James Galbraith, the son of Keynesian hero John Galbraith, has recently written an article in The Nation. Apparently he thinks that if he keeps repeating discredited falsehoods they will become true. So people like him will continue to say that deficits are good for growth and the working class and will claim that governments never go bankrupt despite witnessing the Greek debacle.
The idea that deficits benefit the working class is especially annoying. Galbraith poorly brushes off the fact that deficits lead to monetary devaluation, which reduces the purchasing power of laborers:
“Too much spending, net of taxes, may lead to inflation, often via currency depreciation–though with the world in recession, that’s not an immediate risk.”
Not an immediate risk? And what happens when this flood of liquidity is present when economic activity rebounds? I suppose a statist like Galbraith would trust a central planning agency like the Fed to have the wisdom to make the proper adjustments. Just another Keynesian unicorn.
Also, he repeats that favorite point of all Keynes disciples, which is that deficits are needed to avoid economic catastrophe. He then makes the outrageous claim that Wall Street is opposed to deficits because it competes with bank loans as the source of growth:
“…[T]here are two ways to get the increase in total spending that we call “economic growth.” One way is for government to spend. The other is for banks to lend…Bankers don’t like budget deficits because they compete with bank loans as a source of growth.”
Before thinking that Galbraith is a comedian, understand that most Keynesians believe this non-sense. No, the savings needed for lending to occur has nothing to do with growth. A Keynesian pixie is that all growth is based on debt, either public or private. But don’t ask what makes debt possible, however. And also don’t ask how a debased currency erodes the item that makes debt possible (the item is savings, of course).
Galbraith is currently a professor at the University of Texas, poisoning the minds of our peers as America’s decline accelerates. We can only thank Keynesian ramblers like him for this wonderful phenomenon.
