Thursday, July 02, 2015

The Orwellian-Keynesian Path

Nelson Hultberg
Greece defaults. The Dow plummets 350 points in one day. Ugly, ominous DEBT builds up like a giant snow cliff hanging over the economic valleys of the West. Is this the end of the Great Keynesian Charade brought to us by the collectivists with the advent of 1913 and the Roosevelt revolution of 1933? Not quite; but the end is near. It sits just beyond the "fiscal can kicking" that our government banking oligarchs have fashioned for us from Milhouse Nixon to Hussein Obama. A few more years of such illusory "policy making" will be all that is needed. The DEBT avalanche that we have contained far longer than wise men ever thought possible will begin its descent and crash into our lives. It won't be a slow form of destruction either; it will be a huge and horrific crash that will wipe out much of the quality of our way of life overnight.

It will begin as the marketplace reasserts its control in the bond market, and interest rates begin to climb in defiance of the Fed's massive rate suppression over the past decade. China and the world's buyers of U.S. Treasuries are not going to continue ponying up in the Treasury auctions like they have been doing for so many decades. In fact they are now beginning to get rid of U.S. Treasuries, and this means they will surely be buying far less of them in future auctions. This will mean interest rates must go higher. The days of Washington borrowing its way to power and phony prosperity are numbered.

With higher interest rates will come more pressure for the Fed to simply print money in order to fund the egregious prodigality of the welfare state that FDR and LBJ gave to us. With such blatant printing will come price inflation and a fall of the dollar's value throughout the world, which will then spur further rises in interest rates. The Keynesian chickens of "pseudo prosperity" that we have been enjoying for 80 years will come home to roost in a devastating decline for America. The boom will be replaced by the bust, and it will be massive.

If the Chinese Yuan is admitted into the IMF's club for reserve currencies this October (which is a serious possibility), the dollar will lose huge amounts of its attractiveness around the world. It will sell off steadily and disastrously over the next decade. Prices will scream in America. Standards of living will plummet. Such an event combined with the past 80 years of Keynesian monetary illusion cannot end well for America. We have broken the natural laws of economics for so long that we will have to now pay for our sins like all prodigals do. And it will not be a pretty sight.

The Charlatanry of Keynes

The question is, can our authorities grasp the fundamental flaw underlying the Keynesian ideology that lies behind the boom-bust nature of our modern economy? This flaw is that Say's Law is valid, and that Keynes was a charlatan to try and convince us that it was no longer applicable to modern times. As Jean Baptiste Say (the famous 19th century French economist) told us, "supply creates its own demand," and no amount of credit expansion by government bankers is going to increase demand beyond what can be created by the productiveness of our people. At least there can be no "increased demand" that is genuine and stable. Keynesian demand is equivalent to the high that a dope addict experiences. There must come a total destruction and crash to balance out the high that the credit expansion created. Therefore government juicing up of demand by "priming the pump" with liquidity injections of credit to the people will not make us all richer in the long run. And that is what is important - the long run. [For a detailed explanation of why this crash must take place, see my article, Keynesianism's Ugly Secret.]

Can our authorities grasp all this? Very doubtful. Thus America's crash will drag Europe, China, Japan, Australia, and the rest of the world into a protracted depression that will be more devastating than anything in history. Calls for renunciation of American sovereignty will be heard everywhere. A world bank will be championed. Capitalism will be blamed even though we haven't had capitalism since the 19th century. What we have is economic fascism, the merging of corporate power and state power. But all of this will elude our authorities. They will be in full panic mode and looking for a way to cling to power and climb back to some semblance of prosperity.

All of this will bring so much disorder, so much suffering, so much outrage among the people (who will not understand the Keynesian sources of the problem) that they will tolerate massive government centralization and martial law. They will scorn what is left of the Constitution. They will kowtow to demagogues preaching the need to nationalize the banking system and enact a massive redistribution of wealth through punitive progressive tax rates. They will agree with the Marxian mindset more and more. They will tolerate Marx's "new kind of freedom."

Can this disaster be averted? No, the crash cannot be averted. But what's important is can America be revived after the inevitable crash that is coming? Can the revival be genuine, i.e., a restoration of the Founders' vision of limited government? That is the paramount question that we now face. Is there enough patriotic desire for the real America among the people for them to want to restore it? Or will we succumb to Orwell's nightmare and become Oceania (North and South America), while the rest of the world becomes Eurasia (Europe and Russia) and Eastasia (China, Japan, Australia, Korea, the Philippines, etc.). Three regional governments to dominate the world.

Lincoln's Nationalization

This is the direction that we are headed. This is what is in store for our children. This is the price we paid when, 155 years ago, we began the nationalization of our government under Abraham Lincoln and the mercantilists of his day. It was with Lincoln that the Hamiltonian political philosophy finally gained power in our country. Till then we were Jefferson's "Republic of States" relying on free enterprise, gold money, and a strict separation of powers, i.e., "federalism." With Lincoln we shifted into mercantilism and political nationalization culminating with the Federal Reserve and the federal income tax in 1913, which led to the Great Depression, which led to Keynes in 1936, LBJ in 1966, and the Nixon to Obama government banking oligarchy.

[See Thomas J. DiLorenzo's, The Real Lincoln and Hamilton's Curse for two brilliant expositions of this treasonous departure from the original purpose of America.]

The collectivists have held power ever since Lincoln. Sometimes it's Republican collectivists, and sometimes it's Democratic collectivists who win at the polls. But always it's collectivism. Always it's more centralization of power. Each domestic economic crisis has brought us more centralization of government in Washington. And this next economic crisis, being a world crisis, will bring us world centralization of power. Regional government will be the beginning. We already have the forces set in motion with all the modern fervor for the North American Union (NAU) in which America, Canada, and Mexico are merged, first economically, which, of course, will eventually require political union in order to be workable.

Orwell's world is coming. It will take a miracle to stop it. Americans will have to rebel and demand the restoration of what they know deep in their souls is their birthright - freedom in both the political and economic realms. Political leaders who grasp the Orwellian-Keynesian source of our problems will have to appear after the crash to galvanize the people. Americans still have a love of freedom inside them; but they will need both intellectual and political leaders to clarify this and inspire them to be true to the country once again.

We live in epic times. A high-tech Dark Ages of Orwellian-Keynesian slavery to government banking oligarchs looms ahead. Where will you, the reader, stand in response? Will you fight such ignominy, or will you stay with the collectivist herd to enjoy the fruits of redistributed wealth and government privilege? If you are a true patriot, you already know where you will stand.

Nelson Hultberg is a freelance scholar/writer in Dallas, Texas and the Director of Americans for a Free Republic A graduate of Beloit College in Wisconsin, his articles have appeared in such publications as The American Conservative, Insight, Liberty, The Freeman, The Social Critic, The Dallas Morning News, and the San Antonio Express-News, as well as on numerous Internet sites. He is the author of The Golden Mean: Libertarian Politics, Conservative Values. Email: NelsonHultberg (at)