It continues to amaze me that somehow, the American people will buy into the illogical conclusions of Keynesian economics. Is it because the conveyor has an advanced degree? Some degree… It is as Ayn Rand puts it, simply mysticism brought on by the “witch doctors” of our times, telling us that we are not advanced enough to understand. Lets break it down, can you ever get out of personal economic crises by simply running up your credit cards? NO!!! Eventually, you will have to pay the piper in the form of newly increased and unaffordable monthly payments. Well who makes these payments? We do. As so simply is stated on FEE’s website:
hey are guaranteeing that future generations are going to be faced with the devil’s bargain of either having to tax themselves mightily to pay off the debt or to repudiate it with inflation. Neither is a satisfactory outcome.
We at least ought to admit this much…
William Anderson (the author of the above article at fee.org) goes on:
Keynesians seem to believe that a boom can be sustained forever, providing that governments fill in with extra spending. However, that is extremely unsound thinking. As Ludwig von Mises and the Austrians long ago noted, the very nature of the crisis at the end of a boom is built upon the fact that a boom cannot be sustained because the longer the boom goes on, the greater the malinvestments.
It comes across to me as the classic example of a lowly lottery winner. Someone who suddenly comes upon a substantial amount of money without an increase in personal production doesn’t tend to make wise financial decisions with it. You see lottery winners blow through millions on unneccesary luxuries and “malinvestment” to find himself/herself destitute once again. The boom has busted. If they win a second time, now they think they will never lose and the boom will bust that much harder. Investments are even riskier and more unguided than the first time.
Indeed, the only way out of the crisis is for the malinvestments to be liquidated or diverted to other, more sustainable, uses. Once the fundamentals of an economy are put back into balance, a recovery can begin.
Someday, over the rainbow, we will come back to fundamentals…
