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Despite Evidence, Keynesians Want More Fiat Money

May 3, 2012 by  

Despite Evidence, Keynesians Want More Fiat Money
PHOTOS.COM
Despite ineffectiveness, mainstream economists continue to call for more massive government spending the world over.

Printing too much fiat money is dangerous and has historically led to rampant inflation, but central banks throughout the world are currently printing full speed ahead. According to analysis, they’re failing miserably.

Washington’s Blog reports that Keynesian economic thought has led mainstream economists to ignore debt and advocate even more money printing all over the world.

It seems outrageous that governments could possibly spend their way out of financial crises, but that is precisely what economists like The New York Times’ Paul Krugman believe.  He recently opined that the Federal government let the financial crises go to waste by not using even more inflationary tactics than it has in battling economic decline in the United States.

After the debt crisis hit in 2008, Federal Reserve Chairman Ben Bernanke nearly tripled the size of the Fed’s balance sheet from about 6 percent of gross domestic product to almost 17 percent of GDP. It is now about 20 percent of GDP.

But Krugman believes Fed printing should make up an even larger slice of GDP, writing in a recent column:

Consider, if you will, the current state of our nation. Despite hints of economic progress, we’re still in the midst of an immense disaster, in which unemployment and underemployment are devastating millions of American lives. And none of this need be happening! There has been no plague of locusts; we have not lost our technological know-how. Americans should be richer, not poorer, than they were five years ago. Yet economic policy across the board has become almost passive, has essentially accepted this disaster instead of trying to end it.

Those who subscribe to the Austrian school of economic thought fiercely disagree with ideas like Krugman’s, just as Republican Presidential candidate Ron Paul did when the two debated this week on Bloomberg.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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  • Vicki

    It’s really very simple. The law of supply and demand affects EVERY possible transaction just as the law of gravity affects EVERY possible bit of matter/energy.

    If you increase the supply of ANYTHING the value of that thing goes down with respect to everything else. Even if that thing that you increase the supply of is money.

    • charlie

      very well,,,BUT,,,paper money ain’t money ,,,it’s only credit notes and “They” can really play inflation /deflation with credit notes ,,,in that phoney money game the DAA’s lose…

  • Sirian

    When you can print you’re own money and in so doing control it’s true value, especially since it is no longer backed by gold, you can play with it in an untold number of ways. What we have here are a bunch of professional “Monopoly players” and they are gleefully using everyones money to win the game. Why not, we blindly let them print it up for us to use. Keynesians have proven their unworthiness quite well.

    • ralph coffman

      when are we going to take the control of our money away from the international bankster cartel[mafia] and issue our own currency like lincoln did with the issuance of the GREENBACK DOLLAR. thats why lincoln was assasinated !!! these international globalist elite dont like honest development… they instead like to steal everyones wealth by sucking up their cut of everything and turning people into addicts and slaves. we need to identify them and cull them out because their eugenic/natz agenda has the goal of culling ” us” from the present 7 billion down to a managable 1 billion or less. the believers of this should be tried like the mass-murder criminals at the nurnberg trials. END THE FEDERAL RESERVE- SET UP OUR OWN NATIONAL BANKING SYSTEM-REINSTATE GLASS STEAGALL TO BREAK UP THE TOO BIG TO FAIL INTERNATIONAL SPECULATIVE BANKS AND RETURN TO COMMERCIAL BANKS THAT CAN FINANCE AMERICA’S RECONSTRUCTION WITH PROJECTS LIKE NAWAPA, [ NORTH AMERICA POWER AND WATER ALLIANCE ]=7+ TO 27+ MILLION JOBS] AND JOIN OTHER COUNTRIES WITH THEIR OWN WORLD DEVELOPMENT PROJECTS ETC.ETC.ETC. signed, ralph coffman registered candidate for president of the united states. IMPEACH OBOMBA NOW AND HAVE 2/3 OF CONGRESS ELECT A NEW PRESIDENT. yes 357 people can elect a new president anytime. and the time is NOW…

      • Vigilant

        People who actually believe that the votes exist in the House for impeachment and in the Senate for conviction are living in a fantasy world.

        P.S. Congess would not elect a president; it would go to Joe Biden IAW the Constitution.

      • Vigilant

        The greenback was created to fund the government debt in prosecuting the Civil War. It was a form of fiat money not entirely dissimilar to today’s Federal Reserve notes, and was issued because the government was unable at that time to redeem U.S, Demand Notes in gold.

        “Legal tender status guaranteed that creditors would have to accept the notes despite the fact that they were not backed by gold, bank deposits, or government reserves, and bore no interest. However, the First Legal Tender Act did not make the notes an unlimited legal tender as they could not be used by merchants to pay customs duties on imports and could not be used by the government to pay interest on its bonds…

        “in January 1875, [Congress] passed the Specie Payment Resumption Act, which authorized a contraction in the circulation of Greenbacks towards a revised limit of $300,000,000, and required the government to redeem them for gold, on demand, after 1 January 1879. As a result, the currency strengthened and by April 1876, the notes were on par with silver coins which then began to re-emerge into circulation. On May 31, 1878, the contraction in the circulation was halted at $346,681,016 – a level which would be maintained for almost 100 years afterwards…

        “Soon after private ownership of gold was banned in 1933, all of the remaining types of circulating currency, silver certificates, Federal Reserve Notes, and United States Notes, were redeemable by individuals only for silver. Eventually, even silver redemption stopped in 1965-68, during a time in which all U.S. currency (both coins and paper currency) was changed to fiat currency. At this point for the general public, there was little to distinguish United States Notes from Federal Reserve Notes.” (Wikipedia)

        Bottom line: a return to “greenbacks” would not solve much if anything. Our currency supply, to be stable and viable, needs to be re-tied to a precious metal standard. Continued expansion of fiat money by the Fed can only end in disaster through hyperinflation and eventual collapse through inability to increase debt.

        • ralph coffman

          EXACTLY, but the federal reserve has been “printing electronicaly, their own international money supply for their own use to their friends and whrn it suits their cause. gold is bull! they control that too. FIRE THE FED, and we can issue our own money. my mother and grandmother were sudeten germans in the czech republic and when i heard stories about city people coming out into the country with their gold and jewels to trade for food that stuck in my mind. INFASTRUCTURE on a national and personal level is real wealth. we need to find true god given health and kick out those who would sell us poison if they could and do for their own enrichment i.e. MONEY. and on a national level we need to fix everything, i.e. INFASTRUCTURE. that would be real wealth.the people of the world are ready to join with us to do this on an international level. it’s time to stop the control coming out of the CITY OF LONDON, WALL ST., INTER-ALPHA GROUP OF BANKS. COUNCIL ON FOREIGN RELATIONS, DID YOU KNOW THAT THE CITY OF LONDON FINANCIAL DISTRICT IS THE ONLY PLACE IN THE WORLD WHERE YOU CAN HYPOTHICATE THE MONEY SUPPLY WITH NO LIMIT.LONDON AND THEIR TALLY STICKS. THE DERIVITIVE MARKET IS OVER 1.6 QUADTRILLION DOLLARS [1600 TRILLION DOLLARS] TIME TO CUT THESE BANKSTERS LOOSE. WE NEED NO LONGER HONOR THEIR WORTHLESS GAMBLING DEBT. THE UNITED STATES OF AMERICA SHOULD ISSUE OUR OWN CURRENCY. THE WORLD IS WAITING FOR US TO SHOW THEM THE WAY. AN INTERNATIONAL GLASS STEAGALL ACT AND INTERNATIONAL DEVELOPMENT PROJECTS ARE THE FUTURE… OTHERWISE THE INTERNATIONAL BANKSTER CARTEL/MAFIA WILL BLOW UP THE WHOLE WORLD. they control mi-6, cia, isi etc. check out what is happening in syria right now… STOP THIS INSANITY NOW. IMPEACH OBOMBA NOW. ELECTIONS ARE A SCAM ESPECIALLY SINCE GEORGE SOROS OWNS THE COMPANY THAT OWNS THE ELECTRONIC VOTING MACHINES.

      • Vigilant

        P.S. John Wilkes Booth had little to no interest in greenbacks. Lincoln’s last speech, a few days before his assassination, in which he intimated that the freed slaves should have citizenship rights, is what infuriated Booth.

      • Flashy

        OK…Vig…try this. take the amount of gold in the world (or silver for that matter). Take the amount of dollars in crculation to maintain the current economy we have.

        Mind…the amounts of precious metals are the worlds current stock…not the US.

        Now… having these two sets of numbers before you, look closely at the math. See a problem?

        I suggest a reading of The Wealth of nations as a beginning. Concentrate on the areas where Smith postulates his four tenets of taxation and the area where he argues against precious metals being the basis for a country’s monetary policies and measurement of wealth.

        Next, take a gander at some of the writings of Ricardo. Add in Keynes and Samuelson. You’ll have a better understanding of macro economics and today’s modern economies.

      • charlie

        Lincoln was a “jew” that had been Americanized some what and when The Big Money European “jews” saw he was straying away from “their” program “they” had Lincoln shot,,,
        Lincoln was replaced by a mercenary by the name of U. S. Grant ,,,he knew all about Martial Law Rule ,,,so,,,Grant brought America back under a “camo” US Constitution but using mostly Martial Law Rule on the “Confederates” states ,,, that’s where America is today ,,, NOT abiding by The US Constitution, nor The Holy Bible, both Organic Law Documents of America ,,,so,,,what Law is America going by ???,,, Martial Law Rule and Corporation edicts under USA Inc. ,,, don’t believe the above ??? prove it wrong ,,, bet you can’t ,,,BUT ,,, Praise King Jesus for Salvation and Healing ,,, King Jesus The King of
        America…

    • s c

      Sirian, until or unless i see some PROOF that ANY Amerikan utopians understand what the Fed is, what it does and what the significance of 1913 is, there isn’t much point in trying to conduct a conversation with them. You can’t converse with a mule muffin.

      • Sirian

        s c,
        By all means, I agree!! HA, mule muffins. . . that’s why I seldom respond to anything Flasho pastes in. Waste of time entirely. What’s below is a prime example. Bob tagged him oh so well the other day!!!

      • charlie

        Those mule muffins you write of are “Mattoids” ,,, be careful ,,,they may be more intelligent than you ,,,BUT,,, NOT more intelligent than King Jesus ,,,King of America …
        Beware ,,, intelligence maynot be smarts …

    • s c

      Sirian, this is aimed at Comrade Tushy (below). As I said, you have N O clue. A child might ask WHY utopians think it is so NECESSARY to spend money we don’t have, why we continue to create programs that DON’T work and WHY utopians REFUSE to understand that it is worse than ILLOGICAL to spend, continue to spend and act as though it never matters. You’re putting future generations IN SLAVERY, you ____!
      Comrade Tushy, you are BEYOND clueless. You don’t get it, and you do NOT want to ‘get it.’ That’s a good way to define a utopian, and it’s quite obviously a good way to define your responses. When you’re too _____ to understand what you’re doing or why, there is NO reason to give you the benefit of the doubt and treat you like an adult.
      If I had access to your bank accounts and your wallet, perhaps THEN you might begin to understand. But, since that won’t ever happen, I am forced to hold my breath while people like you continue to threaten the very existence of my once-great land.

      • Flashy

        OK SC…let me ask you for a solution. mind…the solution has to be rational and not some ‘utopian’ pipedream like “slash government spending immediately and suck it up though the resulting Depression’….

        So Sparky…you have your shot. What is it?

      • cawmun cents

        How about they(legislators,whether state or local)can only lobby one year after election,and not within one year of election.That way the voting populace has time to decide if they are worth voting for.
        There you have settled the debt crisis.
        -CC.

  • LarryG

    It’s the Rothschild global criminal organization.

    Rothschilds and the Fed
    http://www.youtube.com/watch?v=NzLIz27Gq

    Rothschilds criminals
    http://www.scionofzion.com/federalreserve.htm

    Criminal Rothschilds
    http://www.youtube.com/watch?v=USGSOViaulc

    • http://N/A HapHarris

      LarryG, You’ve got it nailed. What folks are missing is…right now the US stands where 1920 Russia stood, just after the Bolshevist Revolution. Only difference..we have lost our Freedoms incrementally inch by inch and day by day.

  • Vigilant

    Dr. Paul once again demonstrates his complete grasp of the monetary situation and its potential to destroy the nation. Krugman once again has neither the foresight to see what’s coming, nor the serious intent to head it off. He’s a provocateur and socialist in the worst sense.

    • charlie

      Is that a Mattoid Provocutear???

  • Flashy

    Let’s put it in perspective. We have a deficit which had $1.8 trillion added because of the Bush II Tax Cuts/Welfare for the wealthy. $1.3 trillion added because of the unfunded wars in Iraq and Afghanistan (direct costs, not adding in the indirect costs). Compare that to the Stimulus package passed in 2009 … a distant third coming in at $890 billion.

    Now…despite the article’s negativity, the facts speak for themselves. Pres. Obama had two options. The one option advocated by the Right …austerity and trusting ‘confidence’ will be the panacea, and the one he chose…stimulate the economy now and allow growth to reduce the economic cost burden as well as ease into a set pattern of budget control coupled with increasing revenues.

    There is direct stark factual evidence as to the effects of both options.

    japan went that course in the 90′s. Europe chose to also adopt the way advocated by the Right. Austerity. Japan experienced what they now call “the lost decade”. For Europe, in three years, such policies have also worked…if the goal was to have a stagnate economy, increased unemployment, increased concentration of wealth, and ongoing budget crisises as revenues from declining economies decrease.

    Those are the facts about austerity be successful in times of economic malaise. Hard reality Facts.

    Denying them requires something more than mere statements. Denying them calls for an accompanying answer to the question as to how austerity would be the solution given two very recent situations showing it to be abject failure in bringing a sickened economy to health.

    Compare to the option and path chosen by Pres. Obama. From losing close to 1 million jobs a month to having 27 straight months of positive job creation in the private sector. To diverting an economy heading into a Depression to one now growing. To an economy growing despite being staggered by the continued malaise of our second largest trading partner next to Canada (Europe). From economic shrinkage to now having the problem of INCREASING positive economic growth above that of what it currently is growing. From leading the world into economic recession, to now we are pulling the world into positive economies.

    Facts are facts.

    those who advocate something called the “Austrian school of economic thought’ … there is one question needing to be asked of those advocates. Show where it has worked to bring an economy out of a deep recession.

    • charlie

      America has been sold out by the “Mattoids” years ago ,,,buy only American made , even IF it cost more and you will buy America back,,,then,,, hang the Mattoids with 1 inch Confederate cotton rope made in America…

  • http://www.mototcarsfinancial.com Brad

    Falshy if it is so great anywhere in the world please tell me so I can get a one way ticket there. Yep Greece is doing marvulous. Any where but Germany playing with the EU is fallining faster then an apple can fall from a tree. You my friend and all your liberal friends and living in a dream world.

    • Flashy

      Brad…note where i stated Europe chose the path of economic austrity to battle the recession…quite the opposite path of what Pres. Obama chose.

      Europe is what we would be facing had we taken the option adviocated by the GOP in 2009…and by those who advocate the “Austrian Economics” approach.

      Fact is fact. I await anyone who can show an instance of where austrity in the face of economic recession has been successful in bringing an economy out of recession.

      • s c

        Tushy, I am waiting on pins and needles to see any evidence that a utopian does NOT have his or her or its head rammed up ‘that special place.’ If you could read, if you could comprehend the English language and if you gave a ____ about Amerika, you could learn what you need to know via one or two books.So what do you want for a graduation gift when you escape grade school, comrade? Comrade tush, you have NO clue.

      • Flashy

        sc…it’s very simple…show us where austerity has worked to bring an economy out of a deep recession. I cited japan and Europe showing the disaterous results. I’ll toss in Hoover’s policies as an added one though it is before the modern economies developed towhat they are today.

        You now have three examples showing austerity to be an unqualified disaster. Can you cite one success?

  • cawmun cents

    Of course you know what this means?
    It means that Columbian prostitutes will be marked up so high that Administration officials will need an executive order to sneak one into the hotel.-CC.

    • charlie

      Nonsense,,, then gubmint whore mongars will have to buy American ,,, blue eyed blondes are more beautiful anyway,,, so ,,,buy American…

  • DavidL

    Brad, even Milton Freedman, the ultimate conservative economist, died a Keynesian. The conclusion to be drawn from reading this piece, as well as the many responses on topic written on this site, is that Freedman was a liberal and therefore wrong. This issue should not be liberal versus conservative. It should be what works (constructive) and what does not (destructive). History has shown (and currently is showing in the EU countries with negative GDP growth – that’s right, negative growth) that Keynes was right. The EU is following austerity not Keyens. It isn’t working. In fact, it’s making things far worse. They are headed back into recession.

    When your house is on fire, you have to spend more money on water to put it out. Cutting back on your water use to lower the bill isn’t going to solve the problem. At 2.3% GDP growth, the Europeans think the US economy is booming. Compared to theirs, it is. Our recovery would go a lot faster if the Republicans, who started the fire in the first place, stopped stepping on the fire hoses.

    Government must play a role in our mixed market economy. When the private sector can’t sustain us the government must step in and take action. There is no rational explanation for not doing so. In an emergency we always call upon our government, on all levels, to be there for us. After all, the government is us, we pay for it, and have every right to expect it to respond. The problem, of course, is when is the right time for the government to step in, and when is it the right time for it to step out.

    I like Ron Paul, but I was disappointed in his scattered and superficial handling of his position. When Mr. Krugman pressed him, he simply changed topic. I also learned from Mr. Paul, unlike his previous fundraising letters and debate speeches, that he would NOT abolish the Federal Reserve. I’m afraid Ron Paul, a gentleman whom I like and respect, is well past his sell-by date.

    • charlie

      smart move by Ron Paul ,,,don’t talk to Mattoids ,,,it’s a waste of time and time is money ,,,the sell by date is void ,,, Ron Paul ain’t for sell ,,, as long as Ron Paul can walk and talk he’s My Man…

  • ralph coffman

    IN ANSWER TO BIDEN BECOMING PRESIDENT WHEN OBOMBA IS IMPEACHED. was ford vice president before becoming president. biden is a credit card industry/international bankster cartel lacky. WHEN THE PEOPLE ARISE AND TELL THEIR ELECTED REPRESENTATIVES IN CONGRESS WHO THEY WANT TO BE PUT IN AS “THEIR” PRESIDENT THEN CONGRESS WILL RESPOND. THEY ARE FOLLOWERS WHOSE PARTY LEADERS TELL THEM HOW TO VOTE. THEY LIKE THEIR POSITIONS AND WILL RESPOND TO US. I HAVE SERVED IN ELECTED POSITIONS WITH THEM AND KNOW THEM WELL. I TOOK DOWN THE SPEAKER OF THE HOUSE AND SEVERAL OTHERS AS WELL. I LEFT MY PARTY WHILE IN OFFICE AND THEN EARNED ENOUGH CREDIBILITY TO WORK ON JOB PROGRAMS WHERE I BROUGHT MEMBERS OF BOTH PARTIES TOGETHER. IT CAN BE DONE !!! CONGRESS WOULD WELCOME A TRULY INDEPENDENT PRESIDENT. INDEPENDENT OF POLITICAL PARTIES WHO ARE CONTROLLED BY A FEW. WE NEED TO TURN OUR COUNTRY AND THE WORLD AROUND. ARE YOU READY??? WILL YOU BE READY SOON OR WILL ARMAGEDDON ARRIVE BEFORE WE ARE READY??? RALPH

    • charlie

      Armageddon may happen the same time as Obadiah,,,Praise King Jesus for Salvation and Healing …

  • FreedomFighter
  • froggy1944

    You know what I like about these forums, People argue the pros and cons and feelings and everything else thrown in. You know what it accomplishes, nothing. When the economy blows up which it will the only people that are going to survive are the people that are prepared or who are preparing. Good luck sheep. I hope Obummer takes care of you when the botton falls out.

    • charlie

      froggy ,,, your a little foggy,,,how does one prepare ??? can you say “Praise King Jesus for Salvation and Healing ???

  • J

    Oh yes Flashy,
    USA is doing just fine when you look at the manipulated jobs numbers! Let’s look at the people with food stamps: now at 45 million up from 31 million at the end of Bush. Great increase attributed to the great economy! Get it into your head, the government data lies for a reason!!

    • charlie

      all you poor boys on food stamps credit notes ,,,don’t forget ,,,buy American made so USA Inc. can print more food stamps for you ,,,please… Then Praise King Jesus for Salvation and Healing…

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