July 11, 2003

One of the classic fallacies built into the failed "science" of Keynesian macroeconomics is the fatal assumption that a national economy is somehow a closed economy -- it isn't, never was. It's a world economy, and national moneys and American producers and consumers are simply elements coordinated within that larger spontaneous economic order. Here's an example of what can go wrong when your leading shamans preach the witchcraft of Lord Keynes:

The various arms of the government continue to accumulate massive debt and pump out truckloads of inflated dollars, and meanwhile American's pump those dollars overseas. Bush and Greenspan are fueling double digit industrial growth -- in China.

The good news is that all those dollars overseas will increasingly be worth less. The bad news is -- well, the bad news always comes down the road, for someone else (our children), and in the real lost of the far better conditions of wealth that we are now sacrificing. I.e. the bad news is always relatively invisible to those who don't know sound economics. If you borrow and spend instead of invest in production goods, down the road you will have an empty bowl of grain and debts to pay, rather than crops coming in as the bounty returned from your wise use of your seed corn. It's a old story-- once taught to children -- which fraudulent economists and selfish politicians deny at the cost of our future economic well-being.

A good history of the various attempts to include money within a understanding of an open global economy is International Monetary Economics, 1870-1960 by June Flanders. Another classic on this general topic if Monetary Nationalism and International Stability by F. A. Hayek, which is going for about $400 used from Amazon. (Wow, I'm rich!).

Posted by Greg Ransom