On some things, Keynes was right

A timely excerpt of Keynes from The Economic Consequences of the Peace, written in 1919.

“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency.  By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.  By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.  The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.

“Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become “profiteers,” who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat.  As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”

Anyone familiar with my writing knows, we are no fans of Keynes. His General Theory was nothing more than a pseudo-scientific repackaging of long previously discredited inflationism, yet it was quickly and gladly embraced by the political and banking elite of his age because it’s complexity enabled them to bamboozle the masses down the same path towards looting. It  interventionist and activist justifications remain at the heart of modern policy, and while many would have said a decade ago that Keynesianism was itself long-gone, it’s core elements were resuscitated in all but name through the Fed and U.S. Government’s reactions to the collapse in economy, credit and markets faster than you can say “tame those animal spirits!”

Keynes himself was a Fabian Socialist, a branch of neo-Marxist ideology that intended to hijack free market capitalism and improve society by quietly splicing its genetic code into the economic and political order.   Fabians always preferred a low-profile  for efficiency and to maintain plausible deniability vs. their overtly revolutionary and violent cousins who gained ground in Russia. The latter’s clumsiness put reflexive fear against all offshoots of Marxism into the rest of the world by appropriately exposing it for its inherent authoritarianism.  Duplicitous means were therefore justified by the glorious ends.

Yet, some elitists in academia can’t help themselves with their sense of superior and infallible knowledge, from which occasionally flows unfiltered honesty.  A great recent example is  MIT professor / economist (and socialist medicine proponent), Jonathan Gruber , who could not control himself sufficiently when crowing about the genius of how they pushed Oamacare through Congress, and who to let the cat out of the bag during one of his preening sessions that it was generally felt among his peers that We The People were too stupid to know what was for our own good regarding the healthcare debate in 2010.  We therefore deserved to be “rescued” from wallowing in ignorance through the use of official lies to gin up political support and promote  passage of Obamacare.    (Naturally, the Obama Administration and Democrat Party attempted to distances itself from Herr Gruber, but the damage was done – with the now infamous evidence in hand, ala “you’re premiums won’t go up”, “it is not a tax” and “you can keep your doctor”. )

Hence, when it comes to evaluating Keynes and his theory, I often say the only Keynesian miracle is that Keynes  was bold and truthful enough to provide a handful of fantastic quotes that fundamentally undermine his own theory and most all modern monetarist offshoots under which we now suffer.  (Of course, it sickens me to know that despite understanding this, he stood by it…)  When B.S. was called on the GT by his own professional peers, he dismissed his detractors many valid criticisms with the now famous “in the long run we’re all dead”, a quote modern progressive minions love for its smugness, as if a dodge dripping with conceit and disdain somehow trumps critical thinking.

Despite repeatedly being declared officially dead, to this  day, modern economics seems devoted to tirelessly repackaging and rebranding that same, crass inflationism / Keyne’s previously discredited policies in fancy new financial instruments and esoteric theory-driven policy that’s deliberately convoluted and simply too complex for the average spectator to distill.

Amid it all, in his day Keynes was heralded a genius by the entrenched political class and bankers of his era since his theory granted carte blanche to their endless bloodletting of economy and citizen.  That’s a partnership in crime that lasts to this day with the General Theory’s core points forever an influential chunk of the DNA of modern economic policy.  Today we have a political economy that serves banking, socialists, politicians and the crony class very well, although in reality, the elites make off like bandits while the real riff-raff are quite bad off – the core topic of this blog.

Here are a few more quotes that undermined everything he’s enabled:

“This progressive deterioration in the value of money through history is not an accident, and has had behind it two great driving forces – the impecuniosity of Governments and the superior political influence of the debtor class.”

On the lack of hubris among his peers:

“If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.”

..and a confession if ever there was one:

“It is astonishing what foolish things one can temporarily believe if one thinks too long alone, particularly in economics.”