HARD CORE KEYNESIANS DOWNPLAY BASIC ECONOMIC THEORY
Introduction – Where Is The Logic?
We know what the major problem is relating to the domestic and global economy – INFLATION. The hard core Keynesian (economic) gurus advising the Biden Administration, unfortunately, have been either too timid to push against Biden’s aggressive socialist agenda attack on the free market or too stupid to recognize policies that are diametrically opposed to the basic tenets of basic economic theory (and common logic). They are not “connecting the dots. Basic economics theory rests on the balance of supply and demand. The mathematical wizardry of economic theorists between the time of Adam Smith (The Invisible Hand) and today have added many useful tools and analyses that have functionally helped keep the economy stable. Unfortunately, some of the wizardly has gone astray and instead supported monetary and fiscal policies that have created periods of economic instability. The present dangerously high inflation that we are experiencing today is a prime example of such hard core Keynesian wizardry gone astray. In true hard core Keynesian style, the Biden Administration has overstimulated the economy from the demand side and then has handed off the problem to the Federal Reserve to address. The Federal Reserve’s tools are restricted to monetary policy functions that put the breaks on the economy not only dampening demand, but also impacting investment and the supply side of the economy.
Inflation is caused by an imbalance between supply and demand where demand exceeds supply for a sustained period of time. In the case of the Biden Administration, they flooded the economy with spending and money at the same time they “put handcuffs” on the oil and gas industry by curtailing leases on public lands and waters and putting a hold on “permitting” for undeveloped leases. Keep in mind that leading into 2021, for a number of reasons, including the mishandling of the pandemic and interrupted supply chains, supply was already lagging demand propped up primarily with stimulus payments. In effect, in 2021 the Democrats spiked the demand side of the economy with trillions of dollars of both spending and stimulus related transfer payments while physically constraining the domestic supply of oil and gas. This blind adherence by the Biden Administration to their hyper green energy agenda has had the unfortunate effect of rapidly increasing the cost of domestic crude and natural gas, which in turn has impacted the cost of virtually every product and service consumed. Most appalling is the surprise expressed by the hard core Keynesian left, when inflation became an extremely dangerous risk to the economy even though a vast number of economists “raised the warning flag”. The damage done to the domestic economy as well as to domestic and global security has proven to be substantial. We may have a hard time answering the question where was the logic, but there is no question where to find the stupidity.
The First Critical Stupidity – Where Is The Economics?
The Biden Administration’s multiple agenda driven policy failures have proven to be far more troubling than their self proclaimed staff gurus and acolytes in the media proclaimed until the resulting crisis level issues became too blatant to ignore and the “handwriting was on the wall”. Janet Yellen, one of the most hard core Keynesian gurus, our present Treasury Secretary, enamored by the socialist leaning Biden Administration, who endorses ongoing “controlled” inflation, finally admitted that she “blew it” regarding inflation. As late as last May (2021) she clearly stated that she did not anticipate that inflation was going to be a problem. Just a little history regarding Ms. Yellen – she generated a flurry of research during the Greenspan chairmanship of the Federal Open Market Committee during the 1990’s that advanced targeted inflation which Greenspan rejected during his highly stable run as Fed Chairman. Yellen’s “liberal” credentials are unquestionable, and her hard core Keynesian theology, that canonizes driving the economy from the demand side at all times, crippled her ability to sniff out the obvious policy missteps of the Biden Administration that have led up to worst inflation in forty years. The prospect of a hard landing for the economy is looming in front of us and Joe Biden has rosined up Nero’s bow and is fiddling like mad, doubling down on his failing agenda, rather than addressing the inflationary problem in a rational manner that works. For a more detailed discussion of the fiscal and monetary blunders of the Biden Administration see “Macroeconomics-Money-Spending-Inflation” and “Can Biden And The Democrats Really Be That Dumb” posted in www.georgeeconomics.com.
An Equally Critical Stupidity – Where Is The Science?
The American climate changing, green energy, we believe in science, socialist movement, is the master of agenda driven smoke and mirrors partial analysis. In other words, they scrutinize the segments of science that support their green hyper ventilating agenda and ignore the science that would integrate reality into their game plan. Their blind adherence to their big government green energy agenda coupled with their ridiculous spending and easy money in 2021 in an already overheated economic environment has resulted in today’s record high inflation. Their goal of minimizing damage to the environment on the way to zero emissions is truly commendable, but their agenda driven policies effectively blocks the optimal path to that goal. Given present technology limitations and existing infrastructure, the intentional application of partial analysis by the political left is scientifically unacceptable and massively deceptive. The real far left policy makers that dictate the Biden Administration’s energy/environment policies only recognize the science that supports their agenda and ignore the scientific constraints that would make the path to net zero pollution truly optimal. Among his initial executive orders Biden revoked the Keystone XL pipeline, paused all leases in the Arctic National Wildlife Reserve, and suspended all oil and natural gas leases on public land. In addition to these actions to physically limit oil and gas production, regulatory blockage of oil and gas permitting on public lands and waters has curtailed the future development of existing leases. The curtailment of domestic natural gas production has negatively impacted the environment by limiting the ability of electric utilities to replace heavily polluting coal burning power plant capacity with clean burning gas fired power plants. On a global basis the United States should be supplying Germany and all other countries with LNG (liquefied natural gas) to replace coal. See the articles “The American and European Left Never Learns” and “The American Left Is Really That Stupid” posted in www.georgeeconomics.com for further discussion of the disastrous impact of the massively stupid energy policy of the Biden Administration on both domestic and global security and economic stability.
When the ideological blindness of an administration in power leads to policies that ignore those aspects of science that oppose the rigid blindness of their agendas and that ignore basic economic theory, damage will be done to the economy as well as to the overall effort to minimize damage to the environment over time (especially on a global level). Ignorance mutates into malice when, on both a domestic and a global level, it has become blatantly obvious that the policies in place are toxic to domestic and global welfare and security, and no course adjustments are made. Biden, however, may not be guilty of malice. He has been a puppet on a string, either snoozing or listening to Nero’s violin concerto, while the radical left puppet masters dictates his policies, writes his speeches and prescribes his medication.
If historians accurately portray the massive negative impacts of the Biden Administration’s socialist agenda driven policies on just about every format and level, he would have to be labeled the most toxic president of the United States, occurring in the first two years of his term.