Keynesian Economics was "the dominant economic paradigm from the 1940s to the 1970s." It is associated with the ideas of the incompetent British economist John Maynard Keynes. In 2010, his native land of Britain (which is deeply in debt) repudiated his economic folly of government deficit spending through the implementation of an austerity budget during a period of economic difficulty. Although government certainly is necessary, economic history demonstrates the more efficient private sector is better at creating economically productive jobs and other economic activity such as investing.
|“||...in the 1930s, it was only the USA that attempted to fight the post-1929 economic contraction with Keynesian stimulus policies and only the USA suffered a Great Depression. In England, the contraction stopped in 1932, France never saw double-digit unemployment, and the Japanese economy was actually enjoying significant growth.(1) This time, Europe, China, and Japan all followed the US lead and applied their own stimulus plans in 2009, which we are already seeing is now in the process of backfiring on everyone.||”|
It is ironic that liberals such as Barack Obama advocate Keynesian economic concepts since they are violating one John Maynard Keynes' key principles. Keynes advocated having governments run budget surpluses during good economic times. In addition, Keynes advocated that governments should increase government spending during difficult times and even engage in deficit spending. Keynes was against large structural deficits because he believed they are a drag on the economy. Liberals such as Barack Obama advocate massive U.S. government spending during a period when the federal government already has a massive amount of existing debt. Furthermore, Obama's colossal government spending was inefficient and did not pull the American economy out of its economic problems, but merely buried the U.S. economy under more debt.
Keynes the incompetent fraud
Murry Rothbard wrote in his work Keynes the man:
|“|| The young Keynes displayed no interest whatsoever in economics; his dominant interest was philosophy. In fact, he completed an undergraduate degree at Cambridge without taking a single economics course. Not only did he never take a degree in the subject, but the only economics course Keynes ever took was a single-term graduate course under Alfred Marshall.
...Murray Rothbard says it all: Was Keynes, as Hayek maintained, a “brilliant scholar”? “Scholar” hardly, since Keynes was abysmally read in the economics literature: he was more of a buccaneer, taking a little bit of knowledge and using it to inflict his personality and fallacious ideas upon the world, with a drive continually fueled by an arrogance bordering on egomania. … He possessed the tactical wit to dress up ancient statist and inflationist fallacies with modern, pseudoscientific jargon, making them appear to be the latest findings of economic science. Keynes was thereby able to ride the tidal wave of statism and socialism, of managed and planning economies.
Dishonesty of Keynes
Concerning his dishonesty Rothbard wrote:
|“||Keynes reviewed Ludwig von Mises’s German Treatise on Money and Credit in 1914, slandering it, but it later came out that he did not understand German! As Murray Rothbard notes, ‘This was Keynes to the hilt: to review a book in a language where he was incapable of grasping new ideas, and then to attack that book for not containing anything new, is the height of arrogance and irresponsibility.”||”|
Rothbard also maintains Keynes purposefully misrepresented the work of English economist Arthur Cecil Pigou.
Keynesian Economics and Stagflation
In February of 2010 the Washington Times reported:
|“|| Prices rose 2.7 percent during 2009, according to the Bureau of Labor Statistics' recent update of the Consumer Price Index (CPI). This is a worrisome fact because last year's unemployment rate averaged more than 9 percent. This trend may signal a return of "stagflation," a merger of stagnation and inflation.
In the 1970s, stagflation shocked traditional Keynesian economists, whose models said the economy could not suffer from both high unemployment and rapid inflation at the same time. Unfortunately, the Keynesians were wrong, because an economy obviously can experience both evils simultaneously...
It seems every week the Obama administration announces some new tax or mandate that will further handicap businesses. Regardless of the official definitions of recession, the economy will remain sluggish for years to come. But if the Federal Reserve continues with its reckless policies, Americans will experience high inflation on top of high unemployment. As in the late 1970s, Americans will see that the pundits are wrong, because stagflation is very real.
On June 18, 2011 Business Insider declared:
|“||There are millions upon millions of Americans that are sitting at home on their couches right now wondering why they lost their jobs and why nobody will hire them. Millions of others are wondering why the only jobs they can get are jobs that a high school student could do. Families all across America are wondering why it seems like their wages never go up but the price of food and the price of gas continue to skyrocket.||”|
On June 15, 2011 Fox News reported:
|“|| The government said consumer prices jumped 3.6% year-over-year, exceeding estimates for 3.4% and good for the largest increase since October 2008 when they climbed 3.7%. Core prices gained 1.5%, compared with forecasts for 1.4%.
The hotter-than-expected inflation data combined with a dreary report that showed manufacturing activity in New York State unexpectedly contracted in June to send U.S. stock futures tumbling more than 100 points into the red Wednesday morning.
The inflation report underscores the Fed's limited options in injecting new stimulus into a U.S. economic recovery that may have stalled out in recent months. That’s because further quantitative easing may only increase the pressure on inflation.
“Stagflation is now a growing reality and the 'flation' part ties the hands of the Fed to react with more easing,” Peter Boockvar, equity strategist at Miller Tabak, wrote in a note. “As many of us believe, though, the more easing has added to the 'flation' so maybe less will tame it.” 
According to Keynes, economic slumps are the result of too little demand (see also aggregate demand). The government can stimulate demand by cutting taxes and increasing spending even if this results in growing deficits. During times of economic boom the government can increase taxes and/or cut spending. This will reduce the risk of Inflation and also reduce government deficits. Keynesian economics influenced FDR's New Deal programs during the Great Depression.
While Keynes supported government intervention and government programs, he intended that they only be active during poor economic situations, unlike the modern welfare state. Many believe that FDR agreed, though FDR had died before these programs could be repealed.
- "Fascism entirely agrees with Mr. Maynard Keynes, despite the latter’s prominent position as a Liberal. In fact, Mr. Keynes’ excellent little book, The End of Laissez-Faire (l926) might, so far as it goes, serve as a useful introduction to fascist economics. There is scarcely anything to object to in it and there is much to applaud."
While liberal in nature, Keynesian economics also had an influence on conservatives - the Laffer curve, a key component of supply-side economics and the basis for the Reagan and Bush II tax cuts, was based on Keynesian concepts.
- The Great Depression According to Milton Friedman
- Will the G8 Repudiate the Philosophy of Living Beyond Our Means?
- Deathbed of Keynesian Economics will be in the UK
- The Great Depression According to Milton Friedman
- EK Brown-Collie and Bruce E. Collier, What Keynes really said about deficit spending, Journal of Post Keynesian Economics, Vol. 17, No. 3, Spring, 1995
- James Strachey Barnes led a "major group" established "to promote ... fascism," and circulate "fascist propaganda," emphasizing "the positive nature of fascism." Roger Griffin with Matthew Feldman, eds., Fascism: The 'Fascist Epoch' (Taylor & Francis, 2004) ISBN 0415290198, p. 255
- Gaetano Salvemini, Under the Axe of Fascism (Read Books, 2008) ISBN 1443736708, p. 115
- James Strachey Barnes, Universal Aspects of Fascism (London: Williams and Norgate, 1929), pp. 113-114