Thursday, November 19, 2009

Reisman Quote on Keynes

I have been attempting to study the Austrian explanation for the Japanese economy as compared to the conventional Keynesian explanation which also bears relation to America's current economic problems. One of the basic features of Keynesianism is the so-called IS-LM analysis which, among other things, involves Keynes' convoluted and fallacious view of the relationship of investment to savings. I came across this great Reisman quote which serves to emphasize the very real devastation wrought by Keynes and his modern followers:
The Keynesians' preoccupation with the utterly fictitious problem of saving as a cause of poverty bears major responsibility for the very real problem of growing poverty as the result of a lack of saving. Based on their hostile economic analysis of saving, the Keynesians have brought about the enactment of correspondingly hostile government economic policies towards saving. The result has been economic stagnation and decline, whose nature and significance are captured in the words: the rust belt. Over a span of approximately two generations, the intellectual rot of Keynesianism has helped to bring about the physical rot of the industrial heartland of the United States.

Prof. George Reisman
Capitalism: A Treatise On Economics, p. 885

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