Failure Of Keynesian Economics

Team Obama has exposed the empty edifice that is Keynesian Economics, for the once glorious ‘multiplier’, the foundation of Lord Keynes economic thought has failed.

Early in our ‘market failure’ there were ironic historical contrasts reminiscent of Fascist leaders who disparaged of capitalism in the 1930’s.  We heard how capitalism itself as a way of life and its intellectual patrimony were in need of radical alteration.  But liberal governance itself is to blame for the pain the country now suffers.

The Federal Reserve kept interest rates low for too long, Fannie & Freddie continued to make irresponsible loans that only drove up housing prices while encouraging reckless borrowing, regulators looked the other way in light of ‘social justice.’  The result is our contemporary depression.

Lord Keynes and his Keynesian multiplier sought to smooth out business cycles through interjecting money (quantitative easing) into the economy.  But the failure here is intellectual:  boom and bust cycles are a monetary phenomena.  Just ask/read Hayek.

The democratic insistence justifying government interaction in the economy to smooth out market imperfections is not consistent with any cogent macroeconomic thought.

We’re learning this again after the success that was Reagan and the climatic defeat of stagflation.


About William Holland

Systematic Theologian/International Relations
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