Redneck Review!
No. 125 - 9/11/17
To backtrack a bit...Review #124 asked the question, where did our $20trillion dollar debt in this country come from, is it significant, and does its size even matter?
The claim was made that the thinking behind it has been going on for decades, and can be traced to the theory of John Maynard Keynes, definitely one of the world's most influential economists in the last century. The Keynsian conviction is that national governments with the cooperation of large national banks should control economies, using interest rates, reserve requirements, and the quantity of money in circulation, to keep economies on an even keel.
Complicated in its detail, the theory basically claims that recessions and depressions can be avoided by "quantitative easing," stimulating the economy by increasing the money supply. Then the theory goes on to call for reversing the process, using the same tools to reduce the money in circulation to combat over heated economies resulting in serious increases in the cost of living, and what is commonly called INFLATION!
Well, it is significant, because it is easy to research and prove that the dollar has lost close to 90% of its purchasing power over the last 75 to 100 years. Anyone who dares to compare prices during that last period with those we see today knows it is true. The Lewiston Tribune just recently for one tiny example, states that we might well be looking at a 60 cent postage
stamp in the near future!  Compare that to the 3 cent one that existed for decades just a half century or so ago!  Or the 20 cent gasoline one could buy in the mid 1900s with the fluctuating price we deal with today!  Hundreds of examples can be found with relative ease!
Significant?  What about the approximate $61,000 each man, woman and child in our country would owe if it were required that we begin reducing or paying off our national debt?  And how and why has that debt grown from about $260 billion during the 1950's, to the immense $20 trillion level today, a figure nearly 75 times the size it was then? Repeat that 75 TIMES!
Well, it is asserted here that the Keynesian theory is basically flawed and is therefore a major part of the problem!  History shows conclusively that our government and governments all over the world have been quick to attack recessions and economic downturns, and thus cater to the voters they serve, by increasing money supplies, lowering interest rates, encouraging debt, and increasing handouts and giveaways!  The good times are enjoyed by all!
But, history also proves conclusively that the flip side of the Keynesian theory is rarely used, as to use it in democratically controlled societies is economic suicide!  Witness the continued tale we are told that the FED,  the Federal Reserve System, is going to begin "raising interest rates!"It has been asserted here repeatedly and by untold knowledgeable economists that a significant increase in those rates would result in disaster, so bluntly it is not going to happen!  UNLESS, it is done deliberately by the FED to make the Trump admin-istration look bad!  It might allow more 1/4% increases now and then, but a return to normal rates that were common years ago would bankrupt governments, corporations, and indebted individuals everywhere!  So the FED and the Keynesians are bluntly caught between the proverbial rock and a hard place!
But is there not an even more basic reason for the debt and the pickle we are in?  Back in the second paragraph above, it was stated that Keynesian theory is the cause of the problem. In future reviews, it will be claimed that human nature itself is an even more basic cause, and is in fact the reason Keynes theory is doomed to fail! Give some thought to this in the week ahead!
Jake Wren

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