Monday, October 18, 2010

Robt Kuttner explains KEYNSIAN Economics - and how the Neo-Cons have PERVERTED Keynsian "Deficit Spending" with BAILOUTS and other BIG FINANCE LARCENY of taxpayers' treasury at Workers, Consumers, & Taxpayers' expense...

 Robert Kuttner, of the Huffington Post and The American Prospect magazine, hits the nail squarely and with enough force to drive it home: "Keynsian economics" has NOT been "disproven" by the so-called "Keynsian" economics of the  so-called "liberal Democrat" presidencies of Bill Clinton & Barack Obama  for BOTH Clinton and Obama have allowed their economic policies to be fashioned by former  Goldman Sachs Chairman ROBERT RUBIN and his career toadies (proteges), from Lawrence Summers to Tim Geithner,  Rahm Emanuel, Gary Gensler and Obama's current Chairwoman of the SEC,  Mary Schapiro (etc.).
     GIVING MONEY to BIG FINANCE and FRAUDULENT financial insitutions IS NOT "Keynsian economics"!   - no matter how the Right-Wing Rubinomics crew tries to paint the long-dead Keynes with the blame for THEIR  titanic economic larceny.
    It will be forever IMPOSSIBLE to deny or dismiss genuine Keynsian economics, because of a little, if well known world-wide event called World War II:  
Robert Kuttner:  "It took the accident of World War II for government to spend and invest at a level that finally brought back full production and full employment. Annual deficits were as high as 28 percent of GDP, more than triple the current level. Once prosperity returned, however, the debt level came steadily down." 
John Maynard Keynes was not just an academic economist, but he was a member of Britain's finance ministry (Chancellor of the Exchequer) during the critical  years of WWI, when Britain had exhausted its capital, bullion, and savings arming and supplying its armies during  grueling years of war with Germany. In a peacetime setting, Keynes also   believed in STIMULATING PRODUCTION (as opposed to the obviously mandatory production of weapons and munitions during wartime) especially for those goods and items that workers with money ("disposable income") would purchase,  if  (during the Great Depression) they had the money to buy anything. 
(That is, stimulate production of  REAL goods that would stimulate what we could call "productive consumption," as opposed to investing government stimulus money in luxury goods, or  speculative financial  bubbles, for example.)   

  They key here, is that  GOVERNMENT STIMULATED PRODUCTION, would, and must, PAY  SALARIES for those new workers now engaged in NEW production -  wages and salaries that would give those now working families the "disposable income"  to purchase those "government stimulated production"  goods that they previously could not afford.

 Demonstrating his incredible prescience,  Keynes RESIGNED as his position in the Finance Ministry   representative to the WWI ending Versaille Peace Conference in 1918, Keynes (who had started his economics career investigating and reporting on the British run colonial economy in India) understanding that keeping a nation, a people, down in subjugation and submission through economic & financial policies would lead to massive repurcussions.
  The ultimate "blowback" repercussion  that Keynes feared, of course,  being the rise of Adolf Hilter,   resurgent (Nazi) German warmongering imperialism in the late 1930s,  and the coming of WWII that Keynes had PREDICTED twenty years earlier when he resigned in dismay over the punitive if not draconian Versailles Treaty imposed on the impoverished German populace.
 Robert Kuttner, Co-founder and co-editor of The American Prospect
Posted: October 17, 2010

....Will the recession just go on and on and on? In the absence of far more vigorous government action, it certainly looks that way.
At a recent conference sponsored by several think tanks, Paul Krugman declared that the recession could literally continue indefinitely because the economy is stuck in a cycle of depressed wages, reduced consumer purchasing power, damaged banks, and business hesitancy to invest -- and no strategy on the political horizon is about to alter this dynamic.
It's not surprising to hear that from Krugman. The startling thing was that his two co-panelists, former Reagan chief economist Martin Feldstein and the chief economist of Goldman Sachs, Jan Hatzius, agreed that massive stimulus spending was the necessary cure.  [note: of course GS types are there to CONTINUE DIVERTING real "stimulus" spending IN TO GS's insanely fraudulent  Big Finance, INFLATIONARY, with NO PRODUCTION TO SHOW FOR IT coffers.]
In similar circumstances in the middle and late 1930, GDP growth turned positive, but unemployment remained stuck in double digits. It took the accident of World War II for government to spend and invest at a level that finally brought back full production and full employment. Annual deficits were as high as 28 percent of GDP, more than triple the current level. Once prosperity returned, however, the debt level came steadily down.
But Republicans have made it impossible for the government to increase spending to create jobs and investment, and deficit hawks of both parties would rather have government tighten belts... [THE SAME IS TRUE of the GODDAMN-SACHS DOMINATED "Democratic" Party.]  
If fiscal policy is inoperative, that leaves monetary policy. The Federal Reserve has abandoned its inflation phobia and is turning to the printing presses (the trendy euphemism for printing money is "Quantitative Easing.") (cont'd)  
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His new book is A Presidency in Peril.
 Keynes' wiki bio also gives the "liberal" British economist  grudging credit for probably being correct about the need for a "RADICAL" world currency, to help smaller "trade deficit" nations (DEBTOR nations!) avoid THE FINANCIAL MANIPULATIONS and CURRENCY SWINGS that large, unsupervised (or - allied with an irresponsible government, as Goddamn-Sachs  is now so closely allied, as to be virtually synonymous, with the predatory U.S. government)  finanical cartels  could WRECK small, vulnerable  economies:
 As Allied victory [WWII]  began to look certain, Keynes was heavily involved, as leader of the British delegation and chairman of the World Bank commission, in the mid-1944 negotiations that established the Bretton Woods system The Keynes-plan, concerning an international clearing-union argued for a radical system for the management of currencies. He proposed the creation of a common world unit of currency, the Bancor and of new global institutions — a world central bank and the International Clearing Union. Keynes envisaged these institutions managing an international trade and payments system with strong incentives for countries to avoid substantial trade deficits or surpluses. The USA's greater negotiating strength, however, meant that the final outcomes accorded more closely to the less radical plans of Harry Dexter White. According to US economist Brad Delong, on almost every point where he was overruled by the Americans, Keynes was later proved correct by events.[34]
The two new institutions, later known as the World Bank and IMF, were founded as a compromise that primarily reflected the American vision. There would be no incentives for states to avoid a large trade surplus, instead the burden for correcting a trade imbalance would continue to fall just on the deficit countries, which Keynes had argued were least able to address the problem without inflicting economic hardship on their populations.
   As we can see,   America's  Bretton Woods negotiators'  near-gloating and arrogance over America's political, economic, cultural, and financial  domination in 1945, has come back to bite the American public in the ass in 2010,  with AMERICA now being THE GREATEST DEBTOR NATION in history,  as a result of  the SHEER LARCENY the Fed Reserve has engineered of the U.S. Treasury and American economy under the insanely corrupt Bernanke/Greenspan/Rubin/Summers/Giethner/Paulson crew OPENING the FLOODGATES  of  CHEAP "fait money" U.S. dollars spewed out by  the  VERY PRIVATELY OWNED Fed banking cabal  controlled U.S. Treasury printing presses [actually, the vast proportion of "new money creation" comes, not as printed dollar-bills currency, but as entries in the balance sheet of the member banks' accounts at the Fed]  and with the financial press openly discussing the Fed and American banks   possibly SEIZING  gold stocks (bullion) of other countries currently held "on deposit" in American bank vaults - so much for  "CREDITORS MUST BE REPAID"  notion that, until now was  the  high holy-of-holies for anyone coming out of the Ivy League, U. Chicago, and other elite economics & financial universities - just as Keynes PREDICTED back in 1945!!

    On two of the most important issues of the 20th (and now 21st) century - the harsh WWI ending Treaty of Versailles conditions leading directly to the "blowback" REPURCUSSIONS of WWII, and the U.S. dominated post-WWII financial system leading directly to the ability of American financiers to RIG world financial markets - John Maynard Keynes was proven astonishingly correct.   Keynes also predicted that cheap credit would lead to hyper-speculative markets - and market collapse. Although the exact timing of the 1929 stock market crash caught him by surprise and nearly ruined his finances, he did recover, amassing a  second fortune worth nearly $20 million  in today's value  before he died in 1945.

  Despite the apparent complexity, Keynsian economics is simplicity itself:  MANAGE a nation's assets, including capital (savings), resources, AND MANPOWER, and USE GOVERNMENT POWERS, to RESTRAIN imbalances in one area or another, specifically, the ability of wealthy elites to CORNER ARTIFICIAL MONOPOLIES, CREATE SPECULATIVE BUBBLES during periods of high employment, and to HOARD the MONEY SUPPLY, when those speculative bubbles collapse into credit contractions - as they invariably do.
   Even simpler still, Keynsian Economics should be looked at in terms of POTENTIAL:  even during THE DEPTHS of the Great Depression (mid 1930s) America HAD THE POTENTIAL to PUT job seekers TO WORK, producing the RIVERS of production that would shortly (1941) become the famous "Arsenal of Democracy" that poured out the mountains and oceans of   material that  turned the tide of WWII.

  No matter how much Milton Friedman and his modern Neo-Con "Goddamn Sachs uber alles" disciples try to PERVERT Keynsian economics,  the simplest measure of Keynsian economics is WHAT COULD BE PRODUCED,  IF  capital allocation and scarce investment resources WERE NOT BEING STRANGLED and choked off  by parasitic banksters profiting (via THE BRIBERY of politicians & government "leaders")  from the EXTORTION of the public wealth, resources, and commonwealth assets.