Jul

18

Keynes wanted central banks and their #1 borrowers - the governments whose laws made central bank IOUs into money - to write checks that would pay for more consumption.

They did - eventually; they had World War II and all the subsequent ones that have justified government check-writing in excess of tax collection.

The beauty of the belief system is that its failures guarantee a further application of its promises of salvation. Whenever the extra "money" (actually credit since no one could ever ask for gold coin in exchange for their legal tender paper) gets ahead of the supply of what is being consumed, prices rise permanently. For the people who have money savings, this price rise is a tax on their accumulated wealth and can be celebrated as evidence of a change towards greater greater "equality". For the people who have little or no money, the price increase become a fundamental reason why the government must add to their incomes or, at the very least, index their pay to "inflation". Either way, the solution to the problem requires the government to have more money/credit to spend.


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