Thursday, April 09, 2009

Edmund Conway still shilling for Keynes

Edmund Conway, despite all of the Murray Rothbard books I keep asking him to read, is still shilling for Keynes. So I thought I better just write out the full history lesson myself, after his latest dreadful shill.

Jack Maturin on April 09, 2009 at 10:30 AM

Edmund, Edmund, Edmund.

What are we to do with you?

We will stay in this depression for as long as the governments of the world keep going with their interventions. We will come out of this depression, the "Bernanke Bubble", only when governments stop intervening.

They will do this for two reasons. The first, is that a very brave politician stands up with enough conviction to fight off the concerted interests of the bankers and the debtors in British society, and to convince enough voters that the only way out of this is to stop intervening. (I can only think of Daniel Hannan being able to do this. David Cameron is far too much of a coward.)

The second far more likely scenario is that the British government will run out of the means of intervening, because nobody will lend it any more money and the people will no longer be able to stand the stagflation caused by the Bank of England's printing press, or the new taxes lining up inside the Treasury, straining at the leash to wreck our lives even more.

Yes, if the government stopped intervening and stopped bailing everyone out with borrowed, taxed, or printed money, the subsequent economic cold turkey crash would be appalling. No-one is denying that. Because when you clear out ten year's worth of malinvestments in one fell swoop, then the anti-heroin spike will be really intense.

But then, relatively quickly, within one to two years, the pain will be over. The analogy is this. If we stop intervening, we will pull the plaster off really quickly. And yes, the instantaneous pain will be intense.

However, if we keep going with these utterly stupid government methadone interventions, based upon borrowing, regulating, and inflating, to be followed by taxing to pay for all of the borrowing, then we will drag the plaster off slowly, for a decade or more, with no great huge spikes of pain, but the patient enduring unbearable long-term agony, flecked with brief moments of respite.

If Gordon Brown is to claim any kind of mantle from history what he should do is this. Stand up and admit that he has been wrong about everything. Then to announce that he is going to sacrifice the next election, and not even personally stand himself, and then spend the next two years doing absolutely nothing while the spike of pain kicks in. To ease this pain, he can also throw his legions of Labour client-state voters onto the dole by sacking whole swathes of these parasites, who are supposed to be our servants rather than our masters, and giving the rest of us the money saved as tax cuts, so we can use this as a cushion for the two years of pain. The parasites will then be employed again, this time doing something useful in the productive sector of private business.

Once all of the bad businesses, built upon false premises caused by money held artificially cheap by the central banks, have been cleared out of the system, we can then start building again from a cleaned out base instead of, as now, continually wasting good money after bad by propping these businesses up, which are producing products nobody now wants, and which only produced those products in the first place because of the Bernanke Bubble, which induced a mistaken sense of financial euphoria in most of the population, causing them to splash out on needless luxuries.

One only needs think of the example of Jaguar, making huge powerful gas-guzzling cars, to think of those companies which made particularly poor choices and bad malinvestments over the last decade.

Nobody wants these cars in sufficient numbers to keep this operation going in its current form. So what is the miserable government plan to cure this malinvestment? To strip resources from those successful companies, who do make things people want, to continue pumping it into Jaguar et al, so they can waste even more money making things people don't really want.

This is why we will stay in depression. The mechanism is clear. We will continually throw good money after bad, into loss-making operations, until the money runs out. Then everybody will go bust and we really will have a proper depression on our hands.
Governments will then relish this opportunity, by destroying what little remains of our liberty by imposing military dictatorship upon us, as "the only way out".

We have been here before. And it is the Keynesians who have led us into both holes.

Once again, may I remind you of the Great American “Depression” of 1920-21. It started off worse than in 1929, with a worse unemployment spike, a worse downward spike in production, and worse GDP figures. And yet it was all over in a year, because Woodrow Wilson was too ill to start intervening and because President Warren Harding refused to do anything about it at all, once he was inaugurated, except cut taxes and US government spending.

Harding's lieutenant at the time, Hoover, insisted upon intervention, but Harding simply ignored him. (Not surprisingly, for these failures to intervene to "save" the US economy, Harding was savaged by the intellectuals and proto-Keynesians of his time, a battle which the economically illiterate historians also took up after Harding's death.)

And so we get to 1929. The lieutenant has become the President, and this time he intervenes with a vengeance (even though the Keynesians later fabricated the myth that Hoover hadn't). The depression lingered. So Roosevelt came in to do even more of the same. The depression endured. And endured. And endured, with stupid government intervention, after stupid government intervention.

Only in 1946, with Roosevelt out of the way, did the US economy finally begin to recover, with most of Roosevelt's controls being scrapped in the post-war period.

Read the history books, Edmund. It's all there. Yes, it's been muddied by the Keynesians and all of the other fellow-travelling socialists, including even Doctor Who scriptwriters at the BBC, but if you dig hard enough you will find out about Warren Harding's "depression" and how he dealt with it by doing nothing except cutting government spending and taxes. And how it was all over in one year flat.

That is what we need to do now. Will it happen? Of course not. Because Brown is determined to buy the next election with the taxes of our children, if any of us decide to stay in this country. However, in five years time when we are still in this mess, I want you to remember that a way out was known to you and not acted upon.

And this way out it did not involve your precious Keynesianism. All that benighted economic religion of voodoo has given us has been the depression of the 1930s, the stagflation of the 1970s, the twenty year recession in Japan, and the Bernanke Bubble depression of the 21st century, plus endless cohorts of government-employed court economists telling us that Keynesianism is the only way forward, despite its clear and obvious continuing failures.

The bust is the cure, not the problem. The problem was the boom. The only way to burst a bubble is with a pin. The more we keep inflating this bubble, to avoid the bust, the bigger will be the burst when it finally pops of its own accord.

The choice is clear. Put the pin in now and then clean up the smaller resulting mess. Or your shilled Keynesian solution, which is to keep inflating, until it really does burst into a gigantic mess.

If we do take that second path, and it all pans out as I have described, then you and Paul Krugman may have some explaining to do, when all of this is finally all over, when all of the money has eventually run out.

Good luck.


Anonymous said...

To which article were you refering?

I read one by Edmund Conway this morning on a world currency which had some excellent non-Keynesian responses but which now it is nowhere to be seen.

It would seem that if you now post "off party line" they just take the ball away.

Anonymous said...

OK I have it thanks, but whatver happened to the article on world Currency I wonder. You would have loved most of the comments.

Jack Maturin said...

Well, if I were to believe in the conspiracy theory of history, I would conclude that we may all may finally be wearing the Edmund Conway military column down, by constantly peppering it from the flanks, in our guerilla actions.

However, it's more likely to be a cock-up of the Torygraph's XML-loving web site techies making a mess of their site again! ;-)