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home : opinion : letters to the editor May 25, 2016

9/27/2013 9:55:00 AM

Editor, Times-Union:
The ideas (more like superstitions) of Keynes have done damage to the economic lives of Americans second only to the activities of Congress.
Fortunately, the op-ed piece in the Times-Union praising Keynes was penned by an outfit in Alabama; the journalists of the Hoosier State remain pure.
The problems with the piece are two.
First, the article refers to Keynesianism as a school of economics, which is not accurate.  Economics is a study of the allocation of scare resources.  Those of us burdened by a taste of Keynes sooner or later are shocked to realize that Keynes did not think scarcity was a fact of life.
Keynes, it seems, thought scarcity imaginary, easily overcome by an expansion of government-backed credit.  But, the reductio ad absurdem that is America today instructs that the credit usually finds it's way into the pockets of those close to D.C, the so-called 1 percent, and paid for, one way or another, by the so-called 99 percent. Somebody pays.  Nothing is free. Economics without scarcity is like astronomy without stars.
Second (somewhat related to the first), the article describes a portion of Keynesianism whereby an economy can be stimulated in the short-run by "an infusion of capital by a central bank...."
This knee-slapper illustrates one of the amazing, barely exaggerated, truths of current America – it's an allegedly capitalist economy that has no real financial capital.  It's mostly phony-baloney money, the result of credit expansion and liable to disappear in a poof of panic, not unlike the many financial panics since the creation of modern banking.
An infusion of capital?  Baloney!  The Central Bank has no capital.  It's assets are created at a whim by crediting its own books in exchange for bonds from the big banks.
Indiana has capital. It has human ingenuity.  It has corn and soy fields.  It has steel production.  It has ports and railroads, moo cows and pigs, Ace Hardware and family gardens.
It has Biomet, Zimmer and DePuy.  If the Central Bank were a bologna it's first name wouldn't be O-s-c-a-r, it would be F-R-A-U-D.  The Wall Street smarties can panic all they want and the corn will still be here.  The rail will still be here. The truck out back will be still be here.  These are capital and can't be created or "infused" without work.  
Keynesianism is nothing more than a few boneheaded assumptions underlying a bunch of math seeking to show that something can come from nothing.  It's a disgrace to humanity.
Matt Nellans
Gainesville, Fla., visiting Warsaw, Indiana and soon to be at the Soul Takers Haunted House at the county fairgrounds.

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