John convinced FDR and other economic thinkers that his THEORY had merit and that if implemented it would solve the economic problem of the day which was mass unemployment and stagnant/declining prices. Deflation was the problem and masses of working people could not find jobs. John wrote his General Theory of Employment, Interest, and Money for government policy makers so the economic problems of the day could be solved.
FDR bought into this General Theory of John's and gradually his ideas started to work in the marketplace. Employment declined and prices started to increase as demand increased. His idea was that governments could create unlimited units of money (via their government bond policies) so as to put people to work and then manage prices and interest rates via their monetary tools. An Independent Central Bank was key as policy could be mandated for the marketplace. What were the essential ideas of Keynesianism?
1. The central idea was that DEMAND must be managed by using central government policy to funnel money to companies (and people) which could employ workers. The idea was later called DEMAND MANAGEMENT. I learned all about this theory during my college days in Minnesota.
2. The idea was that increases in production would follow DEMAND and the overall economy would prosper (production would increase) as demand and supply were managed via this central bank system. An Independent Central Bank was key to this governmental THEORY.
3. A centrally controlled 'interest rate' would serve as the reference point for all borrowing. The Central Bank could monitor demand and funnel CREDIT so that the economy would grow indefinitely and continually. Prosperity would develop over time and Guns and Butter would be the slogan for government policymakers continually. It all seemed unreal to many thinkers but it was REAL to central planners in Washington.
This THEORY of John Maynard Keynes was refuted by many economists of the day as less than perfect but no real competing THEORY developed to challenge Keynesianism. Milton Friedman was the one economist who did refute some of Keynesianism theory as he recognized that Central Bank money creation would lead to INFLATION (over time). But the ideas of KEYNES prevailed and we now have lived with this THEORY for almost 90 years. It's the model that has lasted for its projected time period (some 90 years).
John said that the prior gold standard was a barbarous relic of history and his ideas on 'money' were needed to get employment, prosperity, and growth going for governments. Some economists pointed out that the real flaw in this THEORY was that credit and debt had no end point. Credit and Debt were continual under John's THEORY. At some point the accumulated DEBT would reach an unsustainable level. But Keynes said that 'in the long run we are all dead' so credit and debt must be used until this policy produced negative outcomes. He envision some 80 to 90 years before the theory would collapse!
After some 90 years of Keynesianism we are now at the END of a DEBT ERA for this THEORY. Keynes died on Easter Sunday in 1946 at the age of 63. His ideas continued after his death and most higher institutions of education still teach Keynesian Economics today. It's a model that is finally ENDING due to the continual accumulation of DEBT (now unsustainable). You can witness the DEBT which has accumulated since this THEORY started here: www.usdebtclock.org.
It is my viewpoint that Keynesian Economics is now ending for good. America and the WEST has promoted this theory as positive for commerce globally. But the DEBT system is now unsustainable and the management of our global economy can no longer be sustained with this MODEL/THEORY. The END of an ERA has arrived IMO. There is no sound replacement for this theory as of now. Some are promoting a Central Bank Digital Currency as the new model for the planet. But this theory is unworkable IMO.
The idea that a CENTRAL hierarchy of economic thinkers can manage the entire planet's commerce with digital (imaginary) currencies is PURE myth and fantasy IMO. Yet this idea is being promoted by the World Economic Forum (WEF) as the new MODEL for our planet. I call this idea the BEAST financial system. It promotes CONTROL over freedom. Money over the interests of PEOPLE. A central hierarchy over free enterprise and private ownership of property. It's totally DIABOLICAL and corrupt IMO.
Some in our Congress call this new theory MMT (modern monetary theory). In reality this is pure CENTRAL PLANING for the entire planet. It's Communism 101 for everyone. We need to think up a better THEORY. My view is that we need DECENTRALIZATION on a mass scale. We also need to get rid of this idea called MONEY. What is MONEY (in reality)? Think on this! Is it a 'thing' which EXISTS in space/time? Is it an 'object' of nature? What is MONEY (in reality)?
Soon we will be entering a major economic DEPRESSION (much worse than 1929). Isn't it time to think about a NEW MODEL for our planet? A model which gives everyone freedom and justice? I think so! We need to recognize that any THEORY is temporary. Keynesianism is now OVER and the collapse of this theory is happening FAST. By August of 2023, I predict that a depression will develop in America. It will happen because the CYCLE of change is here. Keynesianism is unworkable going forward!
It's a THEORY which worked for a time period. It is now an idea which needs to be mothballed. Keynesianism produces central planning, unsustainable debt, funny money creation, corruption within politics, the Ukraine war and other wars of conquest. It's a theory for the dustpan. Think on this as you watch events happen in real-time. Have a great day! Think for yourselves on all these important issues of survival.
I am: Donald B. Swenson, Eonomist/Philosopher, donaldswenson.blogspot.com.
http://kingdomecon.wordpress.com
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