Keynesian ecomomics at work. If you want to destroy an economy, employ Keynesian economic policies.
For those unfamiliar with Keynes and Hayek, the following is a good explaination:
“Hayek seemed to view economic systems as organic, rather like living organisms, in which there are stocks and flows that tend to produce good health, effective operation, healing processes; automatically seeking correction and resolution of imbalances and perturbations. Keynes seems to have viewed economic systems as machines that need starting and stopping, steering and controlling, speeding up and slowing down, balancing against other machines and other objectives; generally in need of management to correct imbalances and perturbations. These are quite fundamental differences in philosophy and in political outlook.
Hayek felt that application of Keynes policies gives too much power to the state and leads to socialism. Keynes believed that Hayek’s acceptance of “natural” market mechanisms was naive and failed to explain the major movements in the world economy and in national developments.
In recent history, the period 1945-1980 saw mainly a Keynesian trend in economic policies throughout the “western” world, in which governments saw it as their responsiblity to intervene to maintain high employment, stable prices, acceptable exchange rates, balance of trade and so on. From 1980 to about 1998, Hayek’s ideas and those of Milton Friedman were more influential so that governments were seeking to be less engaged in intervention and more concerned to improve the smooth, unimpeded operations of markets. Since about 2000, there has been an uneasy movement to use elements of both philosophies, and some economists have embarked on a re-evaluation of the “classical” and the “Keynesian” approaches to see if a synthesis exists at the various boundaries of understanding.”
http://answers.yahoo.com/question/index?qid=20080221111905AAJmA5t
OK first of all I am dead set anything Keynesian (just another word for Socialism in my book)
However John Maynard never come close to proposing the system that most Governments (who claim they are applying Keynesian Economics) use.
Keynes stated that Governments should accumulate income in the boom times and create "SURPLUSES"! (not deficit spending IOW) Actually spend FAR LESS money than they take in and then ***GASP*** cut back income streams A.K.A. CUT TAXES in the Bad Times (Recessions, Depressions, etc.) and pump money back into the economy! (stimulus plans like investing in infrastructure and the like.)
The problem is that Progressives/Socialists just tax and tax and spend and spend and never institute the 2nd and most important part of Keynesian Economics.
Of course like all things Socialists it all sounds real good until you introduce humans into the equation, then the system collapses in on itself. Reason being is a Few People think they know what is better for all people instead of letting those people decide for themselves)
This is why TRUE market economics is far superior. Yes there will be recessions and such but if businesses know that Government won't swoop in and try to fix the situation they can react in a logical fashion. (Pull back investment and cut expenses and watch for signs to expand again.
The problem with Socialism is it puts its faith in Government to do the right thing which is sheer folly. The reason market economics works is that Ole' Adam Smith's invisible hand WORKS! People doing what is best for themselves when trading also is good for whomever they trade with! (If you are an unfair trader then those who trade with you will seek elsewhere to trade.)
The key “bail out” for Keynes was his quote “in the long run, we’re all dead.” That’s the only ultimate solution for Keynesian policies.