THE ILLUSIONISTS OF INFLATION. Keywords: Inflation, soaring prices, monetary expansion, devaluation, lower real incomes, Keynes, Say’s Law, Jean Baptiste Say, Law of Markets, monetary manipulation, Federal Reserve, New Economics, Hayek, Friedman monetary school, supply-side economics,

 

To deceive gracefully is the very essence of social life.

One must start by deceiving oneself, and make a lifelong practice of deceiving others;

if one does it well enough, in time one might even become an artist economist,

the greatest illusionist of all.

Elspeth Huxley

 

In the age of helicopter money

THE ILLUSIONISTS OF INFLATION

A meditation on the legislation of monetary inflation by Xuan Quen Santos

                When several or many people exchange, the total benefits increase the level of wellbeing of the community in many aspects. As more people participate, the effects of that process create phenomena such as the specialization of creative activities, the generation of new knowledge such as the number systems and accounting, and institutions such as money and credit, and contracts and judges. Long before we realize it, everything we have within our reach to exchange or enjoy has been created by people. We are no longer limited to the fruits of nature to satisfy our needs; we are limited only by what we imagine, create and exchange.

In the state of nature our condition was one of poverty, if by that we mean not possessing anything material to satisfy our needs and wants except for what nature provided. What we have created throughout history we call wealth. How it came about has been a mystery, as it has seemed to each generation that what was already available to them had always been there and only required some method to obtain it or distribute it. Living conditions did not change much until recently, nor did we know much about our human past. Only recently wealth creation has been called the economic process or the economy. Before then, it was treated as stagnant. From this illusion stemmed the interest in studying the differences in wealth and the causes of poverty as if they had been the result of someone’s decision or some mysterious cause. The Oxford dictionary defines this noun as “a thing that is or is likely to be wrongly perceived or interpreted by the senses”. Other words that seem appropriate are hallucination, apparition, vision, mirage, a fantasy or a figment of the imagination. What we should have studied all along is how wealth is created, but that question was asked only 250 years ago.

 Hallucination, apparition, vision, mirage, a fantasy, a figment of the imagination, or an economist explaining inflation

How is wealth created?

We, the people, create wealth through a poorly understood process of cooperation and interdependence. That system was called “the market” and has been working well, even if it was never fully explained or connected to the overall well-being of the community.

The connection went unnoticed because it seemed to every generation it had always been there. It logically follows, but erroneously, that the questions shifted from its nature as a source of wellness to the community to why some people have much and others little. Some aspects of its operation received attention from the palaces and temples for millennia. Among these are the fluctuating prices; why some communities, countries if you will, are more prosperous than others; how can taxes be collected. What criteria can a judge use to resolve a dispute between the two parties to a sale? Some rules that appear in the market seem to be counter to the more ancient traditions of the family-tribal structure. What about foreign money?

Questions and concerns like these are in the oldest writings. The Sumerians, Chaldeans, and Egyptians bequeathed to us the first mercantile law codes and the first price control lists. They invented accounting to know the total production of their subjects and calculate how much taxes and tributes they had to pay. With the use of the alphabet, those innovations spread throughout what we now call the Middle East following trade routes; and from there they spread throughout the world. The spread of civilization took place because of trade, not because of conquests and wars that were just incidental.

Hammurabi's Code was mostly a list of price controls

At the same time, the custodians of religious traditions had important concerns of their own. Their interest was always of a moral nature, that is, determining what was right or wrong, what was acceptable or reprehensible, what was good and what was bad. As a guide they used with great reverence what they called The Law, which is a set of simple rules of conduct we have followed since time immemorial. From that time comes early trading. It was inevitable that they would observe and comment on what was happening in the market. Their concerns were genuine. These concerns led to the discovery of what keeps the peace. People trade what belongs to them for what belongs to others. A substantial element of the ancient Law is the notion of property. This evolved over time to include personal property to the ownership of self, and eventually to the idea of property of rights, not just the right to own property.

But there was a problem.

What they observed and sought to understand from their point of view, whether from the palace or from the temple, they could not reasonably explain as a system. We have been able to do it only for two and a half centuries. Furthermore, its formulation as a science is a little over 100 years old, and there are still some disputes over key details. The market is the economic process studied by economic science. One of the most discussed topics since antiquity is price inflation. It still seems to be a major concern filled with confusion. We are still debating some fundamental aspects of the relationships between prices and the numerical units we use to measure them: money. The latest illusion is still focusing on the questions of wealth and poverty but concentrating on the mysteries associated with money. Intuitively, the ancients had the answer and we have ignored it.

Ancient coins of gold and silver

In ancient times, anything related to money was immediately attributed to the government´s actions. The government was often a mixture of palace and temple, such as the case of ancient Israelites. Money, coinage of different denominations, was minted exclusively at the temple. The monopoly of the issuing of money is one of the oldest appropriations made by the apparatus of what since Machiavelli described it, we know as “the state” (Where the power to rule resides). Eight centuries before our era, condemning their government and warning about the consequences of the prevailing corruption that would result in the fall of the nation, the prophet Isaiah said: “See how our capital has become a prostitute! She once was full of justice but now is full of murderers! Your silver has become dross, your choice wine is diluted with water. Your rulers are rebels and partners with thieves; they all love bribes and chase after gifts...” (Isaiah 1:21-23) The boldened phrase describes inflation, and the next phrase is a simile that explains how silver coins have dropped in value by adding cheaper metals, just like watering wine. Dross is an old word in metallurgy that refers to the impurities found in molten metal that can be discarded in the process of purification. Inflation is the reverse process of degradation.

Ancient copper coins

Why is it called inflation? Because by adding less valuable metal, more coins could be minted with the same amount of available silver. This results in each coin being “debased”. Done in moderation, it is difficult to identify the new, false money. This enabled the palace-temple magistrates to “make money” for spending without raising taxes. Paradoxically, the punishment for counterfeiters was horrible, worse than for thieves. What about the counterfeiters within the government? The problem was that the same magistrates minting the coins were the judges in charge of serving justice. More money enters the market (inflated amount of money) and as the palace-temple magistrates use the fake money to buy in the market, they push the prices up since there has been no additional supply of goods available to sell. This causes a process that after some time has “inflated all prices”. The chaos caused by corruption, inflation a major component, led to failure. The northern kingdoms of the Israelites fell under the Assyrians shortly after Isaiah’s warning.

The prophet Ezequiel had similar concerns two centuries later. His warning with God’s message has a better explanation of how money was adulterated: “...the people of Israel have become dross to me; all of them are the copper, tin, iron and lead left inside a furnace. They are but the dross of silver. Because you have all become dross, I will gather you into Jerusalem. As silver, copper, iron, lead and tin are gathered into a furnace to be melted with a fiery blast, so will I gather you in my anger and my wrath and put you inside the city and melt you. I will gather you and I will blow on you with my fiery wrath, and you will be melted inside her. As silver is melted in a furnace, so you will be melted inside her, and you will know that I the Lord have poured out my wrath on you.” The Temple of Jerusalem was destroyed by the Babylonians who carried the people to captivity. The Israelites were melted for a second time.

Isaiah warning the Israelites

What should be evident from the simple reading of these ancient texts is that everyone concerned, the Prophets and the people, knew: a) The importance of the stable value of money because they were familiar with the market activity; b) They knew how and where money could be adulterated, the palace-temple complex; and c) They were aware of the consequences of monetary inflation. It leads to the destruction of the value of money as the unit of measure in the market by the generalized rise in prices in proportion to the increase of currency in circulation. Since then, economy-scientists, not political economists, have found out that persistent inflation has many consequences beyond reducing the efficiency of the market. A) By artificially altering prices, producers end up producing more of what is not needed, and less of what is necessary. B) Reduces the real income of wage earners as the purchasing power of money is reduced. In this sense, price inflation is a form of a concealed general tax. C) It creates two classes of people: those that have quick access to new fake money, and the rest of us. The first group enjoys buying without producing and their actions reduce the quality of life of the ones near the end of the line where new money is being spent. The first group buys cheap, and the second group pays inflated prices. The politicians, bureaucrats and contractors, plus all those that have sold their votes, get fake money first. The rest of us get poorer. D) Inflation destroys savings, a necessary ingredient in economic growth and investment. E) Inflation causes anxiety, tensions and frustrations among the people. Divorces increase, marriages get delayed, birthrate is reduced. Bankruptcies abound. Contracts are broken. Common crime grows. The mob gets nurtured and social unrest grows.

Were Isaiah and Ezequiel correct in their forecasts? They had common sense. They were not economists, and they were not confused by the new political economists at the service of the palace-temple complex that have created the illusion of the New Economics. They are the illusionists of inflation.

Modern inflation is no longer illegal or immoral. It is now called “monetary policy”. It all began with an illusionist’s trick during a time of crisis, precisely caused by the government’s economic policies. The ancient and obvious rule of common sense that can be understood by young children in fourth grade was declared obsolete in the name of science. This is the old rule:

“To participate in the market and enjoy its benefits, you only must be willing to offer something of yours to others. The value of what you offer is what you receive in return.”

This is known as Say 's Law or the Fundamental Law of the Market in honor of its proponent. Jean Baptiste Say was the translator of Adam Smith's work into French and his disciple. In his work "Treatise of Political Economy" (1803) he unveiled everything needed to understand how the market is a fair -just- system of "distribution" of wealth: each one receives from the market what has contributed to the benefit of others.

THE FUNDAMENTAL LAW OF MARKETS - ONE WAY FROM SUPPLY TO DEMAND

Calling this aspect of the economic process "distribution" is a logical error because nobody is distributing, handing out or giving away anything. The wealth created in the market spreads, disperses instantaneously in the acts of trading. Justly, each participant receives the equivalent of what he has done for others. However, distribution is still the term being used because of its ancient origin. It was still evident in the time of Smith and Say. The autocratic monarchs, powerful owners and lords of the land distributed titles and estates with everything included: towns and tenants, incomes and benefits, rents, concessions, monopolies, tax collection… They could also afford to be generous patrons of the arts, churches and even of “philosophers” like Adam Smith and John Locke. It was the period of history called “mercantilism”. It was based on the general belief the wealth of the states, of course the monarch, lay in the gold (thesaureus, treasure, trésor, tesoro) found in his mines, or looted in wars or by his pirates, or obtained from trade with the weak, or from those who had to pay customs taxes to enter to trade. Adam Smith announced in 1776 the advantages that free trade brings to all people. Since his ideas have spread, the world has prospered unparalleled in history. Wealth is in the creative power of people, not in gold or in money. This is how Say understood it from Smith and explained it that way.

In the market economy there is no one in charge of distributing wealth. There is no bureaucratic office in charge of deciding what each one gets. This topic recalls an anecdote told by the famous economist Milton Friedman to a group of friends. Friedman traveled to communist China in 1980 invited to give several lectures at a university when the People’s Republic of China was thought to be ready to join the free world after Mao’s death. The leaders of the communist party were looking for alternatives and changes to their system. Under Mao's communist party dictatorship, it had created famine and poverty in which between 20 and 30 million people died. In the midst of the activities, the economist had the opportunity to meet privately with dignitaries of the communist party who were in charge of economic planning. After listening to Friedman talk about how the market was a producer of wealth, one of the communist officials naively asked him: –And in your system, who is in charge of distributing what is produced? The question reflects not only the mentality of the old Celestial Empire before the communists, but also the essence of the “scientific socialism" of economic control they still follow. To understand Say 's Law is to understand the essence of the market and its moral foundation.

 “From each according to their abilities, to each according to their needs” is a phrase that sums up the essence of the principles of a society that still believes wealth is produced in one system and its distribution is carried out by another. This idea was promoted by offspring of the French Revolution, such as Cabet and Blanc, popularized by utopian socialists and anarchists who adopted scientific positivism. It was taken up in 1875 by Karl Marx in his "Critique of the Gotha Program" (Published by Engels in 1891) to formulate the principle by which the highest phase of communist society would be governed. Any such programs are re-distribution of other people’s wealth.

From Ancient history to the history of the 20th century, which still projects its negative inertia into our century, we are shown that the idea of re-distributing wealth, even if it is disguised as justice by the words “fairness”, “equity” and “social”, implies three things. The first is that it does not solve anything in terms of creating what there is to distribute. But more than that. It becomes a threat to wealth creation as it inhibits human creativity and initiative. The second is that there is no justice applied as an abstract and general rule to make the distribution; it requires arbitrary power to set a criteria or intention to decide what each person “needs”. It requires force, violence and abuse implicit in authority. The third is the evidence of what has happened to all countries that have been subjected to these economic fallacies. The socialist countries seem to work until the wealth that had been created before is exhausted. There is nothing left to be taken from anyone to give to someone else.

But the tragedy is greater.

This anti-economic system has now been legislated as the illusion of stimulating the market economy in order to save it. It is no longer promoted as a clear socialist system; it is sold to the citizens as the scientific solution to the deficiencies of the free enterprise system. It is no longer justified by a creative moralistic slogan helping the needy. It has been imposed as the achievement of science. How did it happen?

The Inflation Reduction Act of 2023 will go down in history as the major cause of additional inflation in 2024-25. It will flush trillions into the pockets of Green Contractors and products nobody wants.

Say 's Law was twisted despite its obvious logic. It was the use of mathematics that opened the door to perversion. If what we offer is Supply, and this is exchanged for what will become Demand, it can be expressed S = D (Supply equals demand). The equation destroys its logical temporality, meaning the order of events. If it is a valid equation, it can also be read in reverse, D = S. Mathematics changed a clear principle into an irrational conclusion. Demand equals supply, and supply equals demand. This is the same mistake Aristotle made twenty-four centuries ago when looking at how any transaction in the market is finalized by both parties accepting the same price. Excusable then, unforgivable now. While the equation is what confirms the price in any contract in the market, it is not what explains the deliberate action of the people involved. It was Keynes who destroyed the essential idea of how the market "distributes" wealth.

English Lord John Maynard Keynes, father of the Illusion of Inflation Economics
A leading Fabian Socialist and influence on Harvard economists

This change was not an accidental mistake. It was intentional. Keynes changed the terms and destroyed the essential idea of The Law of the Market in his book "General Theory of Employment, Interest and Money" (1936). In the midst of the Great Depression and the post-World War I economic crisis, it occurred to him that one way to "stimulate" the economy was to add "demand." Say’s Law clearly indicates the only authentic way is to produce more, that is: to stimulate supply. Keynes saw its alternative: People demand-buy with money. How is demand today if it is not by producing? By getting money any other way. Who controls and creates the money? A state monopoly called “central bank”. In the old days, when the treasurer had to keep the king’s gold safe in the treasury, the only way to create more money was to adulterate the proportion of gold or silver in the coins by adding other lesser metals, or to make the coins smaller. In more recent times, paper-money was representative of the gold kept in reserve by the treasury. Printing money had a limitation with real value. Since the ideas of Keynes have become Law, the printing presses and other accounting gimmicks have had no limit beyond the prudence of the political leaders in charge. Time has proven they have no prudence. Adulterating the value of money and forging fake money had until then been considered among the most criminal activities against the state. They were also immoral. Everybody knew they were forms of stealing. These time-proven beliefs were destroyed by the illusionists of inflation.

High speed money printing - just paper

Although Keynes idea of “generating effective demand” was conceived as a temporary political action to change the mood of the people by creating government sponsored jobs, it became a Pandora's Box, a creator of political pests and plagues. People were depressed during the Great Depression. Keynes “New Economics” were not intended as an economic solution, but as “psychological” therapy, an illusion. Keynes admitted later that it was never meant to be permanent, but just a jump-start. His American disciples and thurifers became over enthusiastic by the new disguise Keynes created radiating from Harvard. Perhaps, the most influential propagator was John Kenneth Galbraith, celebrated by Harvard Gazette’s obituary as “…the most widely read economist of the twentieth century — 46 books that together sold more than 7 million copies despite none being a textbook — as well as one of America’s most engaged and celebrated public intellectuals.”

Harvard, the American Cambridge became the hotbed of the Keynesian wave of disciples and apostles. Galbraith went on to public service and influenced the highest levels of the bureaucracy. In parallel, Paul Samuelson's bestselling "Economics: An Introductory Analysis" (1948), became the most influential college textbook for several generations and spread nationwide. Keynes had a message of hope in the middle of a depressed environment that seemed hopeless after so many years of economic slump.

Bread Lines of unemployed workers during the Great Depression

Increasing the public payroll or public spending in public projects does not increase the number of goods available; it creates inflation. Building expensive bridges that are not needed only creates the illusion of economic activity, when in fact is destroying wealth. “Economic Stimulus” programs are the trick of the illusionists. What today has been called the "mixed economy" is a new guise for the command economy and the destructive idea of "wealth re-distribution." It has created a popular belief that the government can create wealth out of thin air and dole out free goods at no cost to anyone. What this practice creates is dependency on the state, the ultimate goal of socialism. Along the way it destroys the market.

FDR empowered by Keynes

A genuine question about any influential person in the economic and political scene is to ask what their ideological and partisan leanings are. That helps us put any proposal they make into the context of the big picture. Keynes was elevated to the position of savior of the failed capitalist system, as seen in the Great Depression. Today’s explanation of economic science of what led to that terrible period of history is that the interventionist foreign-exchange and monetary policies were the cause, not the market forces. The inevitable consequences were papered over with the expansionism of the state with the policies of FDR's New Deal, which prolonged the crisis, and then concealed it into the WWII effort.

What ideology did Keynes support? The answer has been given by researcher Edward W. Fuller in an article published in the Cambridge Journal of Economics, in August 2019. The title is suggestive, “Was Keynes a socialist?”, but the article is compelling. Contrary to general belief, especially in the United States where he is still considered the father and savior with his new economics, Keynes was a socialist from 1907 until his death in 1946. He described himself as a socialist. He always aligned himself with socialist policies and movements in Great Britain. He was one of the most famous members of the Fabian Society. His political proposals always promoted the expansion of public functions, the increase of the fiscal budget and the state payroll. His journalistic writings were always in support of socialism, as was his participation in public policy. If it walks like a duck, quacks like a duck, and has duck feathers, it follows that it is…

The Inflation Reduction Act - Green New Deal
depicted as a Fabian strategy - a wolf in sheep's coat

Considering Keynes as the savior of the free enterprise system or market economy inherent to the United States American dream is another aspect of the illusionists’ propaganda. The illusionists perform tricks that create what seem impossible feats. They use a combination of occult actions (secret), misdirection and distractions (fake news and conspiracies), and elaborate manipulations of what we see as obvious (genderism, lawfare), and make objects disappear (documents, tapes, computers and even people). The Illusionists of inflation convince their audiences that they can know the infinite and constantly changing prices of the market. They just have to pass a legislative act by simple majority or an executive order to fix the defective market. They have convinced us that money can be free for the taking and that anything given or provided by the government is free. They have convinced us that is wise to pay people not to work or farmers not to plant. They have convinced us that price inflation has nothing to do with the absurd levels of unproductive government spending; they say that price increases have nothing to do with the interest rates they raised by more than 300% that affect everybody in the economy, or with raising by many tricks the price of gasoline more than 200%. Misdirections like the Wuhan Covid pandemic measures, the Ukrainian invasion, and climate change are blamed for an accumulated inflation in three years that has already reached 20%. Even the old lie of ancient times has been taken out of the illusionists’ hat; price inflation is due to the greed of the merchants.

The unlimited issue of money and the manipulation of credit through private financial institutions, which is another way of creating money, has generated hyperinflations not seen in ancient history. Some have occurred at such speed that workers were forced to demand payment of their wages twice a day so they could take their money in bags to the nearest store before a new price increase was announced. Supporters of the state's social entitlement programs promote inflation and conceal it as charity and generosity. Entitlement programs, public works projects, and an ever-growing state payroll are the main ways “effective demand” (false money) is inserted into the market. The United States Federal Reserve was created expressly to apply those theoretical errors. It is the law, the biggest economic illusion of all.

This is one original proposal as to how to create the illusion that fake money was honest money. “If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again… , there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.” Thus, the illusion of finding treasure was proposed, concealing the culprit of the subsequent price inflation that would inevitably take place. Who came up with this idea? John Maynard Keynes gave it to us in “The General Theory of Employment, Interest and Money” (1936). Notice that it even lauds the efficacy of the free market to dig the money.

One of the critics of Keynes ideas was Nobel Prize winning economist Milton Friedman. In “The Optimum Quantity of Money” (1969), as a way of making obvious what Keynes had really proposed, Friedman illustrated a new method. “Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated.” He went on to analyze the effects of altering the total amount of money in circulation, regardless of how the money was distributed. This led to some confusion among people who did not read the whole exposition and critique to Keynes. Friedman became associated with his proposed  “helicopter money” as a Keynesian solution. Back in 1939, helicopters were only in an experimental stage. Perhaps Keynes would have thought about it had they been in service. The criticism of the “free money” scheme propelled Friedman as one of the founders of what their opponents labeled as “The Monetarist School”. These economists systematically applied mathematical regressions of data spanning the last 400 years to support their conclusion. It is known as the formula D = M2/GDP. Price inflation results when money supply (M2 is cash on hand and bank deposits) increases faster than output (GDP is gross domestic product). The monetarists confirmed what the ancients already knew in times when money matters were simpler. It is also true that there are other events that result in what may seem like inflation because their effect is extensive, but it is not the same. A major disruption to the supply of energy, or an increase in interest rates come to mind; but they do not affect all prices the same way. Only monetary inflation does that. A war, or a serious catastrophe that changes the behavior of consumers may also have extensive effects on many prices, but not all are affected and not the same way. Friedman became one of the most effective critics of Keynesian economics and a formidable defender of the free market. His book “Free to Choose”, co-authored with his wife Rose who was also a well-known economist, is a must-read for anyone interested in the topic of how our rights and a free-market economy are the two sides of our American dream.

The Chairman of the FED illustrating the metaphor of
"Helicopter Money"

One interesting aspect of the “helicopter money” scheme is it evidences that distribution is without specific recipients in mind. In that sense, it is politically neutral and only by chance or fortune will people receive some money. What if the flights become more frequent, or even periodical? Sooner or later, people will stop working to produce goods and will only wait for the flights to drop the money. The politicians will also conclude the flights are lost opportunities to campaign. Indolence and corruption are inevitable with permanent schemes of the sort. The illusionists of inflation go to work and create many avenues to prevent indolence and gain support without being noticed. If the people don’t work, they will soon realize there is something fundamentally wrong. People need to work as a natural extension of their reality. For the politician, work is acceptable even if it is not needed or it does not add anything of value. Work, productive or not, is after all disciplined and people must follow instructions. People will also fall for the illusion. 

This conclusion leads to proposals like the following example. The government decides to build a canal from one end of a region to another. It announces it as investing in vital infrastructure. It hires thousands of young, unemployed and unskilled workers. It buys equipment for each one, stimulating the economy (Uniforms, boots, hats, shovels and pickaxes, wheelbarrows, etc.). All the local vendors are happy, the manufacturers are happy, and the families are happy. The economy gets a boost, money flows. After a few months of digging, the ditch is half-way excavated. Without stopping the front of the works, the government repeats the process with new laborers. The second time, it announces the need for a new group of unemployed older workers to fill back the ditch. It may even be called a national emergency. The process repeats as many times as needed. One group digs, the second one fills it back. The only problem is that demand has been greatly stimulated with all the salaries paid and purchases made, but the production of goods has not kept pace. Steel has been diverted from its economic uses to make shovels that were not needed. Leather for the boots has been taken away from the making of regular shoes, belts and bags, which will increase in price, and so on… Creating work becomes the trick of the illusionists, even if it is not needed and nothing is produced. Everybody seems happy, at first. What is needed to increase wealth is to increase the total supply of goods in the most economically productive way. Monetary policy has created the expediency of public works, public investment, bloated budgets, subsidized industries, forgivable business loans, tax incentives and grants, etc. Public spending has also invaded the charitable organizations that end up promoting projects and services of political interests and end up as contractors of the state. Many churches are aligned. Creating dependency leads to control.

An Eco-hysterical politician illustrating the real policies   
of the Green New Deal

This explains why the socialists have taken over central banks everywhere. From their very elegant ivory towers economic planning is solemnly, scientifically and mathematically conducted with moderation as disguise, but sooner or later, the scientists succumb to the politicians’ abuse clearing the way to the bottom of the barrel. This has happened everywhere where those ideas were applied. In some places with intellectual honesty, but in error. In others because economic destruction was intended. The distress created by hopeless hunger is a condition for their next phase of conflict in chaos. In many countries, the legal principles of the Federal Reserve of the United States of America have been copied, based on the distorted and expanded ideas of Keynes. In 1944, he was one of the architects of the conference of Bretton Woods that led to the creation of the World Bank and the International Monetary Fund. In 1988, the recently created European Union created the European Central Bank – ECB, with identical objectives as the Federal Reserve. We are in the era of inflation, planned and measured or runaway and uncontrolled. As long as Keynes’ ideas remain in force, the risks of economic failure are predictable and high. Keynesian macroeconomics are the fashionable monetary and fiscal policies of our times. We are well on the path to socialist economies all over the world.

Why do I say that Keynes never thought his proposals for stimulating demand were a real solution to the economic crisis and were just a mere illusion? I will let Lord Keynes tell us what he really thought about monetary inflation before he was anointed as a saint and savior of the American and world economies during the 1930s.

“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.”

John Maynard Keynes, “The Economic Consequences of the Peace” (1920)

We can only decant alternative conclusions. A) That he changed his mind from 1920 to 1936 and really formulated a New Economics, rising to the stature of Einstein who dethroned Newton. B) That he was a charlatan who went in the direction of the winds of the moment and was carried away by adulation, fame and fortune. C) That he was a great magician, but his followers did not understand his tricks and they got carried away. D) That he was always intent on destroying the free enterprise system of the United States economy and he knew just how.

Is it ignorance, or is that the plan?
Adding gasoline to the fire

For me it is obvious he was performing all the time. He was a Fabian after all. We are still under the spell of the Grand Illusionist of Inflation.

Two works illustrate the debate that has occurred over the perversion of Say's Law. One is "The Rehabilitation of Say's Law " (1974) by William H. Hutt who collected several of his earlier writings on the subject. The other is "Say's Law" (1973), by Thomas Sowell of Stanford University. The Law, as a description of reality, subsists in modern economists who do not serve the government. Some have come to be called neoclassical, code word for antiquated and passé, while others designate themselves as "on the supply side" (Supply-siders in reference to Say 's Law).