The destroyer of money
Modern-day macroeconomics -- that's the stuff that justifies government manipulation of money to make booms, busts and regular credit crises like the one the world is in now-- is still infected with the virus of John Maynard Keynes, the man who did more to destroy the value of money than anyone else in any century.
The ghost of this long-dead economist still dominates macroeconomic teaching and thinking today, and can be seen in such nonsensical statements from the likes of Michael Cullen that it's inflationary when we get to use our own money, but not inflationary when governments take it from us and piss it up against the wall.
In the long-run the domination of Keynes the state-worshipper has been all bad both for economics, and for those economies which good Keynesians have been manipulating ever since.
His wisdom may be judged by such "insights" as these, which both common sense and genuine economists had long debunked:
To dig holes in the ground,” paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services. (Keynes, General Theory, Ch. 16).
No wonder Henry Hazlitt, in his thorough book-length destruction of Keynes' tax-and-spend system concluded "all Keynes's recommendations for practical policy are unsound," and that
though I have analyzed [Keynes's General Theory] theorem by theorem, chapter by chapter, and sometimes even sentence by sentence ...I have been unable to find in [Keynes, General Theory] a single important doctrine that is both true and original. What is original in [Keynes's] book is not true; and what is true is not original.
For those unable to take advantage of Hazlitt's brilliant book-length critique, a much shorter introduction to Keynes and his destructive notions can be found at the Mises Institute site: Spotlight on Keynesian Economics.
If you genuinely want to understand how governments destroy our money, and the nostrums that back up the pillage, then this is a great place to start.
![]() | The Failure of the New Economics by Henry Hazlitt Read more about this book... |
UPDATE 1: The US Federal Reserve is now subsidising failing bankers to the tune of $31 billion, representing a record level of money being printed to prop up the likes of the Maserati-driving bankers who've been writing bad loans. As Steve Forbes points out in a letter to the New York Times,
Last August when the credit crisis hit, the Fed chairman, Ben Bernanke, began flooding the banking system with liquidity, like throwing money out of a helicopter. Since then, the American economy has ground to a halt, and global economic growth rates have slowed. Yet the price of oil since August has zoomed from around $70 a barrel to more than $120.
UPDATE 2: George Reisman has the perfect follow up reading: Standing Keynesian GDP on Its Head: Saving Not Consumption as the Main Source of Spending:
According to the prevailing Keynesian dogma, consumption is the main form of spending in the economic system, while saving is mere non-spending and thus a “leakage” from the spending stream. This dogma underlies much of government economic policy in the United States, including the so-called economic stimulus package that has just been enacted. In this article, I prove, to the contrary, that consumption is not the main form of spending in the economic system and that the source of most spending is, in fact, saving.
Labels: Budget and Taxation, Economics

Before flying back to Wellington, I was enjoying a couple of pints at