Peter Foster writes about that in today’s Financial Post. Longtime readers of The Locker Room will not be surprised. We have warned against the dangers of retrying the failed economic theory of Keynesianism, explained why it fails, and discussed how it’s based on buncombe and booga-booga. Even the president slips up on occasion and reveals that he knows it’s bull. Now everyone is seeing that we’re struggling under Keynes’ long-term.
Foster writes:
Free markets are based on risk and will always be prone to particular failure. Only government attempts to prevent or compensate for particular failure can threaten the systemic variety.
Post-crisis stimulus stimulated little but insupportable government debt — and now inflation. It was joined by a downward manipulation of interest rates that has promoted what Austrian economists called “mal-investment,” plus asset inflation.
The astonishing aspect of all this — as pointed out numerous times in this space — is that spend-yourself-rich Keynesianism had already been comprehensively refuted in theory and had spectacularly failed in practice by the late 1970s. …
As my colleague Terence Corcoran noted yesterday, Standard & Poor’s warning about a possible downgrade of U.S. government debt should come as no surprise, and certainly no comfort that either ratings agencies or global regulators have a clue about how events will unfold. Indeed, they are in a state of professional denial. In the Borg-like mind of super-bureaucracy, policy failure is merely a temporary glitch, the prelude to more and bigger — and invariably “smarter” — policy. Indeed, policy failure is regarded as synonymous with the acquisition of valuable input that will make the next policy truly potent. The one policy that is rarely countenanced is more reliance on market freedom.
