Slowing Economic Growth: The True Death of Keynes.

The following chart was published not that long ago in a Gallup study. It depicts the real overall economic slowdown that has occurred in the USA since 1966:

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The implications are stunning. For over 50 years, the Keynesian economic establishment running the US government has claimed to be furthering economic growth. This is the entire point of what Keynesians aim to achieve. They eschew morality or principle as anything related to the economy; therefore, what else is there to shoot for other than growth? But growth is not what we’ve been getting.

They run the economic components of government. They run the big corporations. They run academia. This chart 100% belongs to the Keynesian camp. Nobody is responsible for this other than Keynesian economists.

Consider this: Since 1966, government spending is up. Free welfare goodies are up. Military spending is up. Public School spending is up. Regulation is up. The total money supply is up. The bailing out of big banks and big corporations is up. Public and private debt is – far and away – up. Basically, anything related to seizing and wasting your money is up, up, up. And every step of the way, Keynesians assured us: “This is necessary for economic growth.”

The bottom line of the chart is clear: Keynesian economics are a complete failure. Are any of them going to admit this? Unlikely. Here’s what they’ll say: “We need more!” In fact, they are already saying this. In 2015, Keynesian economist and intellectual darling of the Obama Administration wrote this:

Believe it or not, many economists argue that the economy needs a sufficient amount of public debt out there to function well. And how much is sufficient? Maybe more than we currently have. That is, there’s a reasonable argument to be made that part of what ails the world economy right now is that governments aren’t deep enough in debt.

I know that may sound crazy. After all, we’ve spent much of the past five or six years in a state of fiscal panic, with all the Very Serious People declaring that we must slash deficits and reduce debt now now now or we’ll turn into Greece, Greece I tell you.

But the power of the deficit scolds was always a triumph of ideology over evidence, and a growing number of genuinely serious people — most recently Narayana Kocherlakota, the departing president of the Minneapolis Fed — are making the case that we need more, not less, government debt.

This is insanity. Conveniently enough, I wrote an article a while ago on why Keynesians are the most insane people in government. Here, Krugman’s insanity is on full display. Nothing he advocates has achieved any increase in the real growth rate since the Keynesian golden era of the 1960s. How is more of the same supposed to accomplish anything?

When you dig yourself into a hole, the first thing to do is stop digging. Second, climb out. But Krugman and friends don’t want to climb out, or even stop digging. They think they can dig through all the way to China.

They won’t reach China. They’ll get incinerated in the Earth’s molten core. But insanity is as insanity does.

This trend is not going to change anytime soon. A trend over 50 years in the making will not change until something drastic occurs. Congress does not want to do anything drastic, like make enormous and meaningful cuts to government spending and debt. When something drastic occurs, it will have been involuntary: the inevitable default of the US government. When hundreds of trillions of dollars in long-term liabilities can no longer be sustained, Congress will end up making drastic choices because they have no other option.

At that time, all people will need to understand this: Keynesian economists were wrong, Austrian economists were right.

Not sure what that means? Then you need to start here: Economics in One Lesson, by Henry Hazlitt.

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