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Keynes Explained
Keynesian economics is a theory that you will hear quite a lot about when the talking heads are discussing ways to "fix" the economy.  Today I want to try and explain what it is and why it is a terrible theory that in the long run is doomed to fail.  Lord John Maynard Keynes (usually pronounced "canes", but more properly pronounced keinz) is a British economist who is generally credited with all manner of feats such as "saving capitalism".  Unfortunately, the truth is far more complicated and it can, and I will, be argued that his theories were the largest catalyst driving us to the current situation.....bankruptcy.  Keynes died in 1946 so his ideas are not new.  His main theory was that if an economy was failing and GDP was falling. the best way to get things going was to have the government borrow money and spend it to "stimulate" the economy.  This is one of those theories that works, initially, and then later, (sometimes much later) the true costs of the policy are revealed.  
On its face, it would seem illogical that debt spending could benefit the whole and that is correct.  The only people helped by this technique are the sellers of the purchased goods and even they are usually just having future sales moved to the present.  The Keynes supporters say that the government spending stimulates the economy but in reality, because it is debt spending, just takes money out of one part of the economy and puts it into another.  This is not growth, it is debt spending.  Just as the neighbor who has two new cars, swimming pool, a 3 week vacation to Hawaii, and a $15,000 Rolex watch may appear to be prosperous, if it is all bought with debt, he is unfortunately worse off.  Moving future earnings into the present is a bad way to "grow".
Here's a video from the CATO Institute that explains this a little more thoroughly:
So in reality, this theory is just another redistribution scheme.  Redistribution is always sold as a something that will help everyone with no negatives.  The health care bill which was just passed in the Senate is a prime example.  I heard a Senator say that, "this health care bill has something good in it for everyone."  Now, obviously there are at least some people this won't help but more importantly, what about the FACT that there is something bad in the bill for almost everyone.  Higher costs and less freedom.  This is just another ploy to implement socialism.  As far back as 1948 there were those who knew that any "ism" was dangerous.  Here is a vintage cartoon from 1948 which could be playing today:
Keynesian policies are just another disguised version of "ism" tonic.  The bottom line is that government spending is not helpful to the economy and any benefit at all is merely temporary.  Look at the complete failure of the cash for clunkers program.  Sales fell off a cliff right after it ended.  This was entirely predictable, but that didn't stop them from passing it.   
Another trick of the "ism" sellers is to change the name of things to better suit their needs.  Notice that you don't hear the term global warming much anymore?  Instead it is called "climate change".  Now that is open ended isn't it?  Doesn't the climate change all the time?  Weren't there ice ages and warming periods throughout the last million years?  Of course there were and there weren't many men to "blame" it on.  Warming is easily measureable.  Change isn't.  The earth isn't warming like we thought?  Let's just change the rules and go to a nebulous "change" term.  This same name switch trick is now being tried with the term progressives. Who can be against progression?  They aren't socialists or fascists, their progressives.  How are those progressive policies working?  From the Glenn Beck show:
Fairness.   That is is justification for all manner of governmental nonsense.  Where in the constitution does it say that everything must be fair?  Only in regards to the law, not in regards to income or possessions, that is socialism.  Life isn't fair, you no doubt heard that from your mother, and yet politicians are passing multi trillion dollar bills to make things fair.  "It isn't fair that insurance companies don't cover preexisting conditons."  It might not be fair in some cases, but what if a guy waits until he gets a disease and THEN gets insurance.  Is that fair to everyone who was paying premiums the whole time?
Keynes also believed that interest rates should be reduced to zero.  And today the rates are.....right near zero.  They are going up, but not because the Fed wants them to:
Why the Fed cannot raise rates.

To all; there has been much speculation recently as to when the Fed may begin raising rates. I don't believe they can tighten other than maybe 2 or 3 token .25% hikes and here is why. The Treasury has $12 Trillion of "funded debt" and over $60 Trillion (possibly more than $100 Trillion) of unfunded debt. Using just the "funded" number if the Fed were to raise rates 1% it will cost the Treasury roughly $120 Billion more in interest each year. Let's say they raised rates to the unheard of level of 5%, now were talking $600 Billion more in interest each year. The Treasury simply cannot afford this!

We are dangerously close to the point where the marketplace will do this mathematical exercise and realize the Treasury and more importantly our currency is untenable. The budget deficits have blown out the debt levels to a point where the Fed has NO as in ZERO options of ever returning the U.S. interest rate structure to normal levels. The Fed will not be able to raise rates to keep pace with other central banks once they begin to raise rates nor will they be able to raise rates to defend the Dollar's value should it start breaking down further in the FOREX markets. In a nutshell they are backed into a corner where their only tool left is more quantitative easing.

This is a car with only one pedal, THE GAS! Unfortunately the Fed is now in a position where they can't even lift their foot fear of stalling. So when you hear someone from government touting the Fed beginning to tighten, don't believe them. I would speculate that even the mention of tightening will blow the "carry trade" to pieces and finish the aborted decline of late last year and early this one. A rise in rates above 4% on the 10 year Treasury will be a signal to me that the blow up phase is beginning again. Obviously the Fed does not want to allow this but a breakout over 4% will be proof positive to investors that the Fed is losing their grip. Last years leverage has been rebuilt, greed prevails again yet the patient will die because the "doctors" are terminally ill with "insolvency and fraud".

I suspect that Gold will initially be caught up in the coming worldwide "vomit". I also believe that a delivery default will be what will separate Gold from all other deflating assets. When it happens it will be unmistakable! It amazes me how so many just cannot see the road map but then again if they did then we would never be in the current situation. The coming default will be a shock to the masses and viewership of CNBC and the like, sad to say I believe it will even be a shock to those of us who have prepared! Regards, Bill H.

This is Keynesian policy.  It doesn't work.  Interestingly, Keynes didn't believe in personal debt.  He had none.  It is also said that he came up with his theory to reach a preordained conclusion....more government spending.  Greater government control.  Maybe this was plan from the beginning.  In fact, it's been the plan for a long time.....
These guys (the elitests) have wanted to control everything for a long time and Keynes was used to "produce" theories that could be used to achieve the goals.  The Federal Reserve Bank is the entity that is being used to implement the policies that will ultimately bring us down.  The health care bill is merely another tool in the bag.  Did you happen to see this:

Economists Opposing Fed Audit Have Undisclosed Fed Ties
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As the debate over an audit of the Federal Reserve intensifies in the House, one camp is trotting out eight academics that it calls a "political cross section of prominent economists."

A review of their backgrounds shows they are anything but.

In a letter to the House Financial Services Committee earlier this month, all eight wrote that they support the type of amendment now being introduced by Rep. Mel Watt (D-N.C.). Watt's approach purports to increase Fed transparency while it actually would tighten restrictions on any audits that could go forward.

The letter was sent around Wednesday by Watt's staff to members of the committee in advance of a vote scheduled for Thursday.

Watt's measure is in competition with an amendment cosponsored by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.), which would repeal the restrictions that Watt leaves in place.

But far from a broad cross-section, the "prominent economists" lobbying on behalf of the Watt bill are in fact deeply involved with the Federal Reserve. Seven of the eight are either currently on the Fed's payroll or have been in the past.

The Fed connections are not outlined in the letter sent around to committee members on Wednesday, but are publicly discernible through a review of their resumes, which are all posted online.

In September, Huffington Post reported that the Federal Reserve has accomplished a soft form of effective control over the field of monetary economics simply by employing -- and being the means for career advance -- for an overwhelming proportion of the discipline.

So the Fed connected economists argue for not auditing the Fed?  Sounds a little self serving, doesn't it?  Unfortunately, it is unlikely that this audit will happen.  Now that the health care bill is law, the die has been cast.  Inflation is now inevitable.  It WILL happen.  Health care will be used to spend all manner of money and if you think they are only going to spend the $800 billion that is projected, I've got ski chalet in Miami that I'd like to sell you.  The spending must happen, It's the plan.  Nothing is by chance here.  Make sure you gave some gold for when the inevitable happens, because inflation is on the's in the plan.