THE KEYNESIAN FARCE

John Maynard Keynes’ [ June 5, 1883--April 21, 1946] theories have been the most influential socio/economic ideas of the 20th century and so far in the 21rst century.

Keynes , born in Cambridge, England son of John Neville Keynes a lecturer at Cambridge University was influenced in early years by his father and elitist pals at Eton and Kings College.

Having an earlier interest in mathematics and probability he naturally gravitated to the study of economics and his articles being a product of the Great Depression times reflected the growing frustration with the financial stagnation of the times. He published Treatise on Money in 1930,The Means to Prosperity in 1933 and the culmination of his work: General Theory of Employment Interest and Money in 1936.

In his early work he postulated that savings that exceeded investment were caused by too high interest rates and therefore resulted in increased unemployment. In The means to Prosperity he detailed the multiplier effect showing that an infusion of $1 into an economic system had the effect of producing a multiplied $ amount in the system, usually a factor of 4 times. In The General Theory came the formal notion that in bad times governments needed to inject money into the system by public works, etc, then in good times pay the money back to the treasury.

Politicians eager to solve the financial stagnation of the Great Depression in the UK

and the U.S. eagerly latched on to these theoretical ideas as Gospel , and began

spending and have not stopped to this day. We are still waiting for them to pay back the expended funds despite the “prosperity” times. Funny how they forgot the

part about replacing the funds, despite the increases in Income tax, Inheritance tax,

excess profit taxes, liquor and tobacco tax, etc. etc.

In truth, Keynes work was just theory and had unintended consequences we are witnessing today: Huge intrusive governments at national, state and local levels.

Un-payable public. corporate and public debt levels, and increasing socialistic programs. Another probably unintended consequence is that these government stimulus programs never end, but take on a life of their own and continue to grow

having established a dependent patronage and advocates requiring more budgeted funds each year.

The thrust of Keynes work was to discredit the classical economic theory which held that prosperity was a natural result of unfettered market forces if labor would keep their wage demands reasonable . He was a ‘world changer’ trying to right the wrong of unequal division of wealth. Certainly a socialist, he was product of the times when communism , fascism and labor unions were gaining favor.

Keynesian economic policy today today is being discredited as the Democratic and neocon Republican administrations grapple with the consequences of over 70 years of economic folly .