Posted on 11/29/2008 1:11:14 PM PST by reaganaut1
Inflation-racked countries scorn all the self-abnegating rituals that make capitalism work. They want their guns and their butter and they want them now. So they print money to pay for them. By contrast, low-inflation countries are committed to an ethos of scrimping and toiling that yields long-term rewards. In “The Great Inflation and Its Aftermath,” Samuelson studies the transformation of the United States from the first kind of country to the second.
The villain in Samuelson’s morality tale is a group of intellectuals who came into fashion during World War II, then came into power with the Kennedy administration. John F. Kennedy himself had sound economic instincts. But he was seduced by his chief economic adviser, a University of Minnesota professor named Walter Heller, who argued that more rational management of the economy would produce permanently higher growth. “Heller was an aggressive salesman for what ultimately became known as the ‘new economics,’ ” Samuelson writes, but he was “hardly a one-man band.” Many of the day’s leading economic lights — James Tobin of Yale and Robert Solow and Paul Samuelson (no relation to Robert), both of M.I.T. — held similar views.
At the heart of the “new economics” was a concept called the Phillips Curve, which summarized the trade-off between unemployment and inflation. The idea was that an economy could experience very low unemployment and high inflation, or very high unemployment and low inflation, or any combination therein. Heller persuaded Kennedy to move leftward along this spectrum by stimulating the economy — effectively accepting higher inflation in exchange for more jobs.
It worked for a time. The economy flourished; inflation inched up only marginally. But as the Kennedy administration became the Johnson administration became Nixon became Carter, growth stagnated and inflation skyrocketed.
(Excerpt) Read more at nytimes.com ...
The Times is favorably reviewing a book on the danger of inflation and meddling in the economy, but it favors massive new spending ("stimulus") and environmental regulations that will cause more inflation in the future. Another favorable Times review of this book was discussed at http://www.freerepublic.com/focus/f-news/2132882/posts .
He said, "In the long run, we're all dead." In other words, "The hell with your grandkids, live for today."
Well that childless old queen is long dead, but his "long run" has arrived, and we must pay the bill at last.
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
-~~Ludwig Von Mises
"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market, and so check the movement."
~~Harvard Economic Society, October 19, 1929
"Business will turn for the better this month or next, recovering vigorously in the third quarter and end the year substantially above normal."
~~Harvard Economic Society, May 17, 1930
“Several brokerage houses tumbled; blue-sky investment companies formed during the happy bull market days went to smash, disclosing miserable tales of rascality; over a thousand banks caved in during 1930, as a result of marking down both of real estate and of securities; and in December occurred the largest bank failure in American financial history, the fall of the ill-named Bank of the United States in New York.”
~~"Only Yesterday: An Informal History of the 1920’s" by Fredrick Lewis Allen
We have had all our eggs put in the Federal basket and then didn’t watch it. Even if we did watch it, we were told our eyes lie. When Secretary Paulson says he must have 700 billion, in days, to buy home mortgages, and then days after the bill says he’s not going to buy mortgages, we like good Germans did Hitler, pretend he never lied to us.
As you note, Keynes was a homosexual, one of several in his intellectual circle. One problem with homosexuals is that they have no real families, so they don't think about the next generation or care about the future. It's all about them, and all about now. Eat, drink, and be merry, and the hell with other people's kids.
Kennedy signed Executive Order 11110 (which granted the Treasury authority to directly issue money in the form of silver certificates) five months before his assassination. He also gave this speech seven months before his death.
What Paulson did was obtain plenipotentiary power over the disbursement of 700bil. I imagine a certain percentage of that money is guaranteeing the prosperity of him and his progeny after he leaves government “service” as well as that of friends and allies.A lot of that money, that which Paulson and his GS allies manage to get their arms around will be transformed into inflation-proof forms, like gold in off-shore locations. Cayman Islands will prosper mightily from this economic collapse.
I am a minor fan of almost Marxist use of class as a interpretive tool. If anything Paulson has brought the loyalty of the elite and his children are guaranteed access to the temples of privilege.
Another view, is that he is a prisoner of success and sees the world not as it is and will be, but as it was. Kind of like how Russian royalty used to haunt the capitals of Europe decades after the Bolshevik revolution.
I just know that he either out and out right lied, or didn’t know what he was doing.
Just to get more weird. Maybe Congress is in on this.
When I think about this in general terms, my head swims.
700 billion dollars for one man’s sole discretionary use is an irresistible recipe for pure unadulterated old time corruption.
You could be right.
Certain Keynsian freepers still employ the same brand of high-flying obscurantism to confer the ring of wisdom to utter BS.
It works on morons. “Gee Elmer, that shore sounds edecated and smart. It must be right.”
Yah think!? Looting the Titanic's valuables vault before taking to Lifeboat One dressed as a woman, that's Paulson et al.
Yeah, sure. Nice try though.
Exactly. And taking lessons on economic posterity from a blarney spewing gay fop is a sure path to societal doom.
And that gay fop, wherever he rots today, would consider our current predicament a great joke, and would laugh and laugh at where our former misplaced trust has brought us.
Ignorance is bliss. Keep smiling.
We completely agree. Reading Keynes, particularly the General Theory, is very difficult and his admirers like to tell you it’s because he is so profound.
We do not find it so after long study.
He was, however, very skilled at making money in the market himself.
One of the more fascinating accounts of his life concerns his having an audience with FDR, after which he is said to have said that he was appalled by how ignorant FDR was of economics.
Thank you for the link.
It is easy to forget how good a speaker he was and how
he moved us who were still relatively young then.
The speech of his that most rings in my mind these days is the one where he had the chart and he pointed out how reducing taxes would stimulate the economy.
And there will be no hiding the reality.
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
-~~Ludwig Von Mises
Still haven’t read a word of his works or life and times, have you?
Keep smiling.
We have had only one president trained in economics.Reagan had a degree in the subject and it showed. Among others Grover Cleveland and Calvin Coolidge had an understanding of how people act economically. Kennedy did one good thing, he cut taxes. Politicians are dynamic people and as such do not have time to bother with such a boring subject in college. That is why we do not tend to get presidents who understand it and why we do tend to get economic advisers who tell the president he can perfect the economiy by fiddling and jiggering.
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