Fabian: John Maynard Keynes, the stealthy enemy of human freedom

Dodgy to follow Keynes which the Western Fabian Word has done- ignoring the Mises economic standard…..

I don’t like making ad hominem attacks, but what I’ve read about the Fabians and Keynes over the last few days makes it necessary to assassinate Keynes (- in the figurative sense!) – so that he, along with Marx and other corrupted evil geniuses, do not ever arise again. 

Why this focus on Keynes all of a sudden?

I’m still learning. Learning is a lifelong endeavour and one can’t simply use the pretext of one’s degrees to claim expertise and wisdom. Being a science graduate, I barely knew anything about economics till I decided, after joining the IAS, to study it seriously. I realised that I needed to learn economics if to be an effective policy maker. But the MA in economics that I then obtained from Panjab university was more a technical degree than a fundamental study of the logic and debates of the discipline (I did well in mathematical economics because of mathematics background but I now realise that one needs to read widely, and iteratively, to even begin to understand economics). 

I further studied economics in Australia (Curtin university) and then in USA. Only then did I started reading seriously about Keynes. However, Keynes had largely been discredited in the acedemia by then. (As Krugman notes, Keynes has not been taught in most graduate courses at least since the mid-1970s). I was therefore taught Lucasian mathematical macro-economics and some dynamic theory by Richard Day. I developed some idea of Keynesianism in this process (including a bit of IS-LM stuff), but not much.  

Modern macro-economics based on micro-economic foundations didn’t make much sense, either. No doubt, it is better attempt to understand the real world than Keynesianism is, but it remains divorced from the fundamental principles of freedom and the social contract. 

I therefore find the classicals, including FA Hayek, far more satisfying and consistent. Supplementing this knowledge with my experience in public administration, I came to a coherent understanding of the economy that involves understanding the incentives at work within a society’s institutions, and assessing its level of freedom. That is a classical liberal approach, quite different from Keyensian or Marxist approaches. Without firm roots in classical economics, I believe that modern economists tend to rapidly move into statist solutions.

Keynes still has a significant presence in the academia through New Keynesianism (e.g. Stiglitz, Kruman), and receives prominence each time the US government agencies and Federal Reserve Bank – that have diligently followed his ideas – mess up things.

Indeed, that’s the other point – that Keynes is still very prominent inside government agencies. Keynes is the cause of serious government failure across the world and significant devaluation of currencies. The (Fabian) London School of Economics, the League of Nations, the New Deal, the welfare state, various international central bank concepts that led to the International Monetary Fund, the World Bank, the Brettonwoods system which led to the collapse of the gold standard, and even the United Nations – all have been strongly influenced by the Fabians, but more particularly Keynes. 

Hence his ideas MUST BE OPPOSED. Till today I only opposed his ideas. From today, I now oppose his person, as well. Keynes at Harvard has opened my eyes. [Download the Word version which I find is easier to read and search] 

To ensure that I wasn’t jumping to rash conclusions, I did some quick research. this research confirmed that Keynes was indeed a deeply corrupt, devious person, who plotted to shift the world towards his own brand of socialism – by stealth.  It is therefore my mission (apart from my main mission – to reform India) to destroy Keynesianism across the world. And one of things I must do is to destroy his character. Sometimes ad hominem attacks are warranted.   

I’m now going to publish two blog posts in rapid succession. This one is written largely by me, based on my research over the past two days. It will aim to assassinate Keynes’s character. The other one (tomorrow) will be a cut-and-paste from Murray Rothbard’s work, and will aim to demolish his theories. 

The character assassination of Keynes

Keynes theories and policies make sense only in relation to his character. His main policy goal in life was the destruction of capitalism and his chosen method was to destroy the value of money, to destroy private savings, and to orchestrate the takeover of all investment by the state. To achieve that goal he deployed the Fabian method of deception and subterfuge.  

Keynes the pervert

That he was a homosexual – and a particularly promiscuous one at that (many Fabian socialists were part of his network) – was news to me (such things aren’t mentioned in textbooks on macro-economics). Thus, “In 1967 the world was startled by the publication of the letters between Lytton Strachey and Maynard Keynes. Undisputed evidence in their private correspondence shows that Keynes was a life-long sexual deviate. What was more shocking was that these practices extended to a large group. Homosexuality, sado-masochism, lesbianism, and the deliberate policy of corrupting the young was the established practice of this large and influential group which eventually set the political and cultural tone for the British Empire.” [Zygmund Dobb’s Keynes at Harvard]

“Keynes always ready to guide others freely advised his fellow debauchees to go to Tunis, “where ‘bed and boy’ were also not expensive.” Keynes at Harvard]. Thus Keynes probably molested children. 

He married Lydia Lopokova (in 1925 at age 42), so that in public he would appear to have a normal life, but “Keynes marriage was obviously ‘an arrangement’ since he continued his association with his male amours until his death. In fact, his male sweetheart, Duncan Grant, served as best ‘man’ at his wedding.” [Keynes at Harvard]

Keynes was a chronic liar and a fraud

Keyenes was a serial liar and deceiver.

Weak knowledge of economics but falsely putting down von Mises:

“The young Keynes displayed no interest whatsoever in economics; his dominant interest was philosophy. In fact, he completed an undergraduate degree at Cambridge without taking a single economics course. Not only did he never take a degree in the subject, but the only economics course Keynes ever took was a single-term graduate course under Alfred Marshall.” [Source:Murry Rothbard’s Keynes, the Manp.14]

Because of his father’s influence with him and his own passion for socialism (Marshall was the economic advisor of the Fabians and railed against ‘inequality’- see Joseph Schumpeter’s History of Economic Analysis, p. 765 – cited in Keynes at Harvard), therefore Marshall was taken in by Keynes and gave him a job. A case of nepotism at its worst

Murray Rothbard says it all: Was Keynes, as Hayek maintained, a “brilliant scholar”? “Scholar” hardly, since Keynes was abysmally read in the economics literature: he was more of a buccaneer, taking a little bit of knowledge and using it to inflict his personality and fallacious ideas upon the world, with a drive continually fueled by an arrogance bordering on egomania. … He possessed the tactical wit to dress up ancient statist and inflationist fallacies with modern, pseudoscientific jargon, making them appear to be the latest findings of economic science. Keynes was thereby able to ride the tidal wave of statism and socialism, of managed and planning economies.”[Keynes, the Man, p.32] 
Fraud perpetrated against von Mises
Keynes reviewed Ludwig von Mises’s German Treatise on Money and Credit in 1914, slandering it, but it later came out that he did not understand German! As Murray Rothbard notes, ‘This was Keynes to the hilt: to review a book in a language where he was incapable of grasping new ideas, and then to attack that book for not containing anything new, is the height of arrogance and irresponsibility.” [Murry Rothbard’s Keynes, the Manp.12]]
Fraud against Pigou

“Keynes began his systematic campaign of destruction against Pigou when Pigou rejected his previous approach in the Treatise on Money, at which point Keynes also broke with his former student and close friend, Dennis H. Robertson, for refusing to join the lineup against Pigou. The most glaring misstatement in The General Theory, and one which his disciples accepted without question, is the outrageous presentation of Pigou’s views on money and unemployment in Keynes’s identification of Pigou as the major contemporary “classical” economist who allegedly believed that there is always full employment and that money is merely a veil causing no disruptions in the economy—this about a man who wrote Industrial Fluctuations in 1927 and Theory of Unemployment in 1933, which discuss at length the problem of unemployment! Moreover, in the latter book, Pigou explicitly repudiates the money-veil theory and stresses the crucial centrality of money in economic activity. Thus, Keynes lambasted Pigou for allegedly holding the “conviction . . . that money makes no real difference except frictionally and that the theory of unemployment can be worked out . . . as being based on ‘real’ exchanges.” An entire appendix to chapter 19 of The General Theory is devoted to an assault on Pigou, including the claim that he wrote only in terms of real exchanges and real wages, not money wages, and that he assumed only flexible wage rates (Keynes 1936: 19–20, 272–79).

“Thus, it is clear that Keynes seriously misrepresented Pigou’s position and that this misrepresentation was deliberate, since, if Keynes read any economists carefully, he certainly read such prominent Cantabrigians as Pigou. Yet, as Rutten writes, “These conclusions should not come as a surprise, since there is plenty of evidence that Keynes and his followers misrepresented their predecessors” (Rutten 1989: 14). [Murry Rothbard’s Keynes, the Manpp.23-25]
Keynes should have been sued by Mises and Pigou. But these were gentlemen. 

Keynes, even at 55, advocated immorality as a philosophy of life

The following statement of Keynes summarises his immoral character: 

“In our opinion, one of the greatest advantages of his [Moore’s] religion was that it made morals unnecessary….We entirely repudiated a personal liability on us to obey general rules. We claimed the right to judge every individual case on its merits, and the wisdom to do so successfully. This was a very important part of our faith, violently and aggressively held, and for the outer world it was our most obvious and dangerous characteristic. We repudiated entirely customary morals, conventions and traditional wisdom. We were, that is to say, in the strict sense of the term, immoralists. (Essays in Biography. The Collected Writings of John Maynard Keynes. Vol. X. London: Macmillan, [1951] : 142–43) [Murry Rothbard’s Keynes, the Manp.7]

Moore (- an active Fabian and , whose philosophy Keynes claimed to follow) was more than a mere philosopher: “Lytton Strechey and J.M. Keynes … sought Moore’s advice in arbitrating sexual disputes relating to their claims for this, or that, male sweetheart. Moore was installed as unofficial mediator on these jurisdictional claims. Various accounts of Moore, Keynes and Lytton Strachey lying on a rug together, in different rural retreats, attest to Moore’s physical association among that homosexual coterie.” [Keynes at Harvard]

Keynes the megalomaniac

Keynes was unbelievably arrogant. E.g.: “Keynes “had a clear idea of his role in the world; he was . . . the chief economic adviser to the world, to the Chancellor of the Exchequer of the day, to the French minister of finance, . . . to the president of the United States.” Pursuit of power for himself and a ruling class meant, of course, increasing adherence to the ideas and institutions of a centrally managed economy.” [Murry Rothbard’s Keynes, the Manp.11]

“Johnson notes that Keynes’s “instinctive attitude to any new situation was to assume, first, that nobody was doing anything about it, and, secondly, that if they were, they were doing it wrong. It was a lifetime habit of mind based on the conviction that he was armed with superior brains . . . and, Cambridge Apostle that he was, gilled with superior sensibilities” (ibid.: 33).” [ibid]

Keynes engaged in insider-trading

 “Whether Keynes used inside Treasury information to make such investment decisions is still unproven, although suspicions certainly remain (Skidelsky 1983: 286–88).” [Murry Rothbard’s Keynes, the Manp.14] 

In my view, given what we know of Keynes’s character, he almost certainly must have used insider information to make money. It is virtually impossible, given his character, that he did anything honestly.

Keynes’s close association with communist Russians and Russian spies in the West

His Russian wife, Lydia Lopokova, was deeply linked with the Russian communists: “In the midst of such repressive conditions, Lydia and Maynard were allowed unrestricted privileges to visit relatives and to travel freely. Even foreign heads of Communist Parties and representatives of the Communist International could not secure such a broad Soviet indulgence”  [Keynes at Harvard]

–  “[Harry] White served as a Soviet agent while doubling with Keynes as the architect of the World Bank and the International Monetary Fund” [Keynes at Harvard] (White remained close to Keynes, even at his deathbed. Keynes surely knew a of communists very closely). 

Keynes was a closet socialist

Keynes’s version of socialism was different to Marx’s but it had many elements in common. Not only was central bank not based on the gold standard a crucial part of his model – so that currencies could be debased – but he had this idea (along with Marx) that a smart set of people existed who could rule the rest of us. Keynes always tried to massage his language to pretend he was not preaching socialism, but that was consistent with the Fabian socialist strategy.

Keynes’s fascination with inequality and ‘classes’ in society

That Keynes was in favour of equality is obvious even in The General Theory (p.372) where he writes: “The outstanding faults of the economic society in which we live are its … arbitrary and inequitable distribution of wealth and incomes.” [Note how he calls the results of the market system – of voluntarily choice – as “arbitrary”]. Jealousy against the rich drives Keynes, as it drove Marx.

In The Economic Consequences of the Peace he wrote: “Europe was so organized socially and economically as to secure maximum accumulation of capital. While there was some continuous improvement in the daily conditions of life in the mass of the population, Society was so framed as to throw a great part of the increased income into the control of the class least likely to consume it. The new rich of the nineteenth century were not brought up to large expenditures, and preferred the power which investment gave them to the pleasures of immediate consumption.  In fact, it was precisely the inequality of the distribution of wealth which made possible those vast accumulations of fixed wealth and of capital improvement. . . Herein lay, in fact, the main  justification of the Capitalist System.  .If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a regime intolerable.”

Further: “. this remarkable system depended for its growth on a double bluff or deception.  On the one hand the laboring classes accepted from ignorance or powerlessness, or were compelled, persuaded, or cajoled by custom, convention, authority and the well-established order of Society into accepting, a situation in which they could call their own very little of the cake, that they and Nature and the capitalists were co-operating to produce.  And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of “saving” became nine-tenths of virtue and the growth of the cake the object of true religion.  There grew round the non-consumption of the cake all those instincts of Puritanism which in other ages has withdrawn itself from the world and has neglected the arts of production as well as those of enjoyment. . . Saving was for old age or your children; but this was only in theory—the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.”

I can’t distinguish between this Keynes’s opinions and Marx’s, in his Communist Manifesto. Keynes had a strong socialist mindset, focused on class analysis, and inaccurate in many ways. [See this for more details]

Letter to his mother:

In 1917 at age 30 he wrote to his mother about his passion for communism: “My Christmas thoughts are that a further prolongation of the war, with the turn things have taken, probably means the disappearance of the social order we have known hitherto. With some regrets I think I am on the whole not sorry. The abolition of the rich will be rather a comfort and serve them right anyhow. …Well, the only course open to me is to be bouyantly bolshevik; and as I lie in bed in the morning I reflect with a good deal of satisfaction that, because our rulers are as incompetent as they are mad and wicked, one particular era of a particular kind of a civilization is very nearly over.” [Keynes at Harvard

Socialism and “socialisation”

“Keynes’ book, End of Laissez-Faire, was his most pronounced and clearcut advocacy of socialism.” [Keynes at Harvard] In this book, “Keynes boldly declares: In fact, we already have in these cases many of the faults as well as the advantages of State Socialism. Nevertheless we see here, I think, a natural line of evolution. The battle of Socialism against unlimited private profit is being won in detail hour by hour.”[Keynes at Harvard]

Mrs. Joan Robinson (a well known economist and colleague of Keynes) herself noted that the differences between Marx and Keynes are only verbal (not real). She wrote; “The time, therefore, seems ripe to bridge the verbal gulf” between the two. [Keynes at Harvard]

Schumpeter, a socialist, was very pleased that Keynes’s work rivaled Marx’s in undermining capitalism. [Keynes at Harvard]

“Margaret Cole, English Fabian revolutionary, has stated: “We Socialists used Keynes and the U.S.S.R. as touchstones” (Circa 1923).” [Keynes at Harvard] Keynes and Marx were naturally seen as of the same piece by those who knew what socialism was all about.

Even the General Theory: “The State will have to exercise a guiding influence on the propensity to consume, partly through its scheme of taxation, partly by fixing the rate of interest, and partly, perhaps, in  other ways. Furthermore, it seems unlikely that the influence of banking policy on the rate of interest will be sufficient by itself to determine an optimum rate of investment.  I conceive, therefore, that a somewhat comprehensive socialization of investment will prove the only means of securing an approximation to full employment. . .It is not the ownership of the instruments of production which it is important for the State to assume. If the State is able to determine the aggregate amount of resources devoted to augmenting the instruments and the basic rate of reward to those who own them, it will have accomplished all that is necessary.  Moreover, the necessary measures of socialization can be introduced gradually and without a break in the general traditions of society. (p.378)

Also: “The central controls necessary to ensure full employment will, of course, involve a large extension of the traditional functions of government.” (General Theory, p.379)

Keynes’s deep relations with the Fabian society

Few people knew during his lifetime that Keynes was an active member of Fabian society. This was typical, being the standard approach of infiltration adopted by the Fabians. But his association with the society was very deep.

Through his father:

His father was an active member right through. Indeed, “The elder Keynes book was required reading among Fabian socialists and was listed for sale in the official organ of the American Fabian Society under the listing, “Recommended books on Socialism and Social Reform.”” [Keynes at Harvard]

Through George Bernard Shaw

“[George Bernard] Shaw was a chief patron and sponsor of Keynes in Fabian socialist circles in England and the United States. Keynes gave Shaw a full report of the progress he made in writing books over a period of seventeen years.” [Keynes at Harvard]

“In 1925 in an article entitled “The Future” Keynes declared rapturously, “What a debt every intelligent being owes to Bernard Shaw!” This statement was repeated by Keynes in 1932” [Keynes at Harvard]

Sydney Webb:

“In 1926 Keynes emphasized his pro-bolshevik position by writing that he was on the “extreme left” as compared to Sidney Webb the head of the Fabian socialists in Britain.” [Keynes at Harvard]

Fabian society events:

“For many years editions of the Fabian News bore announcements of Keynes’ lectures at Fabian socialist functions.” [Keynes at Harvard]

Fabian society also re-published most of his works under its banner. That it also helped use its contacts to sell his books is outlined in Keynes at Harvard.  

Keynes’s influence on Hitler’s economic policies

Fabian socialists and Keynesians actively supported communist USSR and the two main fascist dictators – Hitler and Mussolini. Note also that Keynes designed Russia’s currency – in his official capacity in the UK Treasury. “Soviet officials were effusive in their thanks to Keynes for designing the first Soviet currency for them” [Keynes at Harvard]

“In 1928 on his way back from the Soviet Union Keynes had a long conference with the German economist Hjalmar Schacht. Keynes reported that he and Schacht agreed on Keynesian policies. Thirty-four months later Schacht joined hands with Hitler and utilized Keynesian methods to socialize the German nation for a war economy. When World War II began Keynes declared, “that Britain would have to employ all of the weapons of Dr. Schacht.” Later Keynes reiterated that, “the various recipies devised by Dr. Schacht for Germany would have to be applied by Britain. . . .”” [Keynes at Harvard]

“Keynes once remarked that “in offering a theory of employment and output as a whole, which departs in important respects from the orthodox tradition,” he might expect “less resistance from German, than from English, readers.”For, his theory of output as a whole, he said, was “much more easily adapted to the conditions of a totalitarian statethan was the then reigning economics of laissezfaire. This disarming sentiment appears towards the end of the preface to the German edition of The General Theory.” [Keynes and Hitler, Narindar Singh, Economic and Political Weekly, Vol. 29, No. 42 (Oct. 15, 1994), pp. 2755-2757+2759-2766].

Mussolini was (at least indirectly) influenced by Keynes:

“Mussolini personally set his approval and signature over a book which proclaims: Fascism entirely agrees with Mr. Maynard Keynes, despite the latter’s prominent position as a Liberal. In fact, Mr. Keynes’ excellent little book, The End of Laissez-Faire (l926) might, so far as it goes, serve as a useful introduction to fascist economics. There is scarcely anything to object to in it and there is much to applaud.” [Keynes at Harvard]

Lenin was a fan of Keynes: “In 1919 Nicolai Lenin issued a wildly enthusiastic panegyric on Keynes book, The Economic Consequences of the Peace. He declared, “Nowhere has the Versailles Treaty been described so well as in the book by Keynes.””

(The fact that Keynes got unrestricted access to travel in USSR is also related to a long-standing and close relationship between the Fabians and Lenin – and Keynes’s direct relationship with Russian spies.]

Keynes the anti-Semitic racist

As a 17-year old Etonian Keynes wrote the following in an essay entitled, ‘The Differences between East and West: Will They Ever Disappear?’

“[W]hether these two branches of the human race [European and Oriental] will continue to live side by side, or whether the one will succeed in absorbing the other. We can best discuss this question by taking into consideration the characteristics of two oriental races…viz, the Chinese and the Jews [who]…have done their utmost to make themselves indistinguishable from Europeans and they have signally failed.

“It is not that the Jews are traditionally the accursed race that makes anti-semites, it is because they have in them deep-rooted instincts that are antagonistic and therefore repulsive to the European, and their presence amongst us is a living example of the insurmountable difficulties that exist in merging race characteristics in, making cats love dogs” [Keynes 1900:2]. [Was Keynes Anti-Semitic?” by Anand Chandavarkar, Economic and Political Weekly, Vol. 35, No. 19 (May 6-12, 2000), pp. 1619.]

Now, this was when he was only 17. Did he change his mind at 42? No!

“Keynes, it can be noted, tended to explain away mass murder in large part on the “Russian and Jewish nature” rather than a logical development of socialism itself. The goal of socialism is clearly Keynes’ objective. It is interesting to note the undercurrent of anti-semitism in Keynes’ reference to “some beastliness” in “Jewish nature.” In the same article Keynes also observed that he had doubts “Russian Communism” would “make Jews less avaricious.” (John Maynard Keynes, A Short View of Russia, Hogarth Press, London, 1925.) [Keynes at Harvard].


This was only the highlight of the material I’ve read in the last couple of days. There’s lot more in the references I’ve provided.

In brief, I’d suggest that Keynes’s work should be given the same stern look we use to analyse Hitler’s writings: a sociopath with deadly goals for society. We can’t forget the person where such extreme deviousness is involved. Indeed, we can’t forget the devious nature of the Fabian society itself while examining the work of any Fabian.

Keynes has undoubtedly managed to take the West well down the slippery slope that Hayek had warned against. Hayek has always been right (so have the classical liberals), but his message got lost in the glitter, showmanship, and shenanigans of Keynes.  Sociopaths have a way with people – and unless the people are very alert, they’ll be taken for a big ride.

It is time we take the world towards genuine freedom that was interrupted by the Marx and Keyenes (and so many of their confused followers), and push back the intrusive state till it is finally compatible with the level that ensures the optimal level of freedom for everyone.

In the end, I must note that while Keynes was a devious character, not all Keynesians deserve to be considered in this manner (though the Fabians should be watched very carefully). Many academic and government Keynesians might genuinely believe that Keynes was “saving capitalism”. They’ve got fooled big time, but they are to be considered as stupid, not evil. It is the intelligent socialists like Keynes that we must be wary of. 

My next blog post, from Murray Rothbard, should help remove the delusion of the Keynesians that he was in any way right.


Read also this anonymous but thoughtful piece: The Disaster of Keyenes.  

comment column more on Keynes!

2 responses to “Fabian: John Maynard Keynes, the stealthy enemy of human freedom


    The Disaster of Keynesian Economics
    No single person deserves more blame for our modern financial condition—our lack of personal
    and national savings, and the extent of our indebtedness–than John Maynard Keynes; and no group
    more cause for our contempt than foolish economists like Paul Krugman and Robert Reich who
    continue to hawk his discredited ideas vigorously. Disproving Keynes theses is simple: it was done
    by Henry Hazlitt back in 1945, in his book “Economics in One Lesson. The primary task, therefore,
    that I have set myself here is showing not just that Keynes was wrong, but that his errors were
    intentional, and had as their aim the erosion of our political and economic liberty.
    Let me begin with the same simple observation Hazlitt used: no policy can be considered sound
    which does not take into account all groups which are affected, and what the effect of that policy
    will be in the long term. Confronted with the long term consequence of debt his ideas fostered,
    Keynes countered with what many considered wit: “in the long run, we are all dead”. Self evidently,
    our children and their children are not (he himself, by the way, had no children.) They inherit what
    we bequeath them, and it is precisely to try and build a better future for coming generations that
    this series has come into being.
    In its vulgar (which is to say common sense and entirely accurate) rendering, Keynesism amounts
    to the contention that you can borrow your way into prosperity. When businesses aren’t hiring,
    you give them money, and they hire. Those employees then spend money, which increases
    aggregate demand, which stimulates production, which causes economic growth.
    Yet what the right hand giveth, the left hand taketh away. Whose money were you given? Your
    own, in the form of future taxation. Governments, per se, have no money. All they have is what is
    taken in actual taxes, and what they can print; and as we have seen, printing money amounts to a
    tax, since the real purchasing value of your money goes down. Thus, all you have done is make a
    loan to yourself, at interest, and generally with created money. This is the equivalent of drinking
    salt water to ease thirst. It always works in the short run, and always fails in the long run. Hence
    our national debt—our systemic thirst–at least in part.
    The necessity of inflation in Keynesism is missed by many. In theory, loans made in bad times are
    repaid in good times, but Keynes was plenty shrewd enough to realize that the impulse of
    politicians to pander to the electorate would prove insurmountable, and on-going inflation to pay
    the debt unavoidable. This is, in fact, what has happened.
    To be clear, X amount of money is spent to build, say, a dam. The government doesn’t have that
    money in pocket, and can’t exact it in current taxes, so—in the United States—it issues X amount of
    Treasury Bonds, which are then purchased by the Federal Reserve through fiat money. Since those
    dollars were in effect “printed”, they are inflationary. Inflation, in turn, decreases the value of every
    other dollar in existence. Existing private wealth is reduced.
    Thus, supposed “stimulus” spending is always going to cost more than is given. The obvious
    corollary of Hazlitt’s observation is that you can always help a few people at the cost of the many,
    and can solve problems in the short term at the expense of the long term. When you build a dam,
    the people working on it benefit; everyone else loses, through the added taxes this imposes, which
    are not offset by the supposed economic utility of the dam. Further, even the workers on the dam
    lose in the long run, since when the work is complete, they will not have jobs, and whatever money
    they will have saved will have diminished in value.
    Who wins? The government, which now has the power to again use inflation to create employment,
    but only for those who are in favor. (It takes me beyond my intent with this piece, but the principle
    role of the IMF—which Keynes helped found—appears to be taking this basic approach around the
    world, in support of what amount to fascist governments.)
    What Keynesian apologists never talk about is that the goal was not economic equilibrium in a
    condition of freedom, but an economic equilibrium that was in effect under the complete control of
    the government:
    The State will have to exercise a guiding influence on the propensity to consume, partly
    through its scheme of taxation, partly by fixing the rate of interest, and partly, perhaps, in
    other ways [such as?]. Furthermore, it seems unlikely that the influence of banking policy on
    the rate of interest will be sufficient by itself to determine an optimum rate of investment. I
    conceive, therefore, that a somewhat comprehensive socialization of investment will prove the
    only means of securing an approximation to full employment. . .It is not the ownership of the
    instruments of production which it is important for the State to assume. If the State is able to
    determine the aggregate amount of resources devoted to augmenting the instruments and the
    basic rate of reward to those who own them, it will have accomplished all that is necessary.
    Moreover, the necessary measures of socialization can be introduced gradually and without a
    break in the general traditions of society. (General Theory, 378)
    What is he saying here? That if the State controls how companies get money, how much profit they
    make, and how much their employees earn, then it doesn’t have to actually OWN them. Further,
    that his system enables a gradual transition in that direction, without setting off any alarm bells.
    This is socialism, plain and simple, of the Fabian variety.
    To be clear, for a true Liberal, the role of government is to protect us from one another. For Keynes,
    it is to foster full employment at the expense of economic and—inevitably—political freedom. The
    two go hand in hand.
    How is it that the Federal Government owns some 63,000 homes as a result of foreclosure? Simple,
    it held their mortgages. How is it, then, that the Federal governments holds some 80% of American
    mortgages? How did our government get in the banking business? As far as that goes, how is it that
    the Federal government will soon own all student loan debt (this was inserted into Obamacare,
    purportedly as a means of defraying cost increases)?
    If you think about it, the role of Fannie Mae and Freddie Mac has been determining—to a great
    extent–home prices and mortgage interest rates. Since local banks sell almost all their loans to the
    Federal government (remember, both FM’s are now back “in-house”) the price is effectively
    dictated by what our government will pay. Absent FM and FM, the California/Vegas/Florida/etc.
    home inflation could not have happened. There would not have been enough cash to issue the loans.
    I will deal with the role of these two in our 2008 banking crisis in another piece, but for now let me
    point out the congruence between what Fannie Mae and Freddie Mac did, and Keynes call in “The
    End of Laissez Faire” for “semi autonomous bodies within the State”. The role of both was clearly to
    gain control of our housing market, which they have plainly done.
    These are some preliminary observations. Let me now deal in a bit more depth with who Keynes
    was, what his ideas were, what they were supposed to do, and what they have in fact done.
    The first thing I think most people should know, and which most don’t know, is that Keynes was a
    seminal figure in the “Bloomsbury Group”, which was an aggregation of what I would call social
    decadents, who spent a lot of time in various homosexual, extramarital and sexually experimental
    couplings, and all of whom—certainly Keynes—were to my knowledge atheists.
    Keynes himself was an active homosexual for most of his life, and kept a record of his trysts. He at
    one point wrote to his lover Lytton Strachey that “bed and boy” could be had for cheap in Tunis.
    Given that it was at that time common practice for poor parents to prostitute their children, this
    would seem to indicate an actual familiarity on his part.
    Strange love triangles were common. For instance, Keynes stole a younger man, Duncan Grant,
    from Strachey, who was apparently quite upset. For his part Strachey developed a very intimate
    relationship with cross dressing bisexual Dora Carrington, who, when he fell in love with a man
    named Ralph Partridge, married him. Partridge would come by on weekends with his own lover, a
    woman, who he would later marry. As Carrington put it, she had to manage “a great deal of a great
    many kinds of love”
    She killed herself when Strachey died. Virginia Woolf, another core member of the Group, also
    committed suicide.
    It was in that sort of atmosphere that Keynes spent his youth: uncommon enough now, completely
    unheard of 100 years ago. To hew to a stereotype, they all belonged in San Francisco, or somewhere
    along the California coast.
    Keynes was also a life-long protégé of Fabian Socialist George Bernard Shaw, who was one of the
    first people Keynes wrote when he completed his “General Theory”. They were quite close
    intellectually, sharing frequent letters to one another.
    When he married—and his marriage indicates his homosexuality was volitional, and not genetic—
    he married a Russian women, with whom he was allowed to travel the Soviet Union freely, a
    privilege which he appears to have been unique in enjoying.
    My intent is to deal with his ideas, but these few details about his life appeared sufficiently relevant
    to an analysis that I have included them. Provided it is between consenting adults, I could care less
    what happens behind closed doors. The point is that Keynes was a lifelong intimate of social and
    political radicals. Is radical bad? If the goal is the maintenance of social and political order, yes.
    The argument I will be making is that his goal was the subversion of our economic, moral, political
    and social lives, and that it was a natural outflow of his social milieu seems self evident to me.
    Keynes thought does not appear to have evolved much, but his outward rhetoric did. In my view,
    what is plainly perceptible is a progression from a goal—the bankruptcy of the Capitalist class—to
    a means which sounded plausible enough to get repeated. For that reason, I would like to take a
    close look at some of his earlier work, quote some of it at length, and then compare it with the
    conclusions he drew in his most influential work “The General Theory of Employment, Interest, and
    Money”, upon which Keynesian economists base their prescriptions. I will do this in sections, to
    facilitate the intellectual digestion of what at times are subtle ideas.
    The book which made him famous was “The Economic Consequences of the Peace”, published in
    1920. He attended the Paris peace talks, which led to the Treaty of Versailles, ending World War
    One. He was immensely frustrated—apparently sincerely—at the unwillingness of the allies to
    recognize that the “peace” they had negotiated was going to lead to economic and hence political
    instability. Most importantly, the indemnities which France insisted on inflicting on Germany were
    simply grossly excessive relative to Germany’s ability to pay, a fact which he underscores in some
    detail. Most of the Continental combatants had already paid much of their way with inflation, and
    he could well see that more would be needed. He could also see that inflation was damaging in
    many ways:
    Lenin is said to have declared that the best way to destroy the Capitalist System was to
    debauch the currency. By a continuing process of inflation, government can confiscate, secretly
    and unobserved, an important part of the wealth of their citizens. By this method they not only
    confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it
    actually enriches some. – As the inflation proceeds and the real value of the currency fluctuates
    wildly from month to month, all permanent relations between debtors and creditors, which
    form the ultimate foundation of capitalism, become so utterly disordered as to be almost
    meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
    “Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis
    of society than to debauch the currency. The process engages all the hidden forces of economic
    law on the side of destruction, and does it in a manner which not one man in a million is able
    to diagnose.
    In the latter stage of the war all the belligerents practiced, from necessity or incompetence,
    what a Bolshevist might have done from design. (Great Minds 247)
    What is he saying here? Four things: first, that printing money creates economic dislocation. The
    money of the rich becomes worthless. Investing becomes extremely risky, because the future can’t
    be predicted. If the essence of trade is buying low and selling high, it has become impossible to
    gauge the present value of goods, or their likely future value. In response the only safe thing to do
    is buy some property or gold, and hold on.
    Second, he is saying that some people win. Who wins? The people who create the money—here
    the governments—those who own things that rise in value, and those to whom “undiluted” money
    is given. As Keynes puts it: “If prices are continually rising, every trader who has purchased for
    stock or owns property and plant inevitably makes profits.”
    Consider in this regard William Shirer’s commentary on the Weimar hyperinflation, from The Rise
    and Fall of the Third Reich:
    . . .goaded by the big industrialists and landlords, who stood to gain from the masses of people
    who were financially ruined, the government deliberately let the mark tumble [i.e. kept the
    printing presses running day and night, and used that money to pay its bills] in order to free
    the state of its public debts, to escape from paying reparations, and to sabotage the French in
    the Ruhr. Moreover the destruction of the currency enabled German heavy industry to wipe
    out its indebtedness by refunding its obligations in worthless marks. The General Staff. . .took
    notice that the fall of the mark wiped out the war debts and thus left Germany financially
    unencumbered for a new war.
    The masses of people, however, did not notice how much the industrial tycoons, the Army and
    the State were benefitting from the ruin of the currency.” (Rise 96)
    Third, inflation is a means of undermining Capitalism as a system. It is an instrument of
    Fourth, very, very few people understand it.
    Later, he summarizes it in an interesting way:
    Thus the menace of inflationism described above is not merely a product of the war, of which
    peace begins the cure. It is a continuing phenomena of which the end is not yet in sight.
    All these influences combine not merely to prevent Europe from supplying immediately a
    sufficient stream of exports to pay for the goods she needs to import, but they impair her credit
    for securing the working capital required to re-start the circle of exchange and also, by
    swinging the forces of economic law yet further from equilibrium rather than towards
    it, they favor a continuance of the present conditions instead of a recovery from them.
    Inflation and equilibrium are incompatible. Let us call this Data Point One.
    Data Point Two is his expressed foundational understanding of the Capitalist system. I will quote
    him at length, interspersed with my commentary, again from Economic Consequences of the Peace:
    Europe was so organized socially and economically as to secure maximum accumulation of
    capital. While there was some [much, if he is honest] continuous improvement in the daily
    conditions of life in the mass of the population, Society was so framed as to throw a great part
    of the increased income into the control of the class least likely to consume it. The new rich of
    the nineteenth century were not brought up to large expenditures, and preferred the power
    which investment gave them to the pleasures of immediate consumption. In fact, it was
    precisely the inequality of the distribution of wealth which made possible those vast
    accumulations of fixed wealth and of capital improvement. . . Herein lay, in fact, the main
    justification of the Capitalist System. .If the rich had spent their new wealth on their own
    enjoyments, the world would long ago have found such a regime intolerable. (Great Minds 67)
    What is he saying? First, that he analyzes the world in terms of class. Second, that the Capitalist
    System (his capitalization of the words) is unjust, and would be overthrown if seen in its true light.
    He goes on:
    . . .this remarkable system depended for its growth on a double bluff or deception. On the one
    hand the laboring classes accepted from ignorance or powerlessness, or were compelled,
    persuaded, or cajoled by custom, convention, authority and the well-established order of
    Society into accepting, a situation in which they could call their own very little of the cake, that
    they and Nature and the capitalists were co-operating to produce. And on the other hand the
    capitalist classes were allowed to call the best part of the cake theirs and were theoretically
    free to consume it, on the tacit underlying condition that they consumed very little of it in
    practice. The duty of “saving” [his quotation marks, as if savings were somehow unreal]
    became nine-tenths of virtue and the growth of the cake the object of true religion. There
    grew round the non-consumption of the cake all those instincts of Puritanism which in other
    ages has withdrawn itself from the world and has neglected the arts of production as well as
    those of enjoyment. . .
    Saving was for old age or your children; but this was only in theory—the virtue of the cake was
    that it was never to be consumed, neither by you nor by your children after you. (Great Minds
    This is really quite an extraordinary and counter-factual claim, that warrants some common sense
    analysis. As I have argued throughout this series, Capitalism is a system in which money is saved,
    expressed creatively, and which in turn yields more money. You gather together a seed, plant it,
    then harvest the result, which is larger than the seed.
    Prior to World War One, standards of living were rising for ALL classes throughout Europe. This
    was made possible by increases in efficiency. For example, the railway system made all sorts of
    goods cheaper. It also created markets for goods, since foodstuffs, and the products of industry
    could be sold less expensively over a broader area, which in turn fostered employment and wealth.
    The seed was investment in transportation technology and the fruit was greater prosperity.
    As I have often been at pains to point out, Marx’s ideas of class warfare—which Keynes is
    expressing here more or less openly—were falsified by the emergence of the middle class. Where
    he posited that the rich would get richer on the backs of the poor–who would get poorer–what
    actually happened is that all boats rose in a swell of general prosperity.
    As Keynes himself notes: “. . . escape was possible, for any man of capacity or character at all
    exceeding the average, into middle and upper classes, for whom life offered, at a low cost and with
    the least trouble, conveniences, comforts and amenities beyond the compass of the richest and most
    powerful monarchs of other ages.” (Great Minds 61)
    I am getting slightly ahead of myself, but Keynes also quotes Bastiat in his later address which was
    published as “The End of Laissez Faire”: “I believe that the invincible social tendency is a constant
    approximation of men towards a common moral, intellectual, and physical level, with, at the same
    time, a progressive and indefinite elevation of that level. I believe that all that is necessary to the
    gradual and peaceful development of humanity is that its tendencies should not be disturbed, nor
    have the liberty of their movements destroyed.”
    Keynes sets that up, so that he can deliver the devastating Argument from Authority that “From the
    time of John Stuart Mill, economists of authority have been in strong reaction against all such ideas.”
    That’s it. That’s his only rebuttal, to an argument he has already admitted had merit, in that those
    who wanted to could rise socially and economically as high as their talents and dispositions
    inclined them.
    Thus we have to reconcile the tension between Keynes class warfare rhetoric, patently false claim
    that savings and spending are incompatible, and his own admission that self elevation was possible
    within the Capitalist System, even as he described it.
    That reconciliation cannot happen within the economic sphere. It must happen within the moral
    sphere. To that I will turn in a separate exposition on “Socialism as a Moral Claim”, but want for
    now to take one more nugget from Economic Consequences of the Peace.
    The war has disclosed the possibility of consumption to all and the vanity of abstinence to
    many. Thus the bluff is discovered; the laboring classes may no longer be willing to forego so
    largely, and the capitalist classes, no longer confident of the future, may seek to enjoy more
    fully their liberties of consumption so long as they last, and thus precipitate the hour of their
    confiscation [emphasis mine](Great Minds 69)
    Building on an earlier theme:
    Where we spent millions before the war, we have now learnt that we can spend hundreds of
    millions and apparently not suffer for it. Evidently we did not exploit to the utmost the
    possibilities of our economic life. We look, therefore, not only to a return to the comforts of
    1914, but to an immense broadening and intensification of them. (Great Minds 54)
    This is the essence of the modern European Welfare State. What is he really saying here? That
    governments can print money to create the illusion of prosperity. How was the war financed? In
    large measure, through inflation.
    When Winston Churchill, as Chancellor of the Exchequer (effectively, Secretary of the Treasury) put
    England back on the gold standard in 1924, the subsequent economic downturn showed very
    effectively that much of England’s supposed prosperity depended on an inflated currency. As
    Churchill put it: “I will tell you what it [the return to the Gold Standard] will shackle us to. It will
    shackle us to reality.”
    Data Point One, then is an understanding that inflation is a means of wealth transfer.
    Data Point Two is a distaste for the system of Capitalism.
    Data Point Three is an understanding that apparent wealth can nonetheless be generated through
    Logically, then, inflation can be used to take wealth from Capitalists, and give it to others.
    “The End of Laissez Faire” was a lecture given twice, once at Oxford, and once to the University of
    Berlin. In it, Keynes seeks to explain “why State action to regulate the value of money, or the course
    of investment, or the population, provoke such passionate suspicions in many upright breasts.”
    He never really explains why such State action should not arouse suspicion. After all, this speech
    was delivered while both Fascism and Bolshevik Communism were in ascendency.
    His method of argument is quite interesting. He offers up some admirable quotes from common
    sense political economists and theorists, only in effect to say “but we all know that isn’t true.”
    For example, consider this one, from Archbishop Whately: “True liberty is ‘that every man should
    be left free to dispose of his own property, his own time, and strength, and skill, in whatever way he
    himself may think fit, provided he does no wrong to his neighbors. . .”.
    Response? “In short, the dogma had got hold of the educational machine; it had become a copybook
    maxim”. And why should it not have? He doesn’t say. He calls doctrines of equality before the law
    and individualism “exploded sophistries”, “preposterous”, and those who hold them “degenerate”.
    The closest he gets to refuting common sense economics is in what we might term “the parable of
    the giraffes”. The essence of the argument is that giraffes with longer necks shut out those with
    shorter necks. The rich get richer, and the poor get poorer.
    Ironically, he repeatedly accuses orthodox political economists of ignoring facts, yet the only “data”
    he offers to support his own contentions is an analogy, that of the hypothetical short, starving
    giraffes. To this, must be opposed the manifest material progress of all of Western Europe and the
    Americas, under Capitalism. As is usual with leftists, he inverts the truth, while pretending to be the
    honest one.
    Having pretended to refute orthodox economics, however, he later feels free to pursue his actual
    agenda: “Perhaps the chief task of Economists at this hour is to distinguish afresh the Agenda of
    Government from the Non-Agenda; and the companion task of Politics is to devise forms of
    Government within a Democracy which shall be capable of accomplishing the Agenda [italics his]
    (Great Minds 37)
    By Agenda, what does he have in mind?
    First, the establishment of the already referenced “semi autonomous bodies with the State”. He
    offers as examples “universities, the Bank of England, the Port of London Authority, even perhaps
    the Railway Companies.” Phrased another way, institutions with power, but no democratic
    governance. Fannie Mae and Freddie Mac would absolutely fit this mold; or at least they did until
    they went broke and ceased being Government Sponsored Entities. The Federal Reserve would
    definitely qualify (if he could get his people in), as would the IMF and World Bank.
    He goes on to say: “One of the most interesting and unnoticed developments of recent decades has
    been the tendency of big enterprise to socialize itself.” Gradually, in other words, the profit motive
    gives way to public-spiritedness, and what was a Capitalist institution is now socialized. This would
    of course be greatly facilitated by making the sure “right” people get placed in the key positions,
    which is something that could be done over time without excessive difficulty.
    He has no objections to State Socialism, per se, either:
    I criticize doctrinaire State Socialism, not because it seeks to engage men’s altruistic impulses
    in the service of Society, or because it departs from laissez-faire, or because it takes away from
    man’s natural liberty to make a million, or because it has courage for bold experiments [e.g.
    Bolshevism]. All these things I applaud [emphasis mine]. I criticize it because . . .[it] is in
    some respects a clearer, in some respects a more muddled version of just the same philosophy
    as underlies nineteenth century individualism. [Bentham and the doctrine of free competition]
    equally laid all their stress on freedom, the one negatively to avoid limitations on existing
    freedom, the other positively to destroy natural or acquired monopolies. They are different
    reactions to the same intellectual atmosphere [of individualism, which I reject] (Great Ideas
    Phrased another way, his primary objection to State Socialism is, apparently, that it goes too far in
    protecting individual liberties. Small wonder that Benito Mussollini, in reading this piece,
    All this is pure fascist premises and I cordially recommend Mr. Keynes to proceed to Italy and
    there to study Fascism with an open mind and with the same scrupulous care as he has studied
    Bolshevism. An essay from his pen on Fascism would doubtless prove a most valuable piece on
    constructive criticism. 1
    Secondly, he wants to separate “those services which are technically social from those which are
    technically individual.” [italics his] (Great Ideas 40).
    For instance: “. . .deliberate control of the currency and of credit by a central institution [and
    in] the collection and dissemination on a great scale of data relating to the business situation,
    including the full publicity, by law if necessary, of all business facts which it is useful to know. .
    .I [also] believe some coordinate act of intelligent judgment is required as to the scale on which
    it is desirable that the community as a whole should save, the scale on which these savings
    should go abroad in the form of foreign investments, and whether the present organization of
    the investment market distributes savings [income] along the most nationally productive
    channels. I do not think that these matters should be left entirely to the chances of private
    judgment and private profit, as they are at present. (Great Minds 41)
    In other words, he wants a very large State to be able to tell people what they can and can’t do with
    their money.
    Finally, he wants to be able to tell people if they can reproduce, and he implicitly invokes eugenics:
    The time has already come when each country needs a considered national policy about what
    size of Population . . .is most expedient. And having settled this policy, we must take steps to
    carry it into operation. The time may arrive a little later when the community as a whole must
    pay attention to the innate quality [emphasis mine] as well as to the mere numbers of its
    future members. (Great Minds 42)
    1 James Strachey Barnes, Universal Aspects of Fascism, Williams and Norgate, London, 1929,
    pp. 115
    Consider in that regard what his mentor George Bernard Shaw had to say about the future of people
    who in his view lacked quality:
    We should find ourselves committed to killing a great many people whom we now leave
    living… A part of eugenic politics would finally land us in an extensive use of the lethal
    chamber. A great many people would have to be put out of existence simply because it wastes
    other people’s time to look after them2.
    Have you begun to see a pattern, possibly, of something other than a sincere desire to “save
    Finally, let’s turn to the General Theory. The task Keynes sets himself is solving the problem of
    unemployment, which he views as fundamental. “Why?”, one may reasonably ask. If
    unemployment is not excessive, and if some sort of social relief is in place, why would that be the
    primary task? Why not continue the generalized economic amelioration which patently began with
    the Industrial Revolution, and has continued apace since then?
    The simple answer is that it offers him the space he needs to make an argument in favor of putting
    the government in charge of the economy.
    Here is what he has to say:
    The authoritarian state systems of to-day seem to solve the problem of unemployment [note, they
    didn’t and they don’t; most Cubans spend all day on their doorstep staring at the ground] at the
    expense of efficiency and freedom. It is certain that the world will not much longer tolerate the
    unemployment [emphasis mine] which, apart from brief intervals of excitement, is associated—
    and, in my opinion, inevitably associated—with present day capitalistic individualism. But it may
    [or may not; emphasis mine] be possible, by a right analysis of the problem to cure the disease
    whilst preserving efficiency and freedom.
    Please consider carefully what he is saying, and when he said it. This book came out in 1936. When
    he wrote it he knew there was high unemployment in the United States and elsewhere. He knew
    that Communist agitators were trying—both openly and secretly–to foment revolution. Some of
    them were his friends, such as Harry Dexter White.
    What he is saying is that it MIGHT not be necessary to have a revolution, but something has to give.
    Capitalism inevitably leads to structural unemployment. He is positioning himself as a moderate,
    2 The Daily Express (London), March 4, 1910, quoted in Dan Stone, Breeding Superman: Nietzsche,
    Race and Eugenics in Edwardian and Interwar Britain (Liverpool University Press, 2002
    but as we have already seen, he was nothing of the sort. He wanted government control of all
    important aspects of the economy, and said so explicitly in The General Theory.
    Now I should devote a short moment to the content of his argument. What is the basic thesis he
    offers us? Simple: spending equals savings.
    . . . up to the point where full employment prevails, the growth of capital [savings] depends not at
    all on a low propensity to consume [savings] but is, on the contrary, held back by it; and only in
    conditions of full employment is a low propensity to consume [savings] conducive to the growth of
    capital [savings]l. (General Theory 372)
    Phrased another way, the more you spend the more you save, and the more you save, the more you
    can spend. Is that nonsense? Of course.
    But it is hidden in verbiage like this: “. . .the volume of employment in equilibrium depends on (1)
    the aggregate supply function, f, (ii) the propensity to consume, C, and (iii) the volume of
    investment, D2. This is the essence of the General Theory of Employment.” (General Theory 29).
    As I view it, the book has three parts: the introduction, where he discusses Classical Economics,
    briefly; then you get strapped onto a roller coaster, where he invents words, uses intentionally
    opaque prose, and generally tries to confuse you; and finally, the end, where he reveals his actual
    When you watch a magic act, the entirety of the effect depends on misdirection of attention. In my
    view, the entirety of the General Theory can be ignored, in favor of looking at the concrete
    outcomes he openly stated he hoped to achieve, which are perfectly congruent with the entirety of
    his previous output.
    What he is in fact building is a theoretical template for a Command Economy in everything but
    name. He wants government to have the job of equalizing output and demand, in conditions in
    which only the government has capital for investing. He wants all three variables under State
    control, as he already more or less said in “End of Laissez Faire”.
    He talks specifically about the destruction of Capital:
    I feel sure that the demand for capital is strictly limited in the sense that it would not be
    difficult to increase the stock of capital [i.e. use a central bank to induce inflation] up to a point
    where its marginal efficiency had fallen to a very low figure. . .
    Now, though this state of affairs would be quite compatible with some measure of
    individualism [a very, very small measure], yet it would mean the euthanasia of the rentier,
    and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to
    exploit the scarcity-value of capital. . .
    . . .it will still be possible for communal saving through the agency of the State to maintained
    at a level which will allow the growth of capital up to the point where it ceases to be scarce.
    I see, therefore, the rentier aspect of capitalism [i.e. the ability of individuals and banks to
    charge interest on loans, and more generally of anyone to invest in things that they own] as a
    transitional phase which will disappear when it has done its work. And with the
    disappearance of its rentier aspect much else in it besides will suffer a sea-change [for
    example, the State now controls the economy in every aspect that interests it]. It will be,
    moreover, a great advantage of the order of events which I am advocating, that the
    euthanasia of the rentier [note that he is presumably speaking metaphorically, but given his
    association with Shaw that is not a given], of the functionless investor, will be nothing sudden,
    merely a gradual but prolonged continuance of what we have seen recently in Great Britain,
    and it will need no revolution [emphasis mine]. (Great Minds 376)
    He goes on to stipulate that the aim is “depriving capital of its scarcity value within one or two
    If money is not scarce, what does that mean? It means all the means of production are in effect
    managed by a centralized authority, along with means of employment. Scarcity of capital means
    some people are rich. Non-scarcity of capital means there are no rich people, and that the State has
    control of all the money, and can create it at will.
    As he comments—redundantly, given the foregoing: “The central controls necessary to ensure full
    employment will, of course, involve a large extension of the traditional functions of government.”
    He does make some noise here and there to the effect that every last detail need not be controlled,
    and there is room in his heart for some individualism but of course anyone who causes trouble in
    the world he is envisioning could be dealt with easily enough, one way or another.
    Keynes was not coy, for those with eyes to see. What we must assume when we see modern
    economists touting his ideas is that they support his ends, which amount to the collapse of
    economic—and hence political—freedom. Without the right to private property, political liberty is
    impossible. Without the right to property, you are not free in your home; you have no right to the
    results of your labor; you cannot enforce contracts; you cannot safely initiate business of any kind;
    and your ideas belong to the State.
    If true Capitalism is a system for converting ideas into wealth, and wealth into leisure—as I would
    argue happens inevitably in conditions of monetary stasis–then Keynesian economics is a system
    for converting ideas into political power and political power into (relative) money.
    Concretely, though, how would this work? How do you take the basic idea of using inflationary
    deficit spending to stimulate “demand”, and “euthanize” capital? How far along are the Keynesians
    in this country?
    First off, it must be said that Keynes was working to implement Socialism, and socialism doesn’t
    work. His claim was that his system would enable full employment. It didn’t and it hasn’t. I will
    deal with the Great Depression in the following piece, but the simple reality is that his polices, once
    adopted, did not reduce unemployment, for the same reason salt water doesn’t reduce thirst: in
    solving one problem, it creates another.
    Generally speaking, most Socialist revolutionaries take as their goal inducing national bankruptcy,
    then taking advantage of the confusion to seize power. That they would want to induce misery in
    order to solve problems of misery is of course a species of insanity that is best explained
    psychologically and morally, as I will do later in this series.
    In America particularly they have found it hard to counter our national tendencies towards
    innovation, our capacity for hard work, and our skepticism with respect to socialism. Absent
    Keynes “General Theory”, in fact, they would have little progress at all. Make no mistake, though:
    they have made substantial inroads, and effectively taken over our universities. We are $13 trillion
    in debt, and that number is growing. This is the sort of outcome Keynes wanted, although he would
    find much fault with the present positioning of those advocating socialism; other than, of course,
    our election of a socialist to our Presidency, and the pathway that has been laid, for now, towards
    socializing our healthcare system and health insurance companies.
    We forget, though, that socialism has been much more advanced in other nations for many decades.
    Most countries have had politically relevant Communist Parties. Here, the lunatics have been
    forced into the use of subterfuge, with the result that they can’t openly espouse their positions, and
    expect any significant amount of support from any but a radical and politically irrelevant fringe.
    This makes them easy prey, since all anyone has to do is tell the truth about who they are, and what
    they really want. Self evidently, my intent here is to roll Keynes back into the closet, and give
    people ample reason to reject his ideas in total.
    You can’t spend your way into prosperity. All people with a shred of common sense have always
    known that. Now you know why an intelligent man would nonetheless propose it, and why
    Harvard and MIT educated economists would support that proposal: they are closet socialists. I
    have quoted you enough of his texts that you should be able to see that no person of even average
    intelligence could fail to see what Keynes real goals were. He stated them: euthanization of the
    Capitalists through State control of investment, savings, and production.
    With respect to the United States, one key element he wanted and could not get was control of our
    central bank, the Federal Reserve. He and Soviet agent, Asst. Secretary of the Treasury Harry
    Dexter White tried in the 1930’s to get the Fed brought under direct Federal control, and failed.
    I favor ending the Fed, for reasons I have articulated, but it is very much the case that we cannot
    assume confluence of interest between the Fed and the Keynesian socialists, as some conspiracy
    theorists are inclined to do. On the contrary, the Fed clearly favors the interests of the “rentier”
    class, much of whose money the Fed has created. They themselves may well want to rule the
    world—everybody wants to rule the world, don’t they?–but they no doubt make no pretense
    privately about wanting to help anyone but themselves.
    The “Stimulus” was clearly Keynesian, and socialists like Paul Krugman keep calling for more
    spending, but their calls are falling on increasingly deaf ears. It is simply impossible to maintain
    fictions forever. The maintenance of patent nonsense like Keynesian economics has always
    depended on controlling the media and message, and they have lost that control.
    In my view, therefore, the purest expressions of actual Keynesian economics at work is the activity
    of the IMF/World Bank. Perhaps some of you don’t know this, but Keynes and Harry Dexter White
    (who, again, was clearly a Soviet agent, but who unlike Alger Hiss died before he could be brought
    to trial) created both the IMF and World Bank. What these institutions do is fund public works
    projects throughout the developing world, via the agency of the local government. Local strongmen
    get the money, flip it to their backers, they build something, then the money runs out. What
    happens then, consistently, is that the government can no longer pay the loans back. The IMF then
    tells them in effect to use inflation to pay their debt, then loans them more money, starting the cycle
    anew. This process has enabled the World Bank to insert itself into very intimate details of national
    economies. It has fostered dictatorship, rewarded elites, and impoverished many. Zimbabwe would
    be one good example of many. Of course, at some point most countries tire of drinking salt water,
    but IMF remains a potent force on the international scene. Like the Fed, it needs to be ended.
    As was clearly seen in the Weimar Republic, inflation—far from taking wealth from elites—actually
    strengthens them. Keynes ideas—like those of all socialists—have accomplished much evil, despite
    their pretense of being well intentioned.
    Socialism—in its truest form of being government ownership (or control) of the means of
    production–is intrinsically Fascist, in a formal sense, as ratified by the founder of Fascism himself,
    In the end, we have to see Keynes as what he was: an academic, well divorced from reality, unused
    to actually solving real problems, and whose ideas—ambitious as they may have been—have
    succeeded in causing a lot of problems—mostly for the working poor—and helped no one.
    The debt we have accrued following his ideas is still quite dangerous. Social Security (nationalized
    savings, correct?) is not solvent. Medicare (nationalized medical care, in part, correct?) is not
    solvent. Medicaid (redistribution of wealth via healthcare access, correct?) is not solvent in most
    States. We can’t afford to keep doing what we are doing.
    At the same time, we are still in better position than the Europeans, the Japanese, the Chinese, and
    the rest of the world. That’s not a lot, but it’s something.
    Keynes talked about economic equilibrium. This is a topic worth the discussion. As I view it, we
    can achieve economic equilibrium and full employment via continuously increasing the value of
    labor. As Bastiat said, this is the natural outcome of letting things take their course. Specifically, we
    have to stop monkeying with our money. My proposal for this is entitled “How to fix our financial
    system”. We can undo all the evil Keynes sponsored, and then continue, into a much better world.
    For my part, I am willing to use the word “Liberal”—in the sense in which Bastiat and Adam Smith
    were Liberals—even for government programs which provide a basic social safety net, where some
    of my conservative friends might object. Certainly, if we fix our financial system, I think poverty
    will disappear. Further, private charity is and always has been until recently the first and primary
    source of communal succor. But where gaps appear I don’t object in principle to social spending of
    a limited sort. What I object to is the use of social spending to foster the erosion of our
    Constitutional form of government, which is what socialists are invariably after.
    Ironically, the course Keynes prescribed for full employment has only achieved systemic
    unemployment, wider poverty, and the loss—really, redistribution—of wealth we should have been
    able to keep. In general, that redistribution has been from the “have not’s” to the “haves”. When
    gangsters rule, the best gangsters get the loot.
    I see cause for fear, but also pathways forward. What we need more than anything is clarity of
    thought, and an ironclad resolution to correct the errors into which he led us, all those many years
    Some of you may want to read “Keynes at Harvard”, link here:
    In general, I agree with his conclusions, but I found his lack of an overarching narrative reference to
    Keynes actual ideas unhelpful. I have of course tried to rectify that problem here.
    Still, many of the quotes he offers up give the thoughtful reader—I would almost say “with a pulse,
    and a shred of genuine patriotism and Liberal spirit”–ample cause for anxiety, especially as regards
    the patent political subversiveness which has characterized our universities for at least two
    generations now; and in some cases—for example Harvard—for the better part of a hundred years.
    He traces the people, the ideas, and documentary record.
    For example the author of the book “A New Deal”, Stuart Chase, had this to say:
    Best of all, the new regime would have the clearest idea of what an economic system was for.
    The sixteen methods of becoming wealthy would be proscribed—by firing squad if necessary—
    ceasing to plague and disrupt the orderly process of production and distribution. Money would
    no longer be an end, but would be thrust back where it belongs as a labor-saving means. The
    whole vicious pecuniary complex would collapse as it has in Russia. Money making as a career
    would no more occur to a respectable young man than burglary, forgery or embezzlement.
    “Everyone,” says Keynes, “will work for the community and, if he does his duty, the community
    will uphold him.” Money making and money accumulating cannot enter into the life
    calculations of a rational man in Russia. A society of which this is even partially true is a
    tremendous innovation.
    Lest the significance of this be underappreciated, the entire concept of the New Deal originated
    with that book, and he is here in effect offering up Communist Russia as an ideal. The Republicans
    who–then and now–called FDR’s program socialist were quite technically and ideologically
    accurate. Chase himself had a very successful career in the Roosevelt Administration, and
    eventually became the head of UNESCO after the formation (under the direction of Soviet agent
    Alger Hiss) of the UN.
    It might be worth noting, too, that the idea of the League of Nations, of which the UN was the heir,
    was that of Bloombury Group member Leonard Woolf, husband of Virginia.
    With regards to the section on moral depravity, I looked up his references, and was unable to verify
    many of them. The “bed and boy” quote clearly was in a letter; but as to the more sensational
    claims, such as frequent sex trips around the Mediterranean, I was unable to find any supporting
    material in the Strachey biography, which I did not read in full, but canvassed fairly extensively. I
    suspect that in the course of his investigation he got so angry that he substituted what he felt
    strongly to have been the case (and which of course may well have BEEN the case) for what he
    could actually prove from the extant record.
    I will conclude by asking the reader who agrees with my conclusions, and sees the persisting
    dangers of these ideas to share this link—and my series on our financial system more generally,
    especially my proposed solution—with as many people as he or she thinks might have an interest.
    Keynes well understood the power of ideas:
    . . .the ideas of economists and political philosophers, both when they are right and when they
    are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little
    else. . .I am sure the power of vested interests is vastly exaggerated compared with the gradual
    encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of
    economic and political philosophy there are not many who are influenced by new theories after
    they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians,
    and even agitators apply to current events are not likely to be the newest. But, soon or late, it is
    ideas, not vested interests, which are dangerous for good or evil.
    Thus ended the most influential work of political philosophy published in the 20th Century, under
    whose thrall a generation of economists and politicians grew into maturity.
    If you ponder his words, though, you should see ample cause for hope as well.

    Books referenced
    Hazlitt, Henry. Economics in One Lesson. New York: Three Rivers Press, 1946
    Keynes, John Maynard. The End of Laissez Faire/The Economic Consequences of the Peace.
    Amherst: Prometheus Books, 2004. (Note: within the text I have called this “Great Minds” for
    simplicity. Self evidently, I see some irony there, but that was the title of the series, and the
    pagination conflated both texts, so I thought this approach simplest.)
    Keynes, John Maynard. The General Theory of Employment, Interest, and Money. New York and
    London: Harvest/HBJ, 1964.



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