Unfortunately,
liberal elites are still the slaves of a dead
economist, John Maynard Keynes. Economists have not recognized the failure of Keynsian economics. I think the uniform failure of deficit
spending to promote growth has to be recognized. If the model worked, we would not be talking
about Japan's
lost decade, or more accurately lost generation. Japan's debt is now over 200
percent of GDP. Their growth rate in
response to an ocean of deficits is uniformly poor. The story is similar in Europe, particularly Southern Europe. There
is no way Uncle Sam can continue to borrow 40 cents of every dollar spent. When governments get this far behind, they
usually pay off the debt with hyper inflation.
This never ends well. The usual
outcome is social disintegration followed by dictatorship. For example, the hyper inflation of Weimar Germany
after WWI lead to Hitler. The Federal
Reserve's constant quantitative easing in search of economic growth is going to
lead to increasing inflation and interest rates. They are buying 70 percent of the debt
Federal Governments incurs each month.
Once interest rates go up, the deficits will balloon, 160 billion
dollars a year for each percentage point.
We have got to cut spending and stop the coming train wreck.
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