Japan has fallen victim to the Keynesian scam (And so have we)


Japan had “a lost decade.” Then it had another. We are past the halfway mark of the American “lost decade.”

Keynesianism has failed utterly and completely. It’s not that there wasn’t enough stimulus. It’s that the concept of “stimulus” is bunk. It’s real “voodoo economics.” It is a cult. A dream. And as is increasingly obvious even to the Keynesians, a nightmare.

For prosperity to happen markets must clear. The dead wood of the economy must be burned away so that newer, better adapted trees can take root. But if we put out every fire, if we suppress every economic correction, before long all we have is dead wood with a few sick trees poking through.

That’s what we see now in Japan, in Europe, and in the USA. And the thing about dead wood is that it will eventually catch fire. We’ve got a LOT of fuel to burn off. If a spark catches we are going to wish for stagflation.

forest-fire cc

(From CNBC)

We have to abandon these failed Keynesian policies while there is still time. We must boost our employment-to-population ratio, deregulate the economy, simplify the tax code, balance the budget, cut expenditures, end the Federal Reserve‘s runaway printing press and allow the free market to set interest rates and asset prices. Only by doing this do we stand a chance of not falling further into Japan’s stagflationary nightmare. But if we persist in following the Keynesian counterfactual, our fate will be worse than that of Japan, as the deluge of debt being dumped by our foreign creditors causes the dollar to be dethroned, interest rates to soar and inflation to skyrocket.

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