Keynes Economics

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I would completely agree with you, the solution is a cash and carry economy. But that is the opposite of what Keynes would reccomend. Without credit aggregate demand would plumet leading to a deflationary spiral. Which is exactly what ought to happen. Keynes would argue that precisely when you do not have the money to pay back your debts you should go much further into debt. The situation we are currently in is the result of the culmination of Keynsian economic policies and the human nature inherent in our politicians. Keynsianism gives an academic justification for perpetual debt financing.

What keynesianism essentially does is provide temporary stimulus at the expense of longer term production. It undermines the loan contract, destroys the manufacturing base and in nations who have the the status of World Reserve Currency ultimately sets up a situation for a hyper-inflationary collapse.

Hyper inflation is the most dangerious threat to society, it is the only thing capable of completely impoverishing a country. Nations never fall because of deflation.

Much as it surprises me to say this,
I concur, Keynes models for medern ecconomics are the most rational I have come accross, a pity they are rejected as 'staism', 'socialism' and 'big government' so readily when they are the only logical way to manage industrial societies sustainably and moderate 'big' business and it's social impacts.

George Monbiot proposes a Keynesian global ecconomic model in 'age of consent' which is quite elegant and just.

peace j

Hitler made bids for power in 1924 and 1932-33. One after the inflation, the other after the deflation. He succeeded after which?

So deflation is bad because Hitler rose to power afterward? Is this a causal effect? Every time we have deflation do we cause terrible dictators to rise to power? Is that why economists don't like deflation?

One time I helped this lady across the street, and possibly as a result of my action, she was able to get to the far side of town, she got mugged. Does this mean helping a lady across the street is a bad thing because it causes old lady's to get mugged?

When I am talking about Nations never fall because of deflation, I suppose you could blame deflation (very dubiously) by supposing there was deflation before WWII therefore it caused WWII. Therefore Deflation is bad.

Inflation is by far the most understated danger in the world. It is a bigger detriment to human progress than perhaps any other.

The point I was trying to make is inflation is a much graver threat than deflation, if you have two collapses, in each collapse the amount "real" wealth that evaporates is the same.

The question I ask is; which would be preferable? an inflationary or deflationary collapse?

My answer would be that inflation is far worse then deflation, because in deflation the distribution of wealth goes to the prudent, and to the preeminent provider of goods and services that people need. Whereas with inflation the wealth is distributed to the unproductive, like government employees, bankers and speculators.

Also inflationary booms are what necessitates deflation to begin with. With Keynes there is a fallacy that booms are good and busts are bad, actually it's the opposite. Booms are bad - because that's when everyone is making mistakes, that's when people are buying million dollar homes with no money down, that's when bubbles form, where people stop working in order to speculate. Busts are when people correct the mistakes they make in the boom period, if they made the mistake of borrowing to much money they have to be more frugal, they have to pay for the excesses in their past. It's a very sobering time, very unpleasant - and the government doesn't like that so they try to hold off this sobering period, they want hair of the dog treatments until the next election cycle. They look for an academic reason to justify this grossly irresponsible behavior and that's what Keynesian provides.

Deflation terrorfies the rich, and inflation impoverishes the poor. If deflation inspires fascism in those who see potential loss then perhaps it is their materialism that is to blame not the ecconomic event?

peace j

Expected deflation is no problem. It would be incorporated into contracts in the same way that inflation is today.