Keynesianism

The idea that wealth without productive effort is possible is a Keynesian myth. It is this myth that deceives the Fed into believing it can create capital with the click of a computer and reject the notion that true capital can only come from production and savings.

This myth perpetuates the notion that a government and its citizens can live beyond their means and never be forced to live beneath their means. Depending on government stimulus programs, paid for with deficits and money creation, becomes an economic narcotic addiction. The longer the dependency lasts, the greater the dosage required to alleviate temporarily the unwelcome symptoms of the necessary correction.

Politicians are unable to tolerate any symptoms coming from stopping or even slowing the policies that require excess spending, borrowing, and monetary inflation. The message that the markets are sending today is that the age of Keynesian central economic planning is over.

Ron Paul provides a good deal of history about this authoritarian-empowering, but faulty school of economic thought, as well as a laundry list of dangerous fallacies Keynesianism had successfully disguised as conventional wisdom for nearly a century.

If you want to understand how an organization can do so many things wrong and get away with it, or want to solidly refute the idea that economic stimulus can come from printing money, read this chapter in full.