“Why do people still fail to get Keynes, after all these years?” carped an impatient and uppity Paul Krugman, columnist for the New York Times.

Krugman, an avowed Keynesian—and the recipient of the 2008 Nobel Prize in Economics—replied robotically: “For—though no one will believe it—economics is a technical and difficult subject.” In other words, leave it to the experts.

Diminishing ordinary people, like demonizing private enterprise, is essential Keynesianism. Ditto “semantic obscurity.” Keynes “clothed the simplest proposition in the most complicated phraseology,” writes the author of Keynes At Harvard: Economic Deception as a Political Credo.

Written in impeccable prose, and sponsored (decades ago) by an organization of disaffected conservative Harvard alumni, Keynes At Harvard rightly points out that Keynes’s theory is not economics, but a left-wing political theory. Duly, Keynes’s political creed guaranteed a hand-in-glove relationship between the state and its stooge economists. Most of what Keynes advocated entails giving the state enormous confiscatory powers.

The classical economists—Adam Smith, David Ricardo—articulated timeless truths in clear prose. Keynes wrote impenetrable prose. Keynes’s “semantic obscurity” has been mistaken for profundity. He and his followers wanted to give the impression, as Krugman does, that Keynesians alone “have exclusive knowledge of some magic formulas incapable of being grasped by the average man.”

The Washington Post’s David Ignatius calls this “revolutionary”: “Keynes’s revolutionary idea was that … investment cannot safely be left in private hands. So it fell to the government to take actions that would restore confidence and stimulate investment.”

Clintonite Robert Reich couches Keynesian overreach as “optimism,” crediting The Optimist Keynes for “saving capitalism from itself.” Reich religiously believes, following Keynes, that “public investing on a grand scale” could accomplish almost anything—”from building the middle class to buying trading partners.”

Republicans are as devout about Keynes as are Reich and Krugman. Nixon famously declared, “We are all Keynesians now.” But my comment is redundant; Bush has bested the most committed Keynesian. “Nixon’s Keynesian conversion … looks positively quaint compared with the fiscal and monetary stimulus” Bush has initiated, quipped Steven Pearlstein of the Washington Post.

How much to hand out; who to hand it to; which handout makes the best use of taxpayer money; do the Big Three submit a business plan with their bailout requisitions, or not—that’s the depth of the “philosophical” to-be-or-not-to-be among Republikeynesians.

So who was this man who controls the economy from the grave?

Keynes At Harvard provides commendably detailed and scrupulously documented answers: John Maynard Keynes was a Fabian socialist strongly opposed to private enterprise. The Fabian society was formed in England in the late 1880s and spread throughout the British Empire. The Fabians aimed to replace the market with “an efficient administrative bureaucracy,” as F. A. Hayek put it. Its emissaries also came to infect almost every nook and cranny of the American state and civil society.

Fabians departed from communists on the use of force. Whereas the communists believed in “attaining power by violence,” Fabians perfected a form of Islamic takiya—lying to spread the faith, in their case, state-socialism. “Easing into absolute power by deceit” was to be achieved by infiltrating every societal institute under the guise of moderation (and by deploying impeccable manners, once terribly important among the British elites).

Among Keynes’s closest friends were notorious Fabian radicals such as Bertrand Russell, George Bernard Shaw, and the Webbs—Sidney and Beatrice (née Potter). Sidney Webb and Keynes assumed control of the prestigious Royal Economic Society, using its good name to spread state-socialism. Similarly, Fabian Keynesians conquered the Liberal Party by peaceful coup—it was once the party of classical liberalism and laissez-faire capitalism.

“Socialism by stealth” has been spectacularly successful. The communists are politically extinct; the Fabians are everywhere apparent, palming off socialism on the world, while enjoying esteem and respect, and marginalizing those who call their bluff as right-wing extremists.

The Royal “We” used by Keynes’s buddy Beatrice when she mulishly exclaimed, “We have fallen in love with Soviet Communism,” was warranted. Soviet Communism, her best-selling ode to communism, was praised by comrade Keynes. Keynes, like the Webbs, was an icon in the Soviet Union. When he was offered a “Russian decoration” for one of his epistolary mazes, the campy Keynes crowed: “Being a Bolshevik, I thought it more proper to refuse.”

I’m not sure of his status in Russia today, but Keynes’s star shines bright in America. This was not always the case. In 1918, not all major American publications had been converted yet. Clarence W. Barron, then publisher of the Wall Street Journal, scribbled the following cryptic note on his return from England: “Saw Professor Keynes of the British Treasury … Keynes is a Socialist of the type that doesn’t believe in the family”—a subtle allusion, possibly, to Keynes’s homosexuality.

Krugman, one of Keynes’s best-known contemporary acolytes, has expressed the hope that “the Obama administration, like the New Deal … will [create institution that’ll] change the shape of American society for generations to come.”

I think I know what he means.

©2008 By ILANA MERCER
WorldNetDaily.com
December 5

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Inflation internecine among the financial central planners of Canada is heating up. We have a deputy minister nudging the finance minister to pressure the central bank not to raise interest rates, claiming the economy has room to grow and a hike is premature. Clearly, this mandarin is not in the least gearing up to bust inflation. On its record, neither can the Bank of Canada be accused of waging the good fight, with the result that amidst an ostensible economic boom the Canadian dollar continues to flail.

While plumping for yet more inflation leeway, the aforementioned deputy minister, a previous employee of the Bank of Canada, is now preparing to negotiate new inflation targets with the bank. The entire inbred crowd is also set to select the new governor of the Bank of Canada. To float questions about the alleged independence of the bank is to slight the reader, so I’ll refrain.

Clearly, the campaign for governor of the Bank of Canada is marked by an emphasis on maintaining or letting inflation edge up. And why not? Contrary to well propagated opinion, inflation originates in an increase in the money supply by the government and its handmaid, the central bank. It’s a complicated process, facilitated largely by the banking system known as fractional reserve banking. The central bank and the banks, yes, with government imprimatur, are engaged in a process of issuing paper notes uncovered by real assets (money). This enables the banks and the central bank to enter the market with fictive credit, and bring about initially low interest rates and a boom. What flows from these jumbled market signals is investment–jobs included–that should not always have happened.

It’s as economist Roger Garrison cautions, “growth rates and unemployment rates by themselves don’t tell the whole story,” since they don’t distinguish between genuine growth and unsustainable boom. In other words, who is to tell if the growth touted by government is propelled by genuine savings and investment or by the bank’s injecting of new money into credit markets?

The political corollary for the Canadian Federal government is not hard to divine. A credit-induced boom flaunts rosy, often misleading, employment figures. And what government on the eve of elections wants to tamper even in the slightest with those? Make no mistake, Canadian financial politicos are neo-Keynesians to the core; credit expansion in the service of labor demands is all in a day’s work. Bottom line: “sufficient inflation” nets a politician the optics of high employment, to say nothing of license to continue inflating the money supply.

Economists are mostly silent on the rickety moral scaffolding that undergirds fractional reserve banking. Some, however, refuse to slip between the sheets with the kleptocracy. Posted on the office door of economics professor Tom DiLorenzo of Loyola College, is a newspaper article about two college students who were arrested for counterfeiting. A standing, and as yet unmet, challenge DiLorenzo issues to his students is to explain how those actions differ from the central bank’s “money creation.” The prize, a large pizza, is still up for grabs.

Bereft of similar instruction, most of us would be hard pressed to query the form of commercial banking we identify with deposit banking. We are vaguely–if only intuitively–aware that the contract between bank and client constitutes a bailment contract, to wit, we expect the bank to warehouse our money and it to be fully redeemable like the Chippendale chair (I wish) we entrust into storage. In reality, a run on the bank by every client – and the bank would collapse.

With fractional reserve banking, the bank is only good for a fraction of the money, since the Central Bank increases the reserves it gives to banks, and the banks, in turn, pyramid their respective lending capabilities. Unbacked by money (real assets), paper notes then flood the market, diminishing purchasing power, and benefiting those in proximity to power.

The jurisprudence that has evolved to finesse this fraud accords the fractional reserve banker the status of a “good faith” debtor rather than a custodian of his client’s money. Legally, the money is the banker’s asset. The logic of the law thus has the money belonging to client and bank simultaneously. On flooding the market with additional money substitutes when the quantity of money is unchanged, economists Hans H. Hoppe, Jorg G. Hulsmann and Walter Block say this: “Titles to money are–and should be–backed by money in the same way and for the same reason as titles to cars are and should be backed by cars,” and house titles backed by houses rather than “parts of planes and bikes.”

©2000 By Ilana Mercer
The Calgary Herald
September 7

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