The Vampire Keynes
By: Brooks A. Mick
John Maynard Keynes was a socialist who was also a famous economist. As a socialist, he was interested in economic theories that would justify big government and big spending. It was rather clear that, were government to spend a dollar, it first had to tax that dollar away from someone who had earned it or borrow it. Either way, a dollar was removed from the private economy for each dollar spent, and no reasonable person could conclude that a benefit to the economy would have occurred.
But Keynes kept thinking about it, such as his thinking was, and he invented, out of whole cloth, the Keynes Multiplier Effect, wherein he postulated that for each dollar the government spent, $1.50 dollars of economic benefit would result. Those who proposed the Obama stimulus spending, indeed, stated that $1.55 of benefit would accrue for each dollar spent.
But what is the evidence for this multiplier effect? Does it actually occur? Well, no, it doesnâ€™t. A plot of delta-GDP versus delta-Debt shows that a dollar spent never produced a dollar of benefit to the economy. Perhaps $0.66 of benefit occurred in the past. In other words, the economy is HARMED each time the government deficit spends. But reality never entered any big-government spenders minds. Mindless spending is the rule for liberals. If one observes the graph closely, one notes that, as debt increases, the supposed “benefit” to the economy decreases. We were on a path to debt saturation in 2015, such that really severe damage would begin to occur for each dollar spent. But in 2009, the massive spending of Obama reached the tipping point early, and each dollar spent DAMPENED the economy by 45 cents.
But like a vampire sucking blood, the Vampire Keynes and his bogus theory have been sucking the blood out of economies the world over. Greece is clearly on the brink of failure, propped up only by the inflow of capital (mainly borrowed by other sick economies!) into its dying economy. The deficit-spending vampires have been sucking there for a long time. Portugal and Spain are teetering on the brink of death, also, their economic blood having been sucked by the acolytes of the Vampire Keynes.
Modern Keynesian economists are merely disciples of the Vampire Keynes, themselves encouraging the bloodsucking. And in the halls of academe, they are biting the necks of thousands of gullible young students, who in turn promote economic bloodsucking.
Itâ€™s time to find where Keynes lies in his coffin, dig him up, and pound a wooden stake through his heart. Itâ€™s time for the Vampire Keynes to truly die.