The Failure of Keynesian Economics

Keynesian economics is comparable to actual cancer — not being hyperbolic here.

What Is Keynesian Economics?

Keynesian economics is the idea that government should "stimulate" the economy by spending money it doesn't have. The theory claims this helps create jobs and economic growth. In practice, it's a sophisticated system for stealing from savers to fund government spending.

The system combines Fiat Currency (money not backed by gold) with massive government intervention. Politicians claim this helps the poor and "regulates" the economy, but it's really just a way to spend other people's money on their pet projects.

How Money Should Work: The Natural Economy

Imagine a simple economy with 10 people and exactly $100 total. That's it - no more money can be created.

In this economy:

This is deflation - and it's natural and good. Think about computers: they get faster and cheaper every year. That's what should happen to everything in a healthy economy.

How Keynesian Economics Destroys This

Now let's see what happens when government "stimulates" our economy.

Step 1: Government Creates $50 Out of Thin Air

The government decides it needs to build a bridge. But instead of asking taxpayers for money (which would be unpopular), it simply creates $50 from nothing and spends it.

Step 2: The First Theft Occurs

When government spends this new $50, prices haven't adjusted yet. So government gets $50 worth of goods and services at the old prices. But where did this value come from?

It came from everyone else's savings. The economy still only has the same amount of stuff, but now there's $150 instead of $100. Everyone's dollars just became worth less.

Step 3: The Ripple Effect

The bridge builders now have $50 to spend. They go shopping and find prices are still low (markets take time to adjust). So they get a good deal too.

But as this new money spreads through the economy, prices start rising. The people furthest from the government's initial spending get screwed the hardest - they have to pay higher prices but never got any of the new money.

Step 4: Your Savings Get Destroyed

What used to cost $10 now costs $15. Your $10 in savings now buys less stuff. You've been robbed, but no one broke into your house. The government did it by printing money.

The Big Lie: "Economic Growth"

Keynesians claim this creates "economic growth." But what really happened?

  1. Government consumed resources without producing anything
  2. Early recipients of new money got rich at everyone else's expense
  3. Savers lost purchasing power
  4. The economy has the same amount of real wealth, just distributed differently

This isn't growth - it's theft with extra steps.

The Desert Island Test

Imagine you're on a desert island. Can you stimulate the economy by creating more seashells (your currency) from thin air? Of course not. You still have the same amount of coconuts and fish.

If you're alone, this strategy kills you. If you're with others, you're essentially forcing them to work for your benefit while you contribute nothing. That's slavery.

The Inevitable End Game

This system requires constant theft from savers. Every year, your money must lose value to keep the scheme going. Where does this lead?

Your money slowly but surely approaches zero value. Look at countries with hyperinflation - this is Keynesian economics taken to its logical conclusion.

Meanwhile, wages haven't risen since 1970 (when we abandoned the gold standard), but productivity has increased 3.5x. Workers are producing more but earning less. Where did that wealth go? To the government and those closest to the money printer.

The Solution

The solution is simple: Sound Money backed by something real, like gold or Bitcoin. No more money printing. No more theft through inflation. Let the Markets work naturally, with prices falling over time as innovation makes us more productive.

Keynesian economics isn't helping the economy - it's a cancer slowly destroying the wealth of everyone who works and saves.