He should call it wet dreams party


I stole the idea for the heading of my post from a comment associated with the article. The story is of course about the watermelon aka Green Party aka Marxist in disguise, Van Jones who wants to create his new version of a TEA movement. He claims that the USA is not going broke. It seems that Van Jones lives in some kind of void, a place where he does not accept reality and a place where he can ignore good economics.

If John Maynard Keynes was alive today I am certain that he would have scrapped his theory based upon the evidence that we have confronted since at least the 1970s. The welfare state, where able-bodied people scam the system, does not work because it needs a constant stream of tax revenues to make the system work properly. Jones does not get this particular truth. The system that works best, where people who are ill, old-aged, or not able-bodied are cared for, is one where there is little in the way of government interference, and where the majority of able-bodied individuals are in the work-force. Taxes come from everybody. If people are not working and they are drawing upon the government coffers by way of benefits, they are a drain on the rest of society.

My best memory of Keynes’s writing is that he stated that taxes should be lowered when there is not a war, and raised when there is a war so that the government budget remains equal. In other words, Keynes recognized the value of lower taxes in getting people to work. The government income via Tax will still flow, and more of it will be received when fewer people are on welfare. This is probably why I will defend at least a portion of the thought of J.M. Keynes.

The real problem for Government has been the implementation of Keynesian theory, since it has been Marxists within government that have done the implementation, and always with their own agenda of flooding the system. The experience of the late 1940s through to the late 1960s was that government had a policy of high employment but also kept a hand on the levers controlling inflation and interest rates. The hand came off the levers as unions became more powerful and started to demand higher wages at a point where other factors were starting to get out of control. The late 1960s, early 1970s saw the first oil shock. This was also the time of the rise of stark raving mad Islamists. It was a time when the PLO came to prominence as they went on a killing spree around the world. It was also a period of higher inflation, higher interest rates, and out of control government spending.

Stop…. did you see what I just noted?  OUT OF CONTROL GOVERNMENT SPENDING. It is my theory that the stagflation and the prolongation of the stagflation of the 1970s was in fact due to the out of control government spending at the time. This is something that I have observed in Australia because the stagflation seemed to be a direct result of government policy at the time, as well as the other factors such as the oil shocks, as well as the increased demand for wage increases, union disputes, strikes that caused huge losses to production. I should point out that 1972 was the year that Australians went bezerk and elected the Marxist Gough Whitlam as Prime Minister based upon the use of a catchy tune “It’s Time”… aha… it was not. As soon as Whitlam took power he went on a spending spree and government debt went totally out of control. By the end of 1975 when he was tossed out of power, somewhat like a dirty rag doll is tossed out, the employment situation in Australia was devastating. The jobs market, especially at the graduate level had dried up.  Australia went through a lot of pain right through to the 1990s as successive governments tried to bring the deficit under control, as well as trying to free up our trading with other nations. (we used to have tariffs on imports).  The Howard Government brought us back into balance, but when John Howard was defeated, and Kevin Rudd-Julia(r) the Marxist Gillard (als known as Juliar Dullard) took control, Australia went from having a surplus to having a very huge budget deficit. Like the USA we had an unnecessary stimulus that was nothing more than pork barrel spending.

As you can see, the pattern is once again repeating itself. Perhaps, and this is theory, even just a thought I just had, the stagflation was also the problem in the 1930s where it was the economy that had remained stagnant despite the excessive government spending. OOPS… NOTE what I just said. There it is again… excessive government spending.

The point is that when government spends in this manner, it is taking available Investment dollars away from the private sector. When the investment dollars become scares, which is inevitable when Government is competing for a finite resource, then the price of borrowing (the interest rate) rises substantially.

This is why Van Jones, and a number of economists in the USA such as that extremely stupid Krugman, are so very wrong. Government spending of that nature destroys the economy. It does not stimulate the economy at all.

 

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