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About Thomas Brewton
Thomas E. Brewton had the great good fortune in the middle
1950s at Louisiana State University to study under two of the 20th century's
great minds: Eric Voegelin in political science, and Walter Berns in
Constitutional law. These two professors opened the door of education to a
glimpse of Western civilization and of American political and social thought as
they had been before socialism was unconstitutionally established as the
official national religion of the United States in 1933. Mr. Brewton believes
that door to understanding has been nailed tightly shut since the late 1960s by
the forces of the liberal-socialist jihad. He believes a great many educators
have imposed speech and behavior codes to prevent teaching and discussion of
anything other than the catechism of socialism. Mr. Brewton also believes that
generations of young students have been radicalized to hate the United States
and to regard its history as a chronicle of imperialistic crimes. He maintains
the publication The View from 1776,
accessible here. |
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Past Articles
Stop
Obsessing About Japan & Deflation
A
Liberal-Progressive Abstraction: Caring for the...
The
Deflation Bogeyman
The
Business Cycle: Krugman v. Austrian Economic..
Academic Theorist In The White House
The 17th
Amendment Revisited
Read more from Mr. Brewton |
Thomas Brewton
Stop Obsessing About Japan & Deflation
November 17, 2010
Fed chairman Ben Bernanke apparently is misled by fictionalized versions of two
economic models: Franklin Roosevelt's New Deal Keynesianism and Japan's
deflation and economic stagnation.
Mr. Bernanke reads New Deal economic history with blinders firmly affixed to
narrow the breadth of his vision. In the face of overwhelming evidence to the
contrary, he holds to his philosophically materialistic, Keynesian economics
faith that manipulation of monetary quantity alone is a mathematically certain,
unfailing cure for any economic downturn or increase in unemployment.
Keynesian macroeconomics depends upon a simplistic faith that mathematical
inerrancy can be applied to human conduct, that the behavior of hundreds of
millions of people can be conformed to an academic spreadsheet model of an
economy. Keynesian logic says that, if A = B, then reversing the equation,
starting with B, will produce A. Implicitly for Keynesians, if A (expanding
business activity) equals (produces) more bank credit and more money in
circulation, then flipping the equation and starting with B (increasing the
money supply) will create more bank lending and increase business activity.
What happens, instead, is blips in business activity, rendered temporary by
uncertainty about the effects of government action and fear of worse to come,
accompanied by misallocation of investment funds and long-range inflation that
robs everyone of the value of work and saving.
Neglected is the reality that businesses will not markedly rev up production and
resume large-scale hiring so long as they confront huge increases in operating
costs, the full extent of which is unknown until millions of new regulations
have been written. Nor will they do so when the president continually tongue
lashes them as greedy capitalist criminals, and the Democrat/Socialist Party
threatens yet more punitive programs such as cap-and-trade regulations and
regulating CO2, a by-product of almost every human activity, as a toxic agent.
Mr. Bernanke's Keynesian economics became fashionable in the 1930s among
Franklin Roosevelt's Ivy League policy advisors for one primary reason: it fit
with the prevailing faith that economic prosperity and social justice (read
cradle-to-grave welfare benefits) could be attained under socialism.
Private enterprise, in their view, had spectacularly failed, evidenced by the
1929 stock market crash. According to socialist economists such as Harvard's
Alvin Hansen, private business would never regain the production levels of 1928.
Businessmen were just too stupid to understand the refined aspects of academic
economic theory. Government would have to expand and become the employer and
investor to fill the gap and eliminate unemployment. That meant punishing
private business directly and indirectly through regulation. Most of all it
meant huge increases in Federal spending, along with much higher taxes to take
presumably ill-got money from "the rich" and re-distribute it to the deserving
workers.
Such remains the social-justice economic paradigm of Obama's Democrat/Socialist
Party administration and of its handmaiden, Ben Bernanke's Federal Reserve.
Mr. Bernanke's other obsession is that the United States may fall into the grip
of deflation, another name for Keynes's notorious "liquidity trap." Keynesian
true-believers like Paul Krugman proclaim that we already are there. Businessmen
and consumers, just too befuddled and stupid to comprehend the reality
understood only by academics, should be spending at a rapid pace to reduce
unemployment and prolong the housing boom. Instead businesses are sitting on
billions of dollars of cash, and consumers, fearing loss of jobs and economic
unknowns, are reducing spending and paying down their debts.
Faced with this Marxian lumpen proletariat, the duty and prerogative of
liberal-progressive-socialists is take command of the economy. Unheeding and
resistive consumers and businessmen must be prodded by Marxian, Darwinian
materialistic forces, such as government deficit stimulus spending and oceans of
phony money inundating Wall Street. Liberal-progressive-socialists must compel
them to stop saving, start spending, and place their faith in the social justice
to come under a
fully socialized economic and political state.
Whence Mr. Bernanke's new $600 billion program of quantitative monetary easing
to prevent deflation. Meanwhile, in the real world,
as economics columnist Larry Kudlow reports,"Since Bernanke first hinted at
quantitative easing in late August, commodity indexes have jumped nearly 20
percent, gold has hit a new
record high over $1,400 an ounce and the dollar has fallen nearly 10 percent
against the euro."
Some years ago, Mr. Bernanke's academic studies persuaded him that Japanese
authorities could have forestalled that nation's decade of deflation and
domestic economic stagnation, had they leapt into full-fledged Keynesianism. He
publicly scolded Japanese authorities for being too slow to apply a
full-court-press Keynesian package of massive expansion of the money supply,
intended to drive interest rates to near zero.
Had they heeded Mr. Bernanke, presumably consumers would have been led to
increase spending, business would have stepped up production, and Japan would
have remained a strong and growing No. 2 world economy.
The Japanese paradigm, however, is not a good match for economic conditions in
the United States. Carnegie-Mellon professor Tom Emerson alerted me to Robert J.
Samuelson's
How to avoid Japan's economic mistakes, published in the November 15, 2010,
edition of the Washington Post.
In it, Mr. Samuelson notes that deflation in Japan is much more than a money
supply, interest rate phenomenon. As Austrian economists observe, human
instincts, shaped by local conditions and age-old traditions, are the real
factors determining economic well being. Human nature on the whole has remained
the same since the advent of homo sapiens. But liberal-progressive-socialist
academics will never be ale to foresee and control the specific reactions of
hundreds of millions of individuals. |
