| | | Keynes was never about massive subsidies or stimulus, but small, tiny. Nothing like the gargantuan debt incurred now.
Oh, and Keynes was alive when the gold standard prevailed. Not that he cared for it.
econlib.org
The problem with enormous debt to stimulate is that, like most things economic, it is subject to the law of diminishing returns which, of course, flies above the cognition of everyone who makes decisions in DC, London, Beijing, Bonn, etc.
Poor dumb clucks, have no idea not clue not an inkling that the more you stimulate, the bigger it gets, the less effective stimulus becomes. So what happens? The utterly expected, as set forth in the Fiat book, it works at first, then sputters, so more is issued, it fails, then even more is unleashed, it fails (a little more spectacularly this time), so the stimulus gets even bigger, and so does its failure, with everyone anticipating that just one more huge bout will fix everything, until la merde hits the fan and no amount of stimulus works because the currency is kaput.
Has happened x times since age immemorial. It is happening now, but in slow motion because the global economy is so large, it cushions blows. But it will happen, and the Magic Money Tree and Helicopter Cash theorists will be seen for the fools that they are.
Amazing that we haven't learned such a simple lesson. It has happened countless times throughout history. Should by now be imprinted in our DNA.
Armstrong is absolutely right, the supply chain in truth is irreparably broken.
Nothing new under the sun. |
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