The Classic Liberal Blog

Voodoo Child Talks Up A Storm

Before his first address to a joint session of Congress, Barack Obama was advised, mainly by Republicans, to "be positive, if prudent" (Bill O'Reilly); "restore economic confidence" (National Review); "talk up" the economy (every Tom, Dick and Harry).

When befuddled Republicans kibitz about "a crisis in consumer confidence," they're referring inadvertently to what famed, Fabian economist John Maynard Keynes called "animal spirits." I kid you not. Keynes honestly believed that the fickle consumer's biorhythms control the spooky economy. If the consumer is spooked, "the economy" gets that way too.

The Voodoo Child obliged the demands for a pep-talk.

"While our economy may be weakened and our confidence shaken; though we are living through difficult and uncertain times, tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before," the president thundered. He then went on to talk big— big government, that is.

The idea that optimistic platitudes can "restore the confidence" of cash-strapped consumers, and compel them to resume their addle-brained consumption, belongs to Keynes and his acolytes. Once you understand that our overlords all follow Lord Keynes, it becomes easier to comprehend their credit and consumption-based voodoo economics. "If we do not re-start lending in this country, our recovery will be choked off before it even begins," threatened Obama.

First the history:

"In his attack upon the principle of savings, Keynes merely echoed an old revolutionary stratagem of Fabian Socialists. At the Labour Party Conference in 1923, the Fabians 'rejected the concept that private savings increase community national assets.' Even earlier (1916) the Fabians declared 'large savings by a wealthy class an inherent evil; they increase and perpetuate a functionless, tribute-levying class of rentiers, which is already a dangerous element in the State.'"

Next the "why":

"The concept of eliminating savings is not an economic one but a political one. If there are no savings there is no private money for investment. Without private investors the government must provide investment capital. If the government provides for investment it has the power to dictate the conduct and processes of those who need investment capital."

"The trick is to get control of the government and then the road to socialism is automatically assured."

The Economic Crisis Is Only a Symptom

There are few economic problems that don't originate in politics.

People know something is wrong. They know economic conditions have taken a turn for the worse. They sense that they don't matter much, at least in the eyes of their government. Furthermore, many believe that government is out of touch and corrupt. Politicians are viewed more as a ruling class than as representatives of the people.

History is replete with examples of the rise and fall of empires. Is there some mysterious, material force that produces "cycles of civilization"? History seems to support such a contention, but coincidence and correlation are not causation. Societies rise and fall as the result of policies, laws, customs, and traditions. Man creates the forces that drive civilizations.

Over the centuries, brighter folks than our elected officials experimented with virtually every combination and permutation of laws and customs. Ideas that worked were adopted, while those that didn't were abandoned. It was in the context of this evolutionary cauldron that "best practices" were discovered and civilizations advanced. Those that abandoned "best practices" deteriorated.

Our learned Founders knew history and the nature of man. They created a Constitution that represented two thousand years of wisdom and experience. Their remarkable achievement enabled a fledgling nation to rise quickly to a world power with unsurpassed wealth, freedom, and living standards.

Now we appear to be on the downside of our historical run. An enormous economic crisis engulfs our country and the world. Has our time of leadership come and gone? What happened?

At the risk of appearing simplistic, I argue that the driving force for our success was our conception of limited government. Our Founders knew the tendency of rulers and constructed a framework designed to protect citizens from government. This setting maximized individual freedom, encouraged initiative, and rewarded success.

Slowly but incessantly, the remarkable document that was our Constitution was weakened. Now few politicians understand it, and even fewer believe that it has any bearing. Politicians suffer from what Friedrich Hayek termed "the fatal conceit."

The Coming Financial Catastrophe

The people have been lulled into a false sense of safety under the rouse of a perceived “economic recovery.” Unfortunately, what the majority of people think does not make it so, especially when the people making the key decisions think and act to the contrary. The sovereign debt crises that have been unfolding in the past couple years and more recently in Greece, are canaries in the coal mine for the rest of Western “civilization.” The crisis threatens to spread to Spain, Portugal and Ireland; like dominoes, one country after another will collapse into a debt and currency crisis, all the way to America.

In October 2008, the mainstream media and politicians of the Western world were warning of an impending depression if actions were not taken to quickly prevent this. The problem was that this crisis had been a long-time coming, and what’s worse, is that the actions governments took did not address any of the core, systemic issues and problems with the global economy; they merely set out to save the banking industry from collapse. To do this, governments around the world implemented massive “stimulus” and “bailout” packages, plunging their countries deeper into debt to save the banks from themselves, while charging it to people of the world.

Then an uproar of stock market speculation followed, as money was pumped into the stocks, but not the real economy. This recovery has been nothing but a complete and utter illusion, and within the next two years, the illusion will likely come to a complete collapse.

The governments gave the banks a blank check, charged it to the public, and now it’s time to pay ...

When the crisis is over, the middle classes of the western world will have been liquidated of their economic, political and social status. The global economy will have gone through the greatest consolidation of industry and banking in world history leading to a system in which only a few corporations and banks control the global economy and its resources; governments will have lost that right. The people of the western world will be treated by the financial oligarchs as they have treated the “global South” and in particular, Africa; they will remove our social structures and foundations so that we become entirely subservient to their dominance over the economic and political structures of our society.

This is where we stand today, and is the road on which we travel.

The western world has been plundered into poverty, a process long underway, but with the unfolding of the crisis, will be rapidly accelerated. As our societies collapse in on themselves, the governments will protect the banks and multinationals. When the people go out into the streets, as they invariably do and will, the government will not come to their aid, but will come with police and military forces to crush the protests and oppress the people. The social foundations will collapse with the economy, and the state will clamp down to prevent the people from constructing a new one.

The road to recovery is far from here. When the crisis has come to an end, the world we know will have changed dramatically. No one ever grows up in the world they were born into; everything is always changing. Now is no exception. The only difference is, that we are about to go through the most rapid changes the world has seen thus far.

Every central bank, and every fiat currency throughout history has failed. 100 years of Keynesian nonsense ... is coming home to roost.

May God help us all.