following references. Quotes and page numbers below are from the free PDF version of General Theory:
The State will have to exercise a guiding influence on the propensity to consume partly through its scheme of taxation, partly by fixing the rate of interest, and partly, perhaps, in other ways. (PDF page 187)
the enlargement of the functions of government… I defend (PDF page 188)
the problem of unemployment… is associated—and, in my opinion, inevitably associated—with present-day capitalistic individualism. (PDF page 189)
These attitudes endeared Keynes to the statists of the New Deal, the post-World War II university clique (who got a huge boost with FDR’s 1944 G.I. Bill) and the increasingly powerful national broadcasting industry of the 1930s and 40s, which then was dominated by federally licensed NBC and CBS.
All three groups elevated Keynes to a position of sainthood in their insular but influential circles. Even a staunch critic of Keynesian economics, like libertarian Murray Rothbard in his biography Keynes, the Man, described the 1936 classic as “one of the most dazzlingly successful books of all time” for having “conquered the economics profession” in just a few years. As to the merit of Keynes’s most famous writing, Rothbard was less impressed, saying:
And yet The General Theory was not truly revolutionary at all but merely old and oft-refuted mercantilist and inflationist fallacies dressed up in shiny new garb, replete with newly constructed and largely incomprehensible jargon.
Longtime economics writer and editor of the New York Times and Wall Street Journal, Henry Hazlitt (1894–1993) was also critical of Keynes’s purported masterpiece. Hazlitt wrote his own extensive commentary on the General Theory, which has been condensed as:
Moreover, when Hazlitt analyzed it, he was “unable to find in it a single important doctrine that is both true and original. What is original in the book is not true; and what is true is not original.”
But no amount of criticism could sway the intellectual community, which viewed Keynes somewhere between a bold visionary and towering idol. Thanks overwhelmingly to Keynes—and his powerful friends in mass media and academia—after WW II the college textbook industry veered away from free-market economics to advocate and endless “feasting” of forced intervention. But even that description is probably too generous.
Keynesian Alchemy Finds a Home at Subsidized Colleges
For all the public denouncing of college “radicals” pushing bizarre new concepts, Keynesian economics and its ideological offspring surprisingly rest on a very old pursuit: the ability to turn common materials into gold, once known as alchemy. Privileged and isolated professors of economic theory now accept as holy writ the god-like ability to speak wealth into existence merely by writing the words “this is money” (or something similar) on worthless pieces of paper. (Throughout most of U.S. history, private banks—protected by state and federal charter privileges—have achieved this feat with fiat loans more than the government has done so with centralized banking.)
It might be of little consequence if just a small troupe of academics clung to such ancient superstitions, now sold under the rubric of “stimulus.” But the general public—with our beloved educational, housing, medical, retirement and other entitlements—now embraces this folly as well. I’ll address the personal choice (made by millions) to follow such madness in my next essay. For today, I’ll focus on the influential industry of classroom books and lectures that peddles this nonsense.
The most popular book (among college administrators) of this newly packaged medieval artistry—Economics by Paul Samuelson, first published in 1948—trumpeted the glories of stimulus/alchemy by various names to fund vast central planning under the banner of Keynesian wisdom. Other college textbooks quickly followed suit, to a point now that the belief in instantaneous, artificial “stimulus” now passes for serious public policy.
Economist and entrepreneur Mark Skousen took on the task of evaluating the viewpoints and biases of America’s top 10 leading college economics textbooks published as of the late 1980s (with most of the books having been first issued many decades prior). The results of Skousen’s research were published in the 1991 book Economics on Trial. Among his many findings is a summary of textbook references to prominent economic theories and their leading advocates, where Keynes and his anti-savings/pro-spending ideology led the pack:
References to Economics Schools of Thought in
Top 10 (USA) Textbooks
|Keynes and Keynesianism||442|
|Friedman and Monetarism||252|
|Marx and Marxism||131|
|Laffer and Supply Side||95|
|Galbraith and Institutionalism||53|
Source: Mark Skousen, Economics on Trial (1991), page 276
Skousen’s note to the preceding table states that his count is “based on the combined references to specific theories and their leaders in the name and subject indexes” of the surveyed economics textbooks. *The author adds that the “Austrianism” category includes references to Carl Menger, Ludwig von Mises, Friedrich Hayek and Joseph Schumpeter; all were advocates of market economics in lieu of government intervention.
As many others have concluded, since the end of World War II, Keynesian interventionism (using PC terminology) has been the dominant viewpoint taught to college students. The above table seems to support this belief. These economics students have gone on to influence politics, mass media and certainly other students via their own subsequent teaching roles.
The ‘Stimulus’ Ruse: Putting a Positive Spin on Wealth Destruction
Of course, being popular in eyes of the mainstream (highly subsidized) academic community does not in itself make Keynes, his supporters or their critics out to be frauds. It’s the results of their combined theories that earn most of them that designation, in my view. Consider the popular Keynesian mantra of “stimulus” (or more correctly, alchemy) that swayed New Deal thinking and eventually mesmerized every Republican president since Nixon. This policy of rampant deficit spending—in the name of “spurring growth” and “public assistance”—now has solid majorities in both parties supporting over \$3 trillion in federal debt in a single year.
As I researched and condensed my findings on the above record of the New Deal, it caused me to reconsider this potent political jargon used widely (then and now) to sell the public on deficit spending and the associated programs it could finance. Until recently, I viewed “stimulus”—a term used incessantly in state media and government schools—as something entirely different than much of the wanton destruction during the New Deal/Keynesian era—e.g., wasting perfectly good food, violent union factory seizures, NRA price-fixing cartels, encouraging wealthy old retirees to mooch off poorer young laborers, and finally the carnage of WW II to “get people working again.” (Destruction is even more popular today, from the anti-human/anti-energy/anti-industry fanaticism of the Green New Deal to the intolerant climate of university “cancel culture” and the widespread violence in “progressive” urban areas.)
Upon further inspection, I now view stimulus and destruction, when employed as political tools, as a seamless and usually sinister continuum. Even something as simple as stimulus spending on food, housing or military hardware involves assigning actual value to money concocted out of thin air—government bonds sold to bankers, purchased with fiat loans to be repaid with real dollars and interest extracted from working Americans. In the last four decades, the banking industry has helped D.C. stimulators conjure over \$20 trillion of illegitimate wealth (even before the covid debt explosion) for such endeavors.
Stimulus snapshot of one of FDR’s make-work programs, from a pro-New Deal website. Why work when you can get paid to plant trees?
Nationalized union furor—with blockades, “sit-down” trespassing and other thuggish activity—was another good example of federal provocation. For all the New Deal talk about “stimulus,” their real fondness was (and still is) social engineering through coercive wealth transfers or, simply, destruction of private enterprise. The atavistic glee that many on the Left (including this 2019 harangue from The Nation magazine) attach to labor strife further demonstrates their enduring passion for tribal warfare at the expense of paying consumers. But “stimulus” mania doesn’t stop there.
With the country being torn apart with divisive demands for political favoritism—everybody from farmers to vets and retirees to real estate agents and corporate behemoths to identity evangelists wanting a piece of the free public feast—it seems pretty clear that “stimulus” economics was a disaster in the 1930s and a complete catastrophe ever since then. This abject failure shouldn’t surprise anyone with an inkling of economic understanding—if they bothered to maintain any smidge of intellectual independence.
“Stimulus” itself is an act of intentional fraud that necessarily debases the current stock of wealth saved by every non-banker who is legally shut out from that counterfeiting racket. In other words, debt-based stimulus is always, by design, an assault against the responsible and productive sector. The beneficiaries of “stimulus” spending are those who refuse to pay for what they covet—such as free food, subsidized housing or medical care, or an excuse to play Rambo in a defenseless foreign land.
Once again, the value system of the D.C. establishment hides behind positive images of painless pleasure to sell their sickening agenda. (Unfortunately, the conservative opposition also engages in foolish banter over “stimulus” fiscal policy, feigning tepid resistance before capitulating to impulsive spending.)
Stimulus snapshot of New Deal/Keynesian “internationalism,” courtesy of Michael Hoffman. Easy bank credit made imperial London and D.C. dreams come true with deadly efficiency.
As for alleged benefits to employment, stimulus “jobs” during the New Deal fiasco were just as much of a fraud. Sure, people had “work” shoveling coal for a Tennessee Valley Authority power plant, tightening bolts on an Army Jeep assembly line, raking leaves at the local park, providing accounting services for government rationing boards, or peeling potatoes for Uncle Sam’s enlisted infantry. But the loss of freedom (and loss of American integrity) was immeasurable and the faux-jobs were often demeaning.
With so much emphasis on phony “stimulus,” I almost forgot to mention the option of real stimulus. If any honest politician wanted to stimulate the economy, he or she could start by lowering tax rates and eliminating much of the hyper-legalistic mandates that make new business formation more difficult (presently benefitting existing giant corporations).
After that, we could eliminate price-fixing cartels in the medical licensing racket, stop subsidizing over-priced and indoctrinating colleges and universities (allowing better alternatives to fairly compete), sell most or all of our 31,300 Post Office retail outlets to competent professionals (such as FedEx or UPS), or sell some of the 640 million acres of hoarded (presently squandered) “public” land to actual members of the public to put into productive use. Any of those actions would give a positive jolt to the economy as well as a boost to personal freedom. Not surprisingly, most apologists for the Total State recoil in disgust at such considerations.
Academic Effrontery Becomes the New Normal
In assessing the widespread failure of New Deal/Keynesian programs, accompanied by an adamant insistence from establishment voices that those policies were beneficial, we arrive at a major disconnect between Main Street reality and Deep State fantasy. Competent, rational people don’t make excuses for such rampant civil-rights abuses and man-made calamity. Fair-minded, modest people also cannot contend with the arrogance of the modern academic cloistered in a tax-free campus, clinging to their government stamp of approval, lecturing passive students while flaunting honorifics of “doctor” and “professor” and other titles of elevated stature. (Federal broadcasters come from a similar mold.)
For shameless arrogance, Keynes and his collaborators in central finance purported (and still claim) to comprehend with mathematical precision the intricate relationships between consumer demand, market supply, factory and office utilization, employment rates and wages, pricing, profit and loss, savings, investment and many other variables that contribute to an advanced economy. Whether the topic was agriculture, banking, communications, education, employment, energy, housing or retirement, the answer was remarkably always the same. The solution necessarily involved more central control and less personal freedom. (Since then, we’ve added healthcare, local pollution, marriage and race relations to the authoritarian mix.)
Private and public bank credit—totaling \$77.6 trillion as of March 31, 2020 and likely closer to \$80 trillion today—helped facilitate most of those interventionist endeavors. Blinded by their own exuberance for power, the “experts” in both parties have no clue what to do about it.
Stimulus snapshot of how the “temporary” debt binge promised by Keynes, Roosevelt, et al became has a permanent addiction. Graphic by Steve St. Angelo of the SRSrocco Report.
No matter how much evidence mounts to the failure of central planning by out-of-touch academics, the public has been trained by mass schooling and public media to be on high alert for their next appointed political savior to come rescue us with painless solutions purchased with other people’s money. If we just do as we’re told, some new polished potentate like Maynard or Franklin or Abe Lincoln or MLK will illuminate the airwaves like a soaring comet in a burst of glory. (Hollywood and broadcast media openly call the entertainment version of these people “stars.”) Then we are carefully admonished to ignore the crashing debris of the ensuing space junk caught in the inescapable laws of physics when their elaborate schemes fail—as they usually do.
Recap on Banking Basics
In a similar way, economics too has its laws of gravity that cannot be resisted indefinitely. In my last essay, I attempted to make the case that: 1) all bank credit is inflationary, 2) all credit inflation involves counterfeiting, and 3) all counterfeiting amounts to organized theft.
Of course, the entire banking industry and its cast of economic advisors insist none of that is true. After all, if any one of those postulates is correct then they would be criminals or con-artists to say the least. These same experts now insist—in so many words—that you can indeed have a free lunch at someone else’s expense with no personal or societal consequences. Thanks to the successful marketing work of J.M. Keynes since the 1920s and many of his subsequent admirers, the war merchants, welfare pimps and corporate sloths who patronize such experts need not fear for potentially missing out on easy bank credit to finance their inflationary spending sprees. At least for now.
Since leashed academics will rarely nibble on the hand that coddles them—and any remotely challenging economic theory breeds loud quarrels among professional squabblers—I won’t waste time taking a vote or waiting for a consensus to emerge. That will likely never happen.
Instead, I will just leave it up to engaged individuals to consider the validity of my three noted conclusions and proceed to build up from there. As mentioned previously, I view the next logical steps in a positive direction to involve recognizing the false option of Big Government or No Government, then rejecting the failed approach of total federal control versus a more balanced state/local government monitoring to ensure that alleged banking reserves are (as much as humanly possible) what they claim to be.
I’ll note again that government monitoring from State Bureaus of Weights and Measures has worked well for over a century in the vastly more volatile and complex energy industry so that a “gallon” of 87 octane gasoline is still 128 fluid ounces of strong-burning petroleum after all these years. No chiseling, skimming or “healthy inflation” has eaten away at those protective standards. Over 300 million Americans—and billions of others around the world—benefit from transparent government monitoring at the point of sale, not manipulative federal control from oil well to refinery to transportation to gas station.
I see no reason to doubt a similar approach would work to reign in reckless fiat banking and their inevitable inflation/boom/bust/mop-up cycles caused by fractional credit counterfeiting. And if any society decides to opt for state/local government monitoring of the money supply, it would seem reasonable to have it backed by something like gold or silver than cannot be conjured out of thin air—as opposed to yielding blind faith to Wall Street tycoons (which failed miserably during the 1800s) or the hyper-legalistic “regulation” of a corrupt system of monetary debasement. With an over 99% loss in U.S. dollar value from 1913 to present, only the most starry-eyed government fundamentalist (or your typical journalist) can defend the status quo as if a few small tweaks from the Central Bank will somehow fix everything.
For those who disagree—and apparently think that “money multipliers” are pure fiction, inflation passively erupts out of nowhere, the \$75.5 trillion in total U.S. debt as of 4Q 2019 involved no bank counterfeiting whatsoever and/or that huge debt bubble is somehow caused entirely by the Federal Reserve’s \$4.2 trillion balance sheet at that same period—you’re welcome to continue building your happy monetary sandcastles while the tide is still out. The tsunami of federal and personal debt may just vanish, as some insist, when the next monetary wizard waves his or her stimulus wand and utters an incantation about “public banking.”
When you add up all the enslaving debt, life-sucking inflation, financial duplicity and public division, the incompetence of the pandering, partisan, isolated, monologue “expert” community of all political persuasions cannot be overstated.
For the rest of us, a more sober assessment seems appropriate. In financial matters (and much else), a healthy understanding often means filtering out the noise from those who have a vested interest in your extended personal suffering.
The Original Fraud of Modern Banking
Since the “exhibitionistic” and “single-minded” idealists in political affairs are usually too busy fanning their plumage in public courting rituals to bother with anything that matters in the real world, I’ll go back to another important foundational point that is too often overlooked. (Keynes never touched it in his 1936 General Theory. Mainstream economists typically ignore it as well.)
In banking, the first step in ensnaring society in the trap of fiat credit began with the simple act of lying: pretending to store more wealth in a banker’s vault than honest accounting could demonstrate. While this story has been told before by a few diligent banking critics, I’ve decided to quote an expert with some gravitas behind his account. In the exhaustively researched (and pro-banking) book, International Banking in the 19th and 20th Centuries by Karl Born, the author sheds some light on the origins of modern finance:
The bank note came into use in England in the course of the 17th century. At that time wealthy individuals began to leave their money and gold in safe deposit with a money-changer or a goldsmith. Certificates were issued for the money or gold deposited. These notes—they were called a “goldsmith’s note” or a “banker’s note”—represented an instantly realizable claim, and so were used as a convenient means of payment which could easily be carried around.
Since the deposit certificates, i.e. the notes, were never all presented for payment at the same time, the money-changers and goldsmiths were able to issue more notes than they had money or gold in their deposit. The money-changers and goldsmiths obtained credit in this way, but this also enabled them to grant their customers more credit than they had available in cash; for they gave the credits in bank notes. Thus arose the business of “bankers”…
By the end of the 17th century, bankers would come in handy for financing their favorite investment: military conflict between belligerent states. Karl Born’s International Banking adds that “The Bank of England—founded in 1694 by subscribers to the state loan, which was to finance the war against France… likewise issued notes.”
Since then, politically connected banking houses have presumably financed—and handsomely profited from—every Western battle (fought by non-bankers) for nebulous reasons of state aggrandizement. Bank credit manufacturing was also indispensable to funding the U.S. welfare state, which spent a staggering \$22 trillion in the half-century from 1964 through 2013, according to the Heritage Foundation. And fiat banking credit—backed with federal “legal tender” mandates to accept their junk notes—now supports America’s roughly \$80 trillion in combined government, corporate and household debt.
Luckily for the modern banking clans, our government—despite voluminous mandates on “fair” banking practices triggering a need for 43,000 compliance staff at J.P. Morgan Chase, the nation’s largest bank (WSJ 2016) and countless thousands more internal watchdogs employed elsewhere—allows bankers to issue fiat credit loans with almost zero tangible collateral of their own. Even during the ostensible U.S. “Gold Standard” period of 1792 to 1933, there was never any requirement that every dollar of loans (the modern “bank note”) had a dollar of real gold or silver backing it up. Bankers are fine with this arrangement because defaulting on most loans means the bank ends up owning your house or business. That’s just part of the game.
The basic government role of fixing a “Standard of Weights and Measures,” as noted in the Constitution regarding money, was abandoned within a few years—basically as soon as the ink on the rebel’s 1787 one-sided contract went dry. With frequent monetary boom/bust cycles throughout the 1790s, the 1800s and again in 1901 and 1907, and about 16,000% inflation since 1913, it’s safe to say that the public has been held hostage by a corrupt system of monetary debasement that only favors the financial class and the politicians they select for office. At 16,000% inflation, an item purchased for \$100 dollars today would have cost 62 cents back in 1913, the year before Washington “saved” us from reckless banking practices that were indeed chaotic. Inflationary theft—all pocketed by the financial class and their corporate beneficiaries—has eroded the value of money that badly.
(The Feds claim that inflation has “only” been 2,500% since 1913, still a staggering act of incompetence. The 16,000% inflation figure cited above comes from starting with official Consumer Price Index data (far right column) for 1913-1982 (a cumulative 875%) then plugging in historically consistent CPI measures from ShadowStats since 1983, when the Bureau of Labor Statistics began rigging their numbers to under-report inflation and thereby save on entitlement cost of living adjustments. The main reasons why American money has any perceived value whatsoever are thanks to enormous advances in productivity due to technology during that same period and federal mandates that force every American—and most of the financial world—to use Wall Street’s junk paper.)
This alchemy of monopoly money, fiat credit and inflationary theft is the fraud that modern banking is built on. This is the corrupt foundation that nearly all political pundits now accept, notwithstanding so much superficial posturing to the contrary.
The Fickle, Futile and Fanatical Opposition
With such breathtaking evidence of failure, one would think that some opposition might have developed to counter this madness. But that has never happened in anything we can honestly call “effective.”
I can practically hear the loyal liberty gang screaming “what about …” (fill in the blank with your favorite anti-government celebrity: Ludwig von Mises, Murray Rothbard, Ron Paul, etc.). I’ll concede that all three men (and many more) have worked tirelessly to promote awareness of federal abuses in other areas such as war-mongering, drug prohibition, racial revenge and welfare dependency.
But in the case of monetary debasement since 1913 (and actually back to the 1790s or even earlier)—the real action has always been on the private side of the ledger. Conservatives and libertarians simply cannot accept this. Admitting any amount of private-sector corruption would imply the need for a government solution (or I would argue, simple monitoring of weights and purity of the gold and silver held in a bank vault, similar to what all 50 states do at gas stations; not rocket science; not a bloated federal bureaucracy). Even that simple administrative oversight is too much for liberty purists—and totally unacceptable for corrupt bankers who love to inflate the money supply with illicit loans.
To wade through so much ideological nonsense, the first step in recognizing academic futility is realizing that writing a book is not a great “accomplishment,” no matter how much time and effort it required of the author. By the same token, writing a bunch of lengthy essays is no major accomplishment either. I get it.
Furthermore, we should remember that the truest test of teaching excellence is not book sales, awards or academic titles, but what is actually accomplished by the teacher’s students. Here is where the monologue droning of classroom teachers, stage preachers and so many book-thumping rent seekers falls flat. And if history is any guide, it probably always will.
While Mises and Rothbard were instrumental in offering some valid critiques of Keynesian “free lunch” foolishness and other statist mythology, the results suggest that the general public is still staggering in the dark. We’re still left in a pit of roughly \$80 trillion of total American debt, about 16,000% inflationary theft since 1913 and a monopolized money system that is strangling the 99% of people who don’t work on Wall Street.
And what are the top students of Mises, Rothbard et al doing about it? Nothing useful that I can find. Just cranking out more newsletters, books and speeches railing against their favorite whipping boys: unspecified “liberals,” the personal names of J.M. Keynes and his modern disciples, and that loathsome Creature from Jekyll Island known as the Federal Reserve.
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The consistent theme I see among professional pundits is to whip up anger in their audience with easy excuses (it’s all the Fed’s fault) and simplistic solutions (abolish the Fed), never challenging the viewer to consider their inherent anti-government bias, and certainly not offering any semblance of a creative solution that might actually work. (The anti-market, anti-choice and pro-government biases of the Left are even more ridiculous.)
The goal from these professional agitators is to get you so angry that you might reflexively make an impulsive decision like subscribing to their newsletter, buying their latest book or attending one of their weekend seminars.
My point is not that every sentence out of the mouths of the corporate mumblers and seminar circus howlers is a complete pack of lies. That would be too easy to spot. Instead, the professional pundits sprinkle in a little common sense (increasingly rare in mass media) then shovel the uncooked red meat to the intellectual sluggards who love to be told: every problem in your life is the fault of your political opponents.
While the pandering is toxic enough, the gaping holes in that message are what concerns me more. I’ll give a few examples of what I mean. And these selections are the best of the conservative and libertarian opposition I can find. If I wanted to quote complete idiots from the anti-government (or pro-government) community, that would be quite easy.
I’ll start with possibly the best economic essay I’ve ever read (when you take into account the strict ban on logic throughout mainstream media and the habitual irrelevancy of leashed academics). This example comes from Reagan’s OMB Director, David Stockman, in an essay that was originally a speech titled “Keynesian Myths, Monetary Central Planning and The Triumph of The Warfare State,” that was published in LewRockwell.com in 2014.
Mr. Stockman’s speech to The Committee for the Republic contains impressive analyses on economic aspects of World Wars I and II along with fresh insights on the Great Depression. For some reason, he felt a need to keep the crowd aroused with no less than 22 specific references to J.M. Keynes, usually in the undefined pejorative form Keynesian. Yet the former Michigan Congressman couldn’t offer a single word of criticism for the criminal counterfeiters in private-sector banking clans or acknowledge that bankers have anything at all to do with our massive inflation problem.
Then we have three-time presidential candidate and author of eight books, Ron Paul. After bravely standing nearly alone against endless federal warfare, monetary debasement and reckless welfare spending for 12 terms in Congress, Mr. Paul—when he’s not denouncing abstract “Keynesianism”—has now retired to the vaudeville theatrical of Fed bashing for donations. To give just one recent example (among many to choose from) his March essay “Central Banking is Socialism” leads off with a helping of red meat to potential sponsors, since we all know that “ism’s” are really terrible things.
Mr. Paul’s trite 560-word rant managed to squeeze in a total of 16 uses of “Fed” or “Federal Reserve”—all negative—and many misleading. The worst examples were his claims of a pending “Fed-created boom, which is inevitably followed by a Fed-created bust.” Like so many other libertarian ideologues, Ron Paul never addresses the many financial boom/bust cycles from the 1790s up until 1907 which entirely pre-date the Federal Reserve. That would negate his false thesis (and closing sentence) that to secure economic “liberty,” all we need to do is “end the Fed.”
Beyond these two reasonable but drifting economic experts, and a few others of a similar pedigree (always shilling for private banking privileges), competent analysis quickly takes a nosedive. The next group all come from the popular conservative website ZeroHedge.
First we have a right-wing populist in May urging us to “Rage Against” the Fed, resorting to violence if necessary:
The shame of it is that these people have every right to be boiling mad… If these people had a clue—even a clue—about what the likes of Ben Bernanke, Janet Yellen, Lloyd Blankfein, Steve Mnuchin, and Larry Fink had done to them, they would be dragging THEM by their necks down the street and beating them with clubs. Not wrecking the local grocery store. (bold and CAPs in original)
This rabble-rousing writer offers no substance whatsoever addressing what to do about Fed corruption, other than to call its top official a “bureaucratic whore by the name of… who is absolutely thrilled to be stealing trillions of dollars from future generations to create the most overvalued stock market in human history.”
For the next five examples, I’ll just go with their headlines, since that pretty much tells the full (or actually empty) story in each case. I’ll only list the originating sources here, which were all re-published by ZeroHedge.
“Bill Fleckenstein On The Fed’s Role In Looting & Rioting” – Quoth the Raven, June 4
“Mike O’Rourke: ‘The Market Is More Broken Today Than It Was On March 23rd, And It’s Entirely Due To The Fed’ ” – Jones Trading, June 11
“It All Comes Back To The Fed: The NWO Is Being Shoved Down Our Throats” – Mac Slavo via SHTFplan, June 17
“Martenson: The Fed Is Leading Us Into Darkness” – Peak Prosperity, June 27
“Peter Schiff: ‘The Fed Is Unleashing An Inflationary Tsunami’ ” – Euro Pacific Capital and Quoth the Raven, July 1
In general among Fed critics, when conservatives and libertarians mention “fiat” money, they falsely assert that this practice was invented by the Fed in 1913, or perhaps only after Nixon took the U.S. off the international gold standard in 1971. They rarely mention that private bankers have been issuing fiat loans (backed a dime on the dollar or often less, with real deposits) for centuries.
Notable Exceptions. With so much sheer lunacy and historical ignorance passing itself off as scholarship, I feel a need to mention a few bright spots peeking out amidst the smog. In the academic community, a good example is U.K. economics professor Richard Werner. His 2016 essay in the International Review of Financial Analysis provides ample evidence that the economics profession has overwhelmingly sowed confusion over the last century on the previously well-understood topic of bank credit creation.
Regular Unz Review commenters RoatanBill and Mefobills are usually well-argued and interesting, without the pretentious posturing common to professional paper tigers. RoatanBill’s comment from July 31 particularly stands out on defining real money versus fake currency:
The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability. Gold and silver check all the boxes. … When something can be created by edict, fatwa, stroke of a pen, that’s not real. It’s phony from the get go. That the bankers want control of money creation via the fraud of currency is understandable…
Richard Maybury’s book Whatever Happened to Penny Candy excels with simple eloquence and (among other things) exposing the barbaric policy started by Mongolian despot Kublai Khan of monopoly “legal tender” mandates—something FDR aped with his gold confiscation in 1933.
I’m sure there are other sensible financial writers that I’ve overlooked. And, no doubt, thousands of responsible business owners understand real-world economics but are too busy to write books and essays about their adventures.
But these exceptions are, as of yet, rare. At this point in time, the crass demagoguery of profit-bashing and power-worship from the Left or Fed-bashing and anti-government paranoia from the Right is still more common.
And that’s the problem with academic cranks and the subsidized stenographers who rant and slander for a living: why take on a difficult issue (like fiat bank counterfeiting) when you can dance around the periphery, never landing or taking a punch?
A small clique of elite thinkers in conservative and libertarian factions have been floating in their own bubbles of delightful narcissism for decades, regularly saluting themselves as champions of “free-market capitalism” or crowing each other as the grand “Enemy of the State.” It should be clear by now, this approach is not working. The State is winning and humanity is losing.
Left-wing Economic Crack Up
On the other end of our warped political spectrum, liberal economic writers typically begin with the specious Keynesian positions on the wonders of “stimulus” and the evils of financial stability (i.e., any solid monetary backing such as gold or silver). Most of these closet commies and crypto-fascists proceed to insist that inflation is either “good” or doesn’t exist, all problems emanate from “unregulated” private-sector behavior, and the solution to any perceived crisis is always more arbitrary government power (i.e., communism or corporate fascism). Challenging their audience’s instinctive anti-profit, anti-business, anti-growth and pro-government disposition would trigger the wrath of their easily excited followers—something that apparently no present liberal economist of any public stature is willing to do.
Lest anyone think that “hate” is a unique condition of the anti-Fed Right, we have public-banking crusader Ellen Brown managing to demonize, by name, the financial management firm BlackRock Inc. a whopping 37 times in a short 1,900 word essay in June—without providing evidence of any wrongdoing. Stewing in substance-free indignation, Ms. Brown couldn’t say a single word about counterfeiting, money multipliers, or inflation—presumably because liberals enjoy wielding all three powerful tools. But she pandered freely to her zealous followers with rants of a “great vampire squid” with “tentacles… all over the world” acting as a “megalithic private entity” whatever that means. She even stooped to the passive and paranoid charge that:
BlackRock has been called “the most powerful institution in the financial system,” “the most powerful company in the world” and the “secret power.”
Oddly, Ms. “Yellin” Brown would have us believe that the federal government doesn’t have or abuse any “power” whatsoever. And this sampling is culled from just her first 160 words.
At America’s preeminent establishment newspaper, matters are just as bleak. The leading liberal economic writer at the New York Times, Paul Krugman, has abandoned reason and now nurses his Trump Derangement Syndrome while pursuing academic censorship on behalf of Black Lives Matter and promoting bigotry against old white people. He’s a pretty big hater too.
Two of the more nakedly fraudulent liberal economic schemes are the competing Elizabeth Warren/Bernie Sanders plans to reward crooked bankers with \$1.2 to \$2.2 trillion in tax-funded *bailouts* under the guise of student debt “forgiveness” or “cancellation.” Even the dullest mainstream journalist should be capable of understanding that real debt forgiveness would be essentially free to the public, and paid mostly or entirely by those who conjured fiat credit out of thin air in the first place. Yet for some reason, I can’t find any MSM mouthpiece willing to call B.S. on this latest scam from two scorched-earth demagogues who seek to destroy what’s left of free enterprise.
As usual from Latter-Day Pharisees on the Left, these grandstanding hypocrites of Biblical proportion have abandoned the traditional practice of internal quality control (e.g., the mandate to “purge the evil from among you” described in Deuteronomy chapters 13, 17, 19, etc.) and now focus exclusively on finding easy external scapegoats from the heathen. That deplorable outgroup now includes middle-class taxpayers, all whites, all non-socialist Christians and most productive business owners—but not wealthy bankers who fund relentless social engineering programs through government debt.
The activists and politicians cited above are supposedly among the most thoughtful economic reformers our modern Left has to offer. For more vitriolic scapegoating and simplistic sloganeering, refer to any given evening of CNN/MSNBC cable television, most U.S. colleges and much of the propaganda emanating from Hollywood.
Meanwhile, the establishment Right is busy playing the part of Useful Idiots shilling for the most destructive social and economic force in U.S. history—the wealth-destroying death merchants and financiers of perpetual slavery known as “bankers.” That’s a funny take on “law and order” that mainstream conservatives have going.
I can’t say for sure why millions of reasonable Christians, Jews and atheists put up with such doctrinaire fascism and gutless surrender. But I think conformity, fear and horrific teaching have something to do with it.
The trillions of counterfeit loans cooked up by the banking industry, their incredible inflationary gouging, the predictable credit cycle of boom/bust/feast-on-the-carnage that they’ve always enjoyed and the perpetual welfare-warfare-corporate kleptocracy they’ve nurtured for the last century did not happen solely from the actions of one man.
John Maynard Keynes was certainly an important matinee idol for totalitarian cultivators to rally around for the last 3 or 4 generations—and for his simpering critics to gnash their teeth over while retreating in irrelevancy. But Mr. Keynes had many helpers along the way. And he rode the coattails of some important predecessors like fiat credit swindler John Law (of the 1718–1720 Mississippi Bubble) and free-money crusader Henry George (1839–1897) who are now largely forgotten.
In more civilized times, con-men like John Law were quickly recognized as frauds and publicly renounced. One would hope a similar fate will eventually befall the huckster from Cambridge along with his cheering section at college economics departments. And this is where the general public comes back into the picture.
Behind all the Keynesian/New Deal slogans, speeches and broken promises lies a more embarrassing question. Who is the bigger fool: the man who peddles snake oil, or the person who repeatedly buys it?
In nature, maggots don’t infest a body until it becomes helpless or dies. Vibrant communities can resist the lure of “free lunch” economic policy no matter how neatly it’s packaged. Only societies that have become incapacitated to a lifeless zombie condition fall prey to such transparently harmful advice.
No one should expect the rotting manure of subsidized academia or the pandering rage peddlers of full-time journalism to breathe life into America’s dying culture or come to anyone’s rescue with creative solutions. They simply can’t and they won’t.
If there is ever going to be sustained prosperity again in any city, town or village in America, it will come from average people making some extra efforts and taking a few calculated risks following sound principles to their logical conclusions. Real progress has probably always been that way, and it most likely always will.
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