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Keynes’ Prophetic Words

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"By this means [printing money] government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft." John Maynard Keynes (1883-1946), British economist.

How true Keynes’ words have been. Since its inception in 1913 the Federal Reserve Bank of the United States has perpetrated policies that have devalued the U.S. dollar by over 90 percent. It has done this by increasing the money supply arbitrarily through fractional-reserve banking, interest rate adjustments and yes as the context of Keynes’ statement indicates through the printing of money out of thin air.

For the most part, almost all Americans have been oblivious to this grand larceny of epic proportions. Many realize that they cannot buy as much as days gone by, but they don’t know exactly why. Many realize that they will have to save/invest a lot more for a better retirement than their grandparents, but again many do not know why. I remember a history teacher of mine bemoaning the fact that unlike his father of a generation earlier he could not afford to buy a new automobile each year. He made more money than his father did, but that just didn’t convert into a new car per annum. The irony was that my history teacher, like many, loved Franklin Roosevelt, who was of course the very scoundrel responsible for taking us off the gold standard and allowing the Fed through our elected officials to print money at will and debase our currency.

What is truly amazing is that today given the consequences of fiat money and all the trillions of dollars the Fed has already printed for “economic recovery” there is still a large clamoring for more artificial dollar production to “thaw” credit markets. Most pundits, journalists, and economists are badgering the incoming Obama Administration and Congress to do more. Well, their wish is about to come true.

Congress is considering an $825 billion “economic recovery plan”. The plan would do everything from making homes more energy efficient to, if you can believe it, infusing cash into money-losing companies to help them stay afloat. It’s the old foolishness that the government can solve all of our problems with no costs. Of course, for those of us that understand why we have to save more for retirement and why most of us no longer can buy a new car every year it is more of the same — the Federal Reserve printing currency with no backing and thereby devaluing it based on false economic theory that was discredited long ago.

The facts speak for themselves. Uncle Sam has already injected over $2 trillion to thaw credit markets and stimulate the economy. What do we have to show for it – a surging unemployment rate, the lowest consumer confidence in a long time, and still no pick up in banks loaning money again. As of the week ending December 17, 2008, the cash reserves of banks in the U.S. increased to $774.4 billion from $604.7 billion in November and an incredible $2.39 billion in December 2007. In December the yearly rate of growth of commercial bank loans fell to 3.55% from 4.8% in November and a hearty 10.2% in December 2007. Remember how we were told by the Paulson/Bernanke/Bush crime syndicate that if Congress didn’t appropriate $700 billion in October the world would come to an end? Their scare tactics were based on phony economics then and consideration of even more spending now is based on equally phony economic assumptions.

Make no mistake about it, even though the Fed has pumped trillions of dollars into the economy prices continue to fall. That’s because consumers, banks, and other businesses have not bought into the government’s phony recovery scheme and are saving their cash for harder economic times to come. Those times will come and be accompanied by the realization of most Americans that the dollar has been devalued enormously and they better spend theirs before it is too late. At that point, the resulting inflation and lack of goods to buy from all the spending will send us into an economic ice age. Unfortunately, even then, Keynes words will be prophetic. I am sure the Fed’s printing press activities will not be blamed for our disaster. Like now, the blame will fall on capitalism.

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About Kenn Jacobine

  • Clavos

    I’m not a Keynesian, but he was right about the indiscriminate printing of money.

    Good article, Kenn.

  • http://www.fontcraft.com/rod/ Dave Nalle

    Kenn, do you know of any relaible source for specific information on exactly how much money the Fed has printed on something like a month by month basis?

    Dave

  • http://www.fontcraft.com/rod/ Dave Nalle

    NM. I answered my own question. You can actually find what seems to be pretty accurate info on the money supply at shadowstats.com, and the figures they have certainly suggest a direct correlation between printing too much money and inflation.

    But there are also some other interesting things to notice. For example, when the economy started to recover from the post-911 recession, the fed responded responsibly and began cutting back on the money supply with a corresponding dip in inflation and increase in the value of the dollar. And it looked like it was going well and they were going to reestablish the essential relationship between the money supply and the GDP which currently serves in place of the gold standard, but then halfway through last year everything went to hell in a handbasket.

    But even more interestingly, all this printing of money is only part of the picture of how the Fed increases the money supply. A lot of what they create is not in the form of actual money, but in other forms of credit. And they haven’t been going hog wild with credit, so the amount of overall inflation they’re producing is not as great as the increase in the money supply would suggest. Which I guess means they might be able to bring it all back under control if the economy turns around.

    For what that’s worth.

    Dave

  • bliffle

    Deficits require the printing of money. Tax cuts and increased spending both produce deficits. GWB did both.

    The horrible thing is that the Fed not only prints money, it also seconds the health of the economy by controlling shortterm interest rates: duties that become politically contradictory.

    Printing money would naturally lead to inflation, but the Fed can temporarily dam up that inflationary trend by unnaturally depressing interest rates. Oh, they can also tell lies, in the interest of “restoring faith” in the financial system.

    Of course, the dam will eventually burst.

    Of course, the Fed doesn’t automatically just print dollar bills (although that’s another province of this renegade and unaccountable outfit), they actually just say they did, and issue cash substitutes, like treasury notes.

    It’s another conflict of interest for the fed.

    So many chaste duties are dumped on the Federal Reserve that only a monkish saint could be expected to administer it well. We haven’t had any kind of monk or saint in the fed, we’ve had Alan Greenspan, a (poor) musician with NO economics training, just a passing acquaintance with the novels of another untrained nitwit, Ayn Rand.

    This brings us to the profound maunderings of Click and Clack, the Tappet Brothers, who pose this poser:

    “If two nitwits work on a problem will the result be better or worse than if only one nitwit works on it?”

    We don’t really have to solve this problem to understand that any number of fools can screw things up adequately to insure disaster.

    Because we have disaster. And at fault is our American habit of elevating utter fools to positions of power that they are patently unqualified to handle, based on mysterious ideas like we’d “like to have a beer with him”, or “it’s time we had a black (or catholic, or actor, or…) President”.

    The resultant calamities are inescapable.

    Ta ta.

  • Jack D

    I still can hear the giant sucking sound of jobs leaving the U.S. as predicted by Ross Perot in 1992, and I can see the Washington lobbyists with their alligator shoes as they continue to control our country.

  • bliffle

    I hope that you meant “alligator skin shoes”. For a moment I had a frightening image of aggressive lobbyists assaulting legislators with their feet firmly epoxied to the backs of a pair of snapping mean American Alligators!

  • Cindy D

    I’ll have one of whatever bliffle’s having.

  • pablo

    Funny how the author nor any of the posters make mention that the FED is neither Federal nor does it have any reserves, and is in fact owned for the most part by foreign entities. I guess thats not important eh fellas? hehehehe

  • http://lovesliberty.tripod.com Kenn Jacobine

    Dave,

    Shadowstats is an excellent site. Another is inflationdata.com.

    Folks, let’s not forget about fractional reserve banking as well. This is what really makes our banking system an illegal cartel. If anybody other than the Fed did this they would be scorned like Bernie Madoff (can anyone say social security) and sentenced to …. house arrest. Banks should be required to use their profits to expand their businesses like other industries. The funny money game Congress allows the banking industry to play is criminal. Any member of Congress that supports the Fed on this issue alone should be indicted and tried for fraud.

  • http://takeitorleaveit.typepad.com/ Roger Nowosielski

    Very good point, Pablo. I don’t have the facts at my fingertips to back it up, but will dig ‘em up. No, they don’t consider it important, it would seem to me. But the globalist movement is alive and well, so we’ve got nothing to worry about, I guess.

    Another interesting thing is, the mention of Keynes but only for the most of banal observations. Keynes and FDR, they were just jerks who didn’t know their ass from their elbow. I’m getting real tired hearing the same old opinions regurgitated over and over again, and for no other reason than to keep snug and comfy with prejudices acquired from birth.

    I would give my right hand for the kind of acumen and intellect that Keynes had; but of course, it’s easy for lesser mortals to think everybody’s an idiot.

  • http://www.associatedcontent.com/user/39420/joanne_huspek.html Joanne Huspek

    Am I the only one thinking we are screwed, no matter what they do?

  • Brunelleschi

    These economic problems like the Fed printing money make no sense because the system itself makes no sense, and there is nothing anyone can do about it.

  • http://www.indyboomer46.blogspot.com Baritone

    Thus spake the gloom and doomers! Prepare for Armageddon! All is lost!

    Since the Bushies – the right’s one time standered bearers – failed so miserably at, well, at about everything they touched, all good capitalists are now in the mode of lambasting everybody and predicting the total dissolution of our economy. It would seem that the only industry benefiting from all this are gun makers and sellers. Owning a large variety of weaponry appears to be the only solution left.

    You also obviously assume that Obama and company will continue and probably exacerbate the Bush cluster fuck. Many of you continue in the assumption that our new president is “an empty suit.”

    So far, during the transition, Obama has done little to support that notion. No transition in memory has been so well organized and with as little disruption. The few mis-steps taken have been minor and minimally disruptive. The President-Elect has made a number of unexpected moves in his effort to establish open discourse from all factions.

    Of course, the proof will be in the pudding. Where we are six months from now, one year from now may tell the tale. Keep in mind that Obama is being handed a rat’s nest teeming with rats – some of them rabid. (Thank you so much, George.)

    I don’t predict success. Solutions to many of the problems facing this country may well be beyond the ability of any one president or any one administration to achieve. Events outside the purview of our government could scuttle everything.

    Until our country’s elders, our braintrust, see the light and beg on bended knee all of you doomsayers into the inner sanctum to impart your collective wisdom, I guess you’ll all just have to either sit and watch the apocalypse as it unfolds, or make your escape to – well, I don’t know where – maybe you can all gather in Dave’s walled city for a last stand – “Remember the Nallimo.”

    B

  • Clavos

    “Remember the Nallimo.”

    Not bad, ‘Tone.*

    *Even Dave has to have gotten a chuckle out of that one.

  • http://www.fontcraft.com/rod/ Dave Nalle

    Funny how the author nor any of the posters make mention that the FED is neither Federal nor does it have any reserves, and is in fact owned for the most part by foreign entities. I guess thats not important eh fellas? hehehehe

    This is because most of us aren’t nearly as concerned about the zionist banking conspiracy as you are. Plus we also might be intelligent enough to know that banking is an international business, and that despite that fact, every Chairman of the Fed has been a US citizen and that currently every single member of the board is not only a US citizen, but also born in the US.

    International banking conspiracy my ass. We have no one to blame but ourselves.

    Dave

  • http://www.indyboomer46.blogspot.com Baritone

    Clav,

    I thought it was inspired. Dave does at time display a decent sense of humor, but we’ll see.

    B

  • http://www.fontcraft.com/rod/ Dave Nalle

    B-Tone, my guest house will only hold 3 and if you want to stay there during the coming breakdown of society you’ll be required to clean the pool and feed the chickens.

    Dave

  • pablo

    #15

    How I love ignorance adoring itself.

  • http://www.indyboomer46.blogspot.com Baritone

    Dave,

    You have a guest house? Well crap! We’re not taking about having the in-laws down for a long week end. We’re talking about the apocolypse. No niceties. If the guest house can house 3 people comfortably, it should be able to handle 20 or 30 under duress – maybe what, 50 or 60 in the main house. And, hey. You’ve got a garage, don’t you? Another 15 or 20. The weather’s usually not too bad in that part of the country except for the summer heat. How much acreage do you have? Even an acre or so could handle maybe a hundred or more tents, lean-tos and the like. You could house a small army. You could camouflage the pool and make that the armory. Stock up on some old “C” rations – get some immersion heaters.

    It was not my intent to take shelter at your digs. Presumably, as a lefty, I’d be counted amongst the enemy.

    But, on second thought, I’m easy. If it comes to living or dying, I’m not that much of an ideologue. I could easily adopt a righty-tighty perspective. If push comes to shove, if I’m obliged to dodge “…the slings and arrows of outrageous fortune…” I could probably “…take arms against a sea of troubles, and by opposing…” yada, yada, yada.

    Yep, I’m just a fair weather liberal.

    B

  • Jack D

    #15 — January 18, 2009 @ 13:42PM — Dave Nalle

    “International banking conspiracy my ass.”

    Dave’s ass has spoken.

  • Clavos

    I hear ya, B-tone. I prefer to be flexible, too. Country? What country?

  • http://www.fontcraft.com/rod/ Dave Nalle

    You have a guest house? Well crap! We’re not taking about having the in-laws down for a long week end. We’re talking about the apocolypse. No niceties. If the guest house can house 3 people comfortably, it should be able to handle 20 or 30 under duress – maybe what, 50 or 60 in the main house. And, hey. You’ve got a garage, don’t you? Another 15 or 20.

    I’ve got 5 garages and a barn, actually. Imagine the potential. I’ll reserve a spot in the chicken coop for you, B-tone.

    The weather’s usually not too bad in that part of the country except for the summer heat. How much acreage do you have? Even an acre or so could handle maybe a hundred or more tents, lean-tos and the like. You could house a small army. You could camouflage the pool and make that the armory. Stock up on some old “C” rations – get some immersion heaters.

    I prefer MREs. And with 5.5 Acres there’s plenty of room. I think the problem would be feeding the masses. My 7 chickens and their 40 eggs a week aren’t going to do the trick.

    It was not my intent to take shelter at your digs. Presumably, as a lefty, I’d be counted amongst the enemy.

    Hardly. The enemy will be the marauding bands of the urban underclass. If you have useful skills nad a gun we can find a place for you. Know any welding, blacksmithing, farming skills? Hey, bring a cow and I’ll let you sleep in a bed.


    Yep, I’m just a fair weather liberal.

    Liberalism and survival are not incompatible. It’s the combination of liberalism and socialism which will do you in. If you’re interested in a good read, take some time out and order a copy of The Last Centurion from Amazon. You might find it enlightening if you can stand reading a treatise on social order disguised (thinly) as a novel.

    Dave

  • oroso

    having a minimal fixed income I feel cheated, having paid off my meager home, no new car nor included in the over-all bailout of which many were rewarded for racking up the bills and crying
    foreclosure, spread out the printing press again and we all can have an acre, and a mule. Wonder whos crops would be planted and who’s would be trampled by the masses who couldn’t figure out to plant, water, and protect from the elements.
    Either way we will all be feasting on rock soup if left up to the current trends of take, take and take some more

  • http://www.indyboomer46.blogspot.com Baritone

    Chicken coop works for me. I had a great aunt and uncle who owned a farm out west of Indy back in the day. The farmstead was a fairly nice little 5 room bungalow. However, they chose to rent that out for the income while they did in fact opt to live in a (slightly) converted chicken coop. Hey, if it was good enough for Roy and Daisy, it should be good enough for me.

    Sorry, no welding or smithing skills. I am however a gardener – that’s close to farming, no?

    B

  • oroso

    I happened upon this site and read the postings which I found informative and amusing. Another thought was how complex does the basic have to be?
    I’m an average to below average labeled person but see the gist of the conversation leaning towards the reality that the true test in these and future times is in the ability to provide the basics of need for survival.
    Coming from a family of farmers I learned that in the depression, life wasn’t much different for them than prior years except having to move aside ashare the shelter and crops with those in need. IIt can be a blessing to realize ones chicken coop
    can be a home of plenty and everyone can contribute to the greater good. Your Great uncle and aunt probably knew this as did mine. Stone soup has nourished many through the ages.

  • http://takeitorleaveit.typepad.com/ Roger Nowosielski

    Dave,

    It was not my intent to take shelter at your digs. Presumably, as a lefty, I’d be counted amongst the enemy.

    “Hardly. The enemy will be the marauding bands of the urban underclass. If you have useful skills nad a gun we can find a place for you. Know any welding, blacksmithing, farming skills? Hey, bring a cow and I’ll let you sleep in a bed.”

    Dave, there IS hope for you. From some of your writings, one could get the impression that you’re devoid of all humanity. Foregoing ideological differences. The new Dave.

  • http://www.indyboomer46.blogspot.com Baritone

    Dave,

    How exactly would you describe the “urban underclass?”

    B

  • http://takeitorleaveit.typepad.com/ Roger Nowosielski

    Good question!

  • http://www.fontcraft.com/rod/ Dave Nalle

    How exactly would you describe the “urban underclass?”

    People who live in large urban areas whose population is such that it is impossible for local agricultural resources to support the population without long range shipping or trucking. And who also lack the ability, skills or will to relocate to a sustainable region without becoming a burden on the regional economy.

    Dave

  • http://www.indyboomer46.blogspot.com Baritone

    As we watch Dave wriggle out of that one…

    So, these underprivileged folk who have no will to relocate will, however, form up and wage war against your walled compound?

    And if they had the will to relocate, where would they go? Let’s say a few hundred thousand New Yorkers abandoned the mean streets and set out to stake their claim in rural America. Will anyone be waiting for them offering the proverbial 40 acres and a mule? Do you anticipate that farmers in upstate New York will welcome a hundred thousand or so displaced poor blacks, latinos and whites with open arms?

    Looking at it another way, is it reasonable to assume that large numbers of inner-city people should just give it up and starve in just pennance for their evil urban ways? Don’t such people have equal stature in our society with folks who live in walled compounds?

    B

  • Cindy D

    Many wouldn’t need to relocate. You’d just have to step up and install a complete urban agriculture program.

  • http://www.fontcraft.com/rod/ Dave Nalle

    Bari. You’re thinking that shooting the messenger will solve the problem, and it won’t. The problem exists independent of the messenger.

    In a real breakdown of society those urban areas are going down in flames. There will be a minimum 80% death rate in the first year, and most people won’t even try to get out, they’ll just die in place.

    The government will not have the capability to feed them or to keep order.

    Not my wish, but a reality.

    Dave

  • http://takeitorleaveit.typepad.com/ Roger Nowosielski

    Yeah, there is a breakdown of society. And the “urban underclass” is the most visible symptom. But it was the promise of the Industrial North, with its promise of jobs in manufacturing, away from slavery and cotton plantations, which had them all coming. Now Mr. Capitalist had decided that there are greener pastures, away from the homeland, in the far reaches of Asia and below-subsistence countries. And why should he care, because it’s all about profit. So the blight in the cities is just a consequence of past actions. But then again, Mr. Capitalist never looks to the past, only the future.

    Happy hunting.

  • http://www.indyboomer46.blogspot.com Baritone

    Of course Dave is absolutely right…unless of course, he’s wrong, which I suspect. Dave reads too many apocalyptic novels.

    B

  • Brunelleschi

    B-

    No kidding!

    Apocalyptists are as old as politics. “Follow me, or you will be sorry when the shit hits the fan!” Jesus was the most well-known and influential apocalyptist. He’s been wrong for 2,000 years. Dave sounds like a weak apocalyptist.

    Roger-

    What do you think the founding fathers would have done with capital flight and abandonment of urban areas if they could have forseen it back in the day?

  • Clavos

    What do you think the founding fathers would have done with capital flight and abandonment of urban areas if they could have forseen it back in the day?

    Slave-owning capitalists that they were, they most likely would have parked their money in the Caymans of the day, and moved to the country — actually, most of ‘em DID live in the country.

  • http://www.fontcraft.com Dave Nalle

    Roger, if that’s what Mr. Capitalist is going to do then we should damned well make our top priority making sure that we have the greenest pastures.

    Dave

  • http://takeitorleaveit.typepad.com/ Roger Nowosielski

    Dave,

    Perhaps it’s all going to come to that – every man for himself and may the best man win. And all the progress we’ve made thus far, economically and in terms of building a democratic society, is a very thin veneer. As to our founding fathers, you’ve just burst my illusion.

    Roger

  • Brunelleschi

    Dave-

    That sounds like a euphemism for greed. Make ME rich, screw the rest of you….. Not very clever.

  • oroso

    The rural community would gladly welcome anyone who is in want or need of self-suffiency if they are able and willing to contribute, each person has some level of skill which can be utilized despite the arrogrant train of thought which labels and boxes people attempting to limit their opportunities. The Gov. is famous for creating sub-cultures and fostering dependance as is the elite who go on and on yada yada yada, w/out stopping to actually do something rather than foster a think tank mentality. There is a lot to be said for knowing when to go when to stay and when to know your screwed either way.

  • oroso

    question? Given the truth of human nature and the distortion of equality does anyone truly believe that in a national crisis those who are already under-served, disenfrachised and desperate would do anything differently than the prime example we were given last fall. The mob of people trampling a man to death to save a few bucks at Walmart. The truth is like the Donner party when your starving and dying, survival takes on a whole new meaning. As for giving those who leave the city 40 acres and a mule, or creating urban gardens; how about the masses passing the hat and buying their own. When people have a vested intrest in something they usually take care of it.