Deathbed of Keynesian Economics Will Be in U.K.

By Matthew Lynn

Feb. 23 (Bloomberg) -- The U.K. has produced notable economists over the years, but John Maynard Keynes, the guru of government intervention, was one of truly global significance.

So it may be fitting that the U.K. will also become the deathbed of Keynesian economics.

Britain has been following the mainstream prescriptions of his followers more than any developed nation. It has cut interest rates, pumped up government spending, printed money like crazy, and nationalized almost half the banking industry.

Full Story

Comment: This article makes a good point, Keynesianism is on its deathbed - much like global warming - but the much like that issue the troops will circle the wagon and toss out red herring after red herring to save the Orthodoxy.

Mark Faber: Social obligations will lead Western states to default

The United States’ top credit rating is at risk, with its triple 'A' status warned it may be downgraded if the economy grows at a slower pace than expected, says ratings agency Moody's.

“Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble – because then there will be not enough money out of the budget to pay for other stuff,” Faber warns. “I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, they’ll print money, and then you get high inflation rates, you have a depression and eventually they’ll go to war.”

The investment guru also says the cracks in the system are starting to spread, naming other countries that could follow suit. “Portugal, Ireland, Italy, Greece, Spain… I think, eventually, they will all default – because if one defaults, then the next would say why should we pay and will also default. The obligations of Western governments are far too high; they won’t be able to pay.” Faber suggests that governments raise the retirement age to 70 years old and cut on social spending, but he believes even that won't be enough.

Full Story

One day after supposedly bashing the banks, the Obama-led Democrats re-nominate top banker

WASHINGTON (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke was confirmed for a second term Thursday by the U.S. Senate. The final confirmation vote was 70-30.

The vote, which occurred just three days before Bernanke's first term was scheduled to end, came after heavy lobbying by Democratic leaders and the Obama administration. President Obama, himself, made calls last weekend. And Senate Majority Leader Harry Reid, D-Nev., lobbied Republicans to make sure he had enough votes.

Despite the strong showing, Bernanke won his confirmation by one of the smallest margins of all time for a Fed chairman. Often the confirmation of a Fed chairman is so overwhelming and uncontroversial, it's done by a voice vote.

Full Story

What Didn't Happen: Krugman Telling the Truth

By William L. Anderson

In reading Paul Krugman's missive today in the New York Times, "What Didn't Happen," I am reminded of Orwell. According to the Great Nobel Laureate, Krugman insists that we believe the following:

• The "stimulus" was "too small"
• The Obama administration was not "tough enough" with the banks (he should have nationalized them, I suppose -- but, then, they pretty much are nationalized already)
• Obama did not do as did Ronald Reagan and blame the previous administration.

I must admit that I admire Krugman's chutzpah at one level. Here is a guy to has the guts to claim things that patently are not true and are easily debunked, but he is able to do with (without any sanctions) in the editorial section of the NYT and get away with it, mostly because his employers at Princeton University and in New York are happy to promote his untruths.

Full Story

Comment: William Anderson owns arch- Keynsian Krugman's backward logic on the Obama administrations first year policies. Krugman obviously in the Keynesian wonderland!

Is The U.S. Economy Being Tanked By Mistake or By Intent?

The government wants Americans to believe the greatest economic collapse in history was the result of ineptness and mistakes yet still have confidence in their financial institutions.

Should American bankers be let off the hook because they self-declare, before an investigational panel, that the failure of their newly invented risk swaps and other highly leveraged investment schemes was simply due to "mistakes"? Not malfeasance – just every-day mistakes? Bankers just fell asleep at the helm at a critical juncture in American history. Is that what we are being led to believe?

Full Story

Krugman Without a Clue

By William L. Anderson

Even when Paul Krugman gets it right, he still gets it wrong. Now, I am not someone who is a knee-jerk critic of the guy, although I generally expect Krugman to blame the wrong people and recommend the wrong "solutions."

Thus, when I saw the title of his most recent column, "Bankers Without a Clue," I thought that this might be the day that I can read a Krugman column without cringing. Perhaps, I imagined, he might even use the "bankster" term that I have seen from so many libertarians and Austrian economists. Ah, hope!

Unfortunately, Krugman gave us his tired analysis, and in doing so, he also demonstrated that he was clueless himself about the stagflation of the 1970s. (After all, Krugman being a True Believing Keynesian believes that we should not have both inflation and rising unemployment, since he already has written elsewhere that almost any economic problem can be solved by…printing more money.)

Full Story

The Myth that Is FDR

By Garet Garrett

When John T. Flynn has put the Roosevelt myth through his terrible wringer and thrown aside the empty sack, all that remains of it is — the myth. His book will not be challenged on grounds of fact. He has a special way with facts. He brings them together in piles like fissionable material, and then suddenly a pile explodes with atomic effect, even though there had been nothing new in the facts. Many of them you already knew and had forgotten. But the secret of a myth is no more explained by facts than the secret of life is explained by anatomy. It may be that for good or bad the man of myth is an instrument, and if that is so, he would be unable to account for himself, or, trying to give reasons, would give wrong or puerile reasons, not knowing any better.

Full Story

Comment: A major plank in the Establishment/Keynesian myth - Roosevelt. Somehow Hoover was "laissez-faire" and blew out the economy and the compassionate Roosevelt came in to save the day. All a part of a fallacious myth.

Marc Faber: The Next Thing You Need To Worry About Is The PIIGS

The countries most likely to blow up this time around are the "PIIGS": Portugal, Ireland, Italy, Greece, and Spain. One ore more of them, Faber says, will likely default in the next couple of years. And, that could result in the death of the Euro currency.

Full Story

Dollar Crisis Looms if US Doesn't Curb Debt: Experts

The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday.

Full Story

Krugman on Bad Actors

By Robert P. Murphy

In a recent New York Times column, Paul Krugman lamented our society's lavish rewards for bad actors. No, he wasn't criticizing the original cast of Star Trek. Rather, Krugman was bemoaning the hefty earnings that accrue to financial executives. Unfortunately, Krugman's critique is riddled with irrelevant paper citations and internal contradictions. The shocking abuses in today's financial markets would end immediately, if only the government would get out of the sector entirely.

Full Story

Comment: Paul Krugman is a high priest of the State. He's following in Keynes's footsteps in ignoring multitudes of economic data in order to promote his ideology - let the state destroy an economy in order to achieve an permanent boom.

Keynes and Bernanke on Bubbles and Manias: Blame the Free Market

By Gary North

In 1936, John Maynard Keynes' book appeared: The General Theory of Employment, Interest, and Money. It changed the world. It justified in the name of economic theory what governments had been doing since 1932: running deficits and creating fiat money. Keynes' ideas took over. Today, they are dominant. The 30-year break, 1978-2008 -- Chicago School, rational expectations, efficient market theory -- is over. Academic economists, like Dorothy in Kansas, ran for the Keynesian storm cellar. Unlike Dorothy, they made it. No trip to Oz for them!

In chapter 12, he contrasts enterprise with speculation. This is conceptually incorrect. Both rely on accurate forecasting. Both rely on transferring assets to a specific market position. He made speculators sound like gamblers. They aren't. The emotions may be the same, but the economics are different.

Full Story

Comment: Great article showing some of the many ways Keynes was ignorant of basic economic theory YET many of our State sponsored academics parrot those nutty theories and even base policy on them! Keynesianism is creed of the economic priest class - it's the economic "theory" that most justifies the Corporate State.

Keynes, the Man

By Murray N. Rothbard

John Maynard Keynes, the man — his character, his writings, and his actions throughout life — was composed of three guiding and interacting elements. The first was his overweening egotism, which assured him that he could handle all intellectual problems quickly and accurately and led him to scorn any general principles that might curb his unbridled ego. The second was his strong sense that he was born into, and destined to be a leader of, Great Britain's ruling elite.

Full Story

Comment: Look for more stories about Keynesianism on here, it is a great intellectual tool of our Masters and is essentially neo-mercantilism. The Austrian School has been great to debunk this tired, archaic, yet popular form of oppression.