The Gospel of Keynes! Now Over!
John Maynard Keynes set in motion a Gospel and a Model for macro-economics and political prosperity. This Gospel started back in 1933-34 (during the Roosevelt administration) and it has continued now for some 82 years. This gospel/model is now, however, about over and the End Game of Keynesianism is nye. The Gospel, however, is being stretched to the extreme so as to extend some semblance of economic activity in our current realtime markets. Just what was this Gospel? What were the key principles which made this gospel last for 82+ years?
The basic principles of Keynesianism are as follows:
1. Demand precedes supply…also called Demand management
2. Credit and debt produce (create) demand and then supply (production) follows
3. Some asset inflation (higher general prices) is necessary so that Debt can be continually serviced
4. Fiat money is the key and Centralized control over fiat money is necessary to further continual growth
5. Governments (under the authority of Central Banks) can give us continual Guns and Butter (prosperity)
6. In the End (long run) we are all dead, so live for the NOW (ignore long run consequences)
7. Governments supersede private markets when push comes to shove (serious recessions)
8. The General Business Cycle can be mostly abolished via a model of borrow and spend
Basically, the Keynesian gospel produced a model where Credit and Debt create Demand and credit/debt will initiate more supply (production) to grow all our markets continually. To create progress and assure continual growth and prosperity governments need to help the private markets by Spending and Borrowing (as deemed necessary). Mr. Keynes started his gospel during the Administration of Franklin D. Roosevelt (after the last Great Depression). He helped to advise Franklin (FDR) to depeg gold from the American dollar and allow a fiat (faith) dollar to emerge. This started in 1934 and was expanded internationally in 1944-46 (with the Bretton Woods Agreement).
The concept of defining the American dollar to gold during the Bretton Woods Conference (at $35/ounce) was really not part of Keynesianism but it was necessary to get International agreement at the Bretton Wood Conference. The concept of gold as money, however, lasted only until 1971. On August 15, 1971, our then President, Richard Milhous Nixon, closed the International Gold Window and the result was the Keynesian fiat dollar (with only ‘faith’) as our global currency. Faith and oil then created the fiat Petro dollar in 1974. America was KING over monetary affairs and politics and gold was mostly demonetized as a currency for international trade.
The new currency for International trade and International reserves (balance of trade) became the American fiat/Petro dollar. With oil prices pegged in American dollars, the fiat (faith) dollar became viable as the International Reserve Currency for the entire planet. We have now experience some 41 years of the Petro dollar as the Reserve Currency for the World. This period is now coming to an End as our International counterparties have chosen to separate from this American Ponzi scheme dollar. Russia, China, Brazil, India, South Africa and many other smaller nations are now choosing to develop alternative schemes for International trade and finance.
The END of Keynesianism and the American fiat dollar is nye! An International RESET is developing and this could create the Crash of the American dollar and its hegemony in 2015. A crash of our major Stock Markets and/or Bond Markets could set-off this RESET. Yes, the Gospel of Keynesianism is mostly OVER. The economic MODEL of Keynesianism (mostly abstract numbers and math) are being viewed as unworkable going forward. What started out as a sound theory in 1934 is now being exposed as mostly a huge American Ponzi Scheme and our Dollar is being exposed as a Cyberspace fantasy. Math and cyber numbers (our current currency) can not last much longer as our pricing mechanism for goods and services.
We have entered the End Game for Keynesianism and for American hegemony over finance, money, economics, and politics. A huge market crash is brewing and about to reveal itself in 2015. The principles of Keynesianism (Credit, Debt, Inflation, Fiat money, Central Bank control) are being revealed as a FALSE Gospel. The Gospel of Keynesianism is now essentially OVER. A Reset is likely to start in 2015 and a NEW Gospel and Model is now needed. Few seem to recognize the failure of this Gospel of Keynes. John died on Easter Sunday, 1946. His Gospel, however, has lasted for nearly 70 years since his passing! What will be the New Gospel going forward? Everyone now needs to THINK on this issue! Enjoy! I am: https://kingdomecon.wordpress.com.