Thursday, August 27, 2009

Keynes: The Paul Krugman of Roosevelt

JM Keynes was to FDR as Paul Krugman is to BHO. In other words, really smart guy, really good economist, no sense of self-respect or need to honor what he knows. At least, he never let what he knew as an economist get in the way of what he believed as an ideologue.

Check this quotation from Keynes, which is actually one of the smartest and most concise summaries of the case against central planning that I have ever seen. Seriously, Keynes understood Lenin and central 1919. Just nailed it.

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.
Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

In the latter stages of the war all the belligerent governments practised, from necessity or incompetence, what a Bolshevist might have done from design. Even now, when the war is over, most of them continue out of weakness the same malpractices. But further, the governments of Europe, being many of them at this moment reckless in their methods as well as weak, seek to direct on to a class known as 'profiteers' the popular indignation against the more obvious consequences of their vicious methods. These 'profiteers' are, broadly speaking, the entrepreneur class of capitalists, that is to say, the active and constructive element in the whole capitalist society, who in a period of rapidly rising prices cannot but get rich quick whether they wish it or desire it or not. If prices are continually rising, every trader who has purchased for stock or owns property and plant inevitably makes profits. By directing hatred against this class, therefore, the European governments are carrying a step further the fatal process which the subtle mind of Lenin had consciously conceived. The profiteers are a consequence and not a cause of rising prices. By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of contract and of the established equilibrium of wealth which is the inevitable result of inflation, these governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century. But they have no plan for replacing it.

That's from "The Economic Consequences of the Peace," 1919. Keynes really deeply understood money, before he decided to become a flack and a shill for the dark side.

Paul Krugman? That's what I'm saying. Smart guy, rotten soul.

Anyway, I do a weekly radio show, on WPTF, with Bill Lumaye, 5-6 pm on Thursdays. I run a cheesy contest, with a "FABulous Prize" of a bumper sticker I made up, called the "KOIT CLUB" (I am the "Knower of Important Things," so that's KOIT, get it?). I read a quotation (this week, part of the quote above), and the listeners have to guess who it is. Hilarity ensures.

Got an email from a listener, after the show, who was incredulous:
When I heard you on the radio today I thought for sure you were quoting someone from the Austrian School of Economics. In fact, I tried to call and guess you were quoting Ludwig von Mises (my battery died).

Please don't take this wrong way, but I would like to know where you got that quote from. Please provide the book and the page number. You'll have to forgive me, but I am in utter shock that Keynes would make a statement like that and later go on to be known for what Keynesian stands for today. Can you provide some insight into how and why he made this huge transition?

Thank you, (Name)

I hear you, even though your battery died. It's pretty amazing.


Michael said...

Are you suggesting that Paul Krugman used to be an economist? Wow.

Anonymous said...

And folks wonder why Duke isn't in the same league as MIT or Princeton.

br said...

Hopefully, more people wonder why Duke isn't in the same league as Chicago or Harvard. Or is it???

ZombieHero said...


Anonymous said...

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


rhbee said...

If I understand your arguement,the Fed has placed us in danger of a radical rise in the rate of inflation by printing up all the stimulus and TARP money. So then how does this tie into that?