Ed Driscoll

Building A Bridge To The 1930s

In “Keynesian Economics, Exposed; Godwin’s Law, Broken,” a post linked on the Pajamas homepage, Steve Green sets the Wayback machine to the 1920s and ’30s:

Via my Year One blogging buddy, Pejman Yousefzadeh, comes this happy fun story about America’s good credit:

Moody’s Investor Service, the credit rating agency, will fire a warning shot at the US on Monday, saying that unless the country gets public finances into better shape than the Obama administration projects there would be “downward pressure” on its triple A credit rating.

Examining the administration’s outlook for the federal budget deficit, the agency said: “If such a trajectory were to materialise, there would at some point be downward pressure on the triple A rating of the federal government.”

If you had a time machine and it was good for only one trip, would you go back and give contraceptives to Hitler’s parents — or to the parents of John Maynard Keynes?

Obviously, I’m being facetious, but only by half.

Hitler discredited fascism, by launching wars of aggression and sending millions of Jews, Gypsies, gays, and the handicapped to the gas chambers. And, minus the extent that he started all those wars and killed all those people — well, good for Hitler.

Again, obviously, I’m being facetious.

But I’m not being facetious at all when I tell you that Keynes legitimized fascism, by giving decent, liberal democracies license to tax and spend and borrow in the name of political expedience.

Look, whatever Keynes may have gotten right — I suppose he could wipe his own bottom unassisted — what he got wrong is precisely what bedevils us today. And Keynes, the fascistic bastard, I think got it wrong on purpose.

Let me explain.

Quite famously, Keynes wrote, “In the long run we are all dead.” Which politicians of the Great Depression, and long thereafter, took to mean, “Right now I can buy votes with money borrowed from people who aren’t even born.” And Keynes enabled them. Keynesian theory held that governments should save money in the good times, so that they could spend it during lean times to “stimulate” the economy.

Gee, where have we heard that word before?

But let’s be frank here. That bit Keynes said about saving money must have been with a wink and a nod and a nudge, nudge — because popular democracies almost never save any money. And Keynes was too smart not to know it, and too conniving not to say it.

Of course, Keynesian theory also held that inflation and recession couldn’t coexist — but then Richard Nixon and Jimmy Carter and the 1970s came along and disproved all that. And yet, somehow, liberal governments still hold by Keynes.

But why?

Click over to read the whole thing.