The last seventy years or so have proven the massive flaws in the official

economic and monetary policies which are promoted by this government, but it
appears that there are few who are either capable or willing to view these flaws
regarding the solutions that are available to resolve those flaws. Evidently,
during this latest economic dislocation, we will see yet another round of flawed
economics and monetary policy emanating from the Keynesian mentality that
permeates the official realms of our government.

Keynesian Economics was created to create problems and not offer solutions. That
seems to be a radical statement however, when you judge that statement in the
light of the writings of those who knew John Maynard Keynes and his economic
theories, it becomes apparent that they were well aware of the effects that
Keynesian Economics would have on the well-being of the economy and that those
effects would create the need for an ever-increasing amount of government
intervention. Perhaps the clearest explanation of the effects of Keynesian
Economics can be found in the writings of Keynes' contemporary and Socialist
Comrade John Strachey. Strachey stated that Keynesian Economics was "an
indispensable step in the right direction. The fact that the loss of objectivity,
and the intrinsic value of the currency which is involved (i.e., inflation) will
sooner or later make necessary, on pain of ever- increasing dislocation, a growing
degree of social control . . . for the partial character of the policy will itself
lead on to further measures. The very fact that no stability, no permanently
workable solution can be found within the limits of this policy will ensure that
once a community has been driven by events to tackle its problems, in this way, it
cannot halt at the first stage, but must of necessity push on to more thorough
going measures of re-organization."

It should be very obvious, and irrefutable, that the real purpose of Keynesian
Economic Theory was to completely undermine economic stability, thus creating a
constant and steady need for government intervention that would eventually destroy
the actual free market, leaving no alternatives but a government centered
Socialist market economy.

In the book "The Failure of the New Economics", Hazlitt stated, correctly,
"Keynes's plan for 'the socialization of investment' would inevitably entail
socialism and state planning. Keynes, in brief, recommended de facto socialism
under the guise of 'reforming' and 'preserving' capitalism." That statement, of
course, is in agreement with Strachey's assessment about what effects Keynesian
Economics would have on the substructure, and eventual superstructure of
economics.

Strachey again, referring to Keynesian Economic Theory, said: "If once it were
admitted that capitalism could be regulated and controlled in this way, might not
the wage-earning majority of the population come sooner or later to the conclusion
that the thing to do was neither to put up with things as they were nor to go
through the fiery furnace of social revolution, in order to establish a wholly new
system, but to harness - to bit and to bridle - capitalism in its own interest?
Was it not apparent that Keynesism had only to be pushed a little further and a
state of things might emerge in which the nominal owners of the means of
production, although left in full possession of the legal title to their property,
would in reality be working not for themselves, but for whatever hands had grasped
the central levers of social control?"

Additionally, Strachey stated: "It is impossible to establish communism as the

immediate successor to capitalism. It is accordingly proposed to establish
socialism as something, which we can put in the place of our present decaying
capitalism. Hence, communists work for the establishment of socialism as a
necessary transition stage on the road to communism."

Thus, according to Strachey, the goal has been to gradually introduce Socialist
mechanisms within the capitalist market systems through degenerative measures
[such as Keynesian Economic Theory] that would increasingly promote government
intervention in the markets. This has indeed happened over the last seventy-some-
odd-years, and today we are seeing an even greater push by government in a
response to this latest dislocation in the economy, as predicted by Strachey, as
well as other Socialists.

It becomes apparent that one of the goals of Keynesian Economic Theory is the
transformation of a free market economy into an official government economy.
Indeed, if we look at the effects of Keynesian Theory on the actual monetary and
economic policies executed in this country over the decades it becomes easy to see
that this particular theory has eliminated the normal market mechanics for
artificially induced and managed market mechanics. You will notice that over the
years the savings rate in this country has gradually deceased, consumption, driven
by debt, has increased and during this process the government has drastically
increased its power over the economy. Due to various mechanisms within Keynesian
Economics, in particular the enforced use of Fiat Money, private monies for
investment has gradually dwindled while government monies have increased. Without
private monies there is no other way for the markets to be maintained other than
through public funding, thus the government must intervene and provide capital in
the markets, as we have seen. At this stage, once the government infuses public
funding, it has the power, as we see, to dictate not only conduct within the
market, but also the various processes involved in business decisions.

John Maynard Keynes was closely associated with various Socialist groups; in fact
Keynes once described himself as a Bolshevik and was well aware of Socialist
doctrine and theory. Keynes, in his book "Economic Consequences of the Peace",
stated: "By a continuous process of inflation, governments can confiscate,
secretly and unobserved, an important part of the wealth of their citizens. By
this method, they not only confiscate, but they confiscate arbitrarily; and while
the process impoverishes many, it actually enriches some.... The process engages
all of the hidden forces of economic law on the side of destruction, and does it
in a manner that not one man in a million can diagnose."

Indeed, Nikolai Lenin spoke before the Second Congress of the Communist
International and declared of Keynes: "I will quote another economic source which
assumes particularly great significance, the British diplomat Keynes, the author
of The Economic Consequences Of The Peace, who on the instructions of his
government, took part in the Versailles peace negotiations, watched them directly
from the purely bourgeois point of view, studied the subject step by step, and
took part in the conference as an economist. He arrived at conclusions which are
stronger, more striking and more instructive than any a Communist revolutionary
could advance, because they are conclusions drawn by an acknowledged
bourgeois...."

The political economic nature of Keynesian Economics cannot be denied, nor can the
effects of those theories on the entire economic and social structure of our
government. Keynes, in a letter to fellow Socialist George Bernard Shaw, said: "I
believe myself to be writing a book on economic theory which will largely
revolutionize ... the way the world thinks about economic problems. When my new
theory has been duly assimilated and mixed with politics and feelings and
passions, I can't predict what the final upshot will be in its effect on actions
and affairs. But there will be a great change, and in particular the Ricardian
foundations of Marxism will be knocked away."
Geoffrey Pilling, a Marxist, wrote of the effects of Keynesian Economic Theory on
the Western Capitalist Societies saying: "It [the West] accepts Keynes' own belief
in the primacy of ideas in the shaping of state economic policy. An examination of
the development of the role of the state indicates that there is an organic trend
towards ever-greater state involvement in the attempted regulation of economic and
social matters. It concurs with Keynes' own judgment about the significance of his
work: namely that it did in fact constitute a revolution in economics. We have
already noted that there is little if any agreement amongst those who would wish
to be labeled Keynesians about the nature of this revolution."

The "Keynesian Revolution" has effectively created a continual increase in the

levels of involvement by the government in economic markets, in fact if you look
at the latter half of the Twentieth Century you will see that capitalism, not only
in the United States, but internationally, has been negatively influenced by this
Socialist Keynesian Revolution. It is also important to understand that the works
of Keynes was not only lauded by various Socialist groups, including Marxists, but
the Fascists and even National Socialists [Nazis] equally held Keynesian Theories
in high esteem. In writing the "Forward" to his German Edition of the General
Theory, Keynes stated: "The theory of output as a whole, which is what the
following book purports to provide, is much more easily adapted to the conditions
of a totalitarian state, than is the theory of production and distribution of a
given output produced under the conditions of free competition and a large measure
of laissez-faire."

In the Journal of Political Economy, you will find: "German economists in the
early 1930s were well aware of Keynes's work, and were developing theories along
parallel lines. These involved the now-familiar prescription for economic
depressions of large budget deficits, public-works programs, and easy credit."

Of course, there can be no doubt that government involvement in the markets and
the regulatory state reached its height under Fascist theory and execution;
likewise Keynesian Economic Theories lead to the overwhelming necessity of such
intervention. The Fascists, in particular the National Socialist Party [Nazi],
were the first to put into practice the economic theories found in Keynes' General
Theory; the Nazis implemented truly massive public works projects and increased
deficit spending seeking to encourage full employment of the German peoples. The
Nazis also created what amounts to an inflationary boom, this naturally increased
productivity, but as we know it was based on the assumption that an inflationary
boom can be permanent when in fact they are artificially induced and will
eventually deflate.

The fact is that inflationary booms are nothing more than the conscious
application of Keynesian policies, which naturally lead to even more government
intervention due to the effects brought about by the collapse of such inflationary
booms. Whether Marxist, Socialist or even Fascist, Keynesian Economic Theory
provides the necessary economic system to achieve government involvement in the
social relationships of economic production.

When a government employs Keynesian Economic Theory there is the inexorable

tendency toward more and more government intervention into every area of economic
functioning within the market. Actual regulation of the capitalist economy has
little to do with what is finally arrived at through the policies employed and are
only the medium by which greater intervention becomes necessary. The theoretical
work of Keynes, as well as others, cannot be underestimated and should not be
confused in judging cause and effect; hearkening back to the words of Strachey,
there is an inherent process within the mechanics of Keynesian Economics that
promotes the implementation of Socialist Political Economics, thus replacing free
market capitalism with government intervention. Generally speaking, while there
appear to be contradictions engendered by the apparent growth in economic
production during the various business cycles, particularly in the boom portions
of those business cycles, the gradual increase of the degenerative effects
associated with the bust of the booms cycle provided the material foundation for
increasing government activity and intervention in the markets.

In looking at Keynesian Economic Theory, it should be apparent that Keynes has

become one of the central forces behind government regulation of the markets and
the increasing degree of intervention into those markets. The ideological
importance of this aspect of Keynesian Theory is the basis of the growing role of
government and has not only transformed capitalism, but has basically negated the
effects of capital markets in favor of government control. In this respect, which
is of extreme importance, Keynesian Economic Theory has provided the government
with a central function within the economy. Since his theories tend to implement
the need for such intervention, the question then arises concerning the effects
such intervention have on the lives of the individual and the degree to which the
individual becomes dependent on the government for his economic, and therefore
social well-being?

Keynes' criticism of unregulated capitalism rest primarily in his belief that

social stability could not be achieved or maintained and therefore he saw the need
of a highly centralized economic plan be administered by government intervention;
thus, this belief lead him to a rather utilitarian view of the necessity of ad hoc
government intervention in economic markets. This idea or belief however, did not
originate from Keynes' himself, but came from the Fabian Essays, published in
1889, by Sydney Webb, Bernard Shaw and others. Like Marx, the Fabians, including
Keynes, believed that it was necessary for governments to gain control over
capital markets, the monetary systems, credit and the implementation of a
progressive income tax system to achieve the goals of Socialism. Indeed, Keynes,
in pure Fabian form, thought that it was absolutely necessary to end laissez-faire
policies in order to end capitalism, for without free markets; capitalism would
then be prone to crisis after crisis under the guise highly regulated economy
while retaining the capitalist label. Free market capitalism died in the Twentieth
Century, thanks in a large part to the policies promoted by Keynesian Economics.

President Bush recently said: "I've abandoned free-market principles to save the
free-market system, to make sure the economy doesn't collapse." Now, if you look
at that quote from President Bush in the light of Keynes' General Theory, you will
find a more eloquent statement bearing the same meaning: "Whilst, therefore, the
enlargement of the functions of government, involved in the task of adjusting to
one another the propensity to consume and the inducement to invest, would seem to
a nineteenth-century publicist or a contemporary American financier to be a
terrific encroachment on individualism, I defend it, on the contrary, both as the
only practicable means of avoiding the destruction of existing economic forms in
their entirety and as the condition of the successful functioning of individual
initiative."

Bush, in short, reiterated what Keynes stated, advocating further government

intervention into the markets to save the capitalist system; nothing could be
further from the truth however. As Keynes stated: "Our final task might be to
select those variables which can be deliberately controlled or managed by central
authority in the kind of system in which we actually live." In concrete terms,
Bush, like Keynes, meant that there is a necessity to select as many variables
within the economic system as possible, at this point, to achieve effective and
applicable controls in preserving the existing economic form while allowing for
even greater government management. Under the continuing guise of preserving the
capitalist market system, Keynes, and it appears that Bush, believed that the
operations of the government intervention would be crucial to "save the free
market system", even though it involves a complete abandonment of free market
principles, essentially destroying the last remnants of free market capitalism.

For decades the American People, and even most of our politicians, have lived
under the illusion that our economic system has retained its free market
capitalist nature; the fact is that there has been a hybrid system that is so far
removed from free market principles that it can no longer be defined as a free
market. Keynes' views have prevailed and today we see that the government has
taken an extensive and growing responsibility over economic functions in our
society.

Like Keynes, most of our politicians believe that the government must not only
regulate the economy to provide price stability and "full" employment, but that it
is also obliged to promote any and all measures that generate sufficient
investments to compensate for the shortfall of private capital in our system due
to various economic drains brought about by the policies of Keynesian. Thus, in
the Keynesian view, the government should employ what amounts to national income
to achieve various economic and corresponding social goals; this is exactly what
has taken place in this country over the last seventy years as we have seen the
rise of the government as the central component of our economic system and not
merely an external force. Essentially, the government has promoted what amounts to
"welfare capitalism", which in realistic terms is nothing more than Socialism
where a government "supra-class" of administrators who manage the economic and
social welfare of all members of our society regardless of their social status or
economic position.

It should be evident in our current state of government involvement in economic

relationships in the market that Keynesian theories have become the primary
driving force behind economic and monetary policies in this country. Additionally,
it is evident that the degree of income redistribution that takes place in this
country has proved effective in producing a stratified social structure where a
hierarchy of wealth is concentrated in those who are politically connected and
enjoy the benefits of those connections with government. Along with the upward
redistribution of income, Keynes proposed that the wages of the masses be reduced
covertly through the government-regulated process of inflation or monetary
depreciation.

Keynes stated: "A movement by employers to revise money-wage bargains downward

will be much more strongly resisted than a gradual and automatic lowering of real
wages as a result of rising prices." Thus, as we have seen, particularly since
1971, the government use of controlled inflation would allow for an increase in
the nominal wages or face value wages of workers while actually affecting a
simultaneous reduction in real wages or purchase value wages through price
inflation. This would not only achieve the goal of providing government with
needed revenues for its expansion, but would continue the illusion that more money
is being put into the pockets of the working man and it would also allow for the
illusion of greater profits for business; the reality, of course, is just the
opposite. Regarding this effect Keynes stated: "It is not the ownership of the
instruments of production which it is important for the State to assume. If the
State is able to determine the aggregate amount of resources devoted to augmenting
the instruments and the basic rate of reward to those who own them, it will have
accomplished all that it is necessary."

Essentially, Keynes proposed that the government, and only the government is
responsible for the determination of the rate of reward a person can achieve by
productivity; thus the functions of market forces are no longer determinant
factors. One should make no mistake about what has taken place in this country or
in the effect of Keynesian Economics have had on the entire economic structure
upon which this country depends. There has been a very definite and intentional
control over income policies in this country, all under the disguise of ensuring
price stability and social equity. What most people don't understand is that these
policies create numerous distortions within the economy and have untold unintended
consequences that promote the need for ever-increasing government intervention.
Consequently, there has been a gradual move toward government-centered
arrangements within the economy, and those developments have rapidly increased
over the last couple of decades which have essentially lead to the creation of a
type of Socialist Corporatism, which, by the way, is not inconsistent with the
ideals of Fabian Socialism.

Keynesian Economic Theory, in particular The General Theory, paved the way for the
ideology that free market capitalism is incapable of being maintained and could
not regulate itself or function without government intervention. It is therefore
claimed that government intervention and the ancillary spending that always
accompanies that intervention is the essential precondition to achieve stability
in the market, the consequences of this intervention is, of course, the increased
provisions of Socialization, not only in the market, but also in society. The most
prominent feature of Keynesian political thought has come in the form of the
drastic rise of government spending, but apparently the vast array of economic
experts fail to see or choose to ignore is that such intervention and spending is
nothing less than a massive drain on surplus value and capital, thus the effects
will always aggravate and dislocate the market. Keynesian-based economic and
political policy made such spending acceptable and generally respectable due to
the fact that such spending is presented as a means of economic growth and
stabilization however, the history of the last fifty years has shown that is not
the case.

The creation of a mixed economy the standard of Fabian Socialistic thinking, which
Keynes obviously adhered to in his theories, can be found in the Fabian Political
& Economic Policy is the foundation of the Socialist agenda: "The individualistic
manufacturer and farmer will be FORCED BY EVENTS to submit to far-reaching changes
in outlook and methods. What is required, if with only a view to equitable
treatment of individuals, is transfer of ownership of large blocks of land - not
necessarily of all the land in the country, but certainly a large proportion of it
- into the hands of the proposed STATUTORY CORPORATIONS and PUBLIC UTILITY BODIES
and OF LAND TRUSTS."

Historically, all public expenditures were considered basically economically

unproductive however, as Keynesian Economics gained widespread acceptance, the
historical and accurate historical view has been pushed out of the way by the
proposition that not only was such spending beneficial, but that the massive
levels of debt to fund such expenditures was of no consequence. According to the
theory, at least, the vast amount of borrowed funds would be recouped by higher
taxation on the production stimulated through such expenditures, of course that is
not quite how it worked out.

Alvin Hansen, one of the leading Keynesian Economist during the 1960's stated:
"the long-standing lesson of history that growth requires an increase in money,
credit and debt. And in the public-private economy of today, a well-balanced
growth suggests an increase of debt at all levels business debt, consumer debt,
state and local debt, and federal debt." While, on the face of it, such a
statement seems to be correct, indeed there appears to be a general expansion of
economic growth, but the nature of that growth should be called into question. The
fact is that such an expansion, both of the money supply and credit, both of which
are debt instruments, have a long-term detrimental effect in the markets, creating
unhealthy distortions and eventual economic dislocations which always require an
increasing degree of government intervention.
Under the prevailing winds of policy, based largely upon Keynesian thought, all
government expenditures is financed through borrowing, thus pushing the growing
burden into the future and thus, regardless of the political will, it will always
drain future surplus value, or as we have seen over the last few years, hope-for
surplus value. The reality of our economy, disguised as capitalism, still produces
surplus value in the private sector only to have it drained away by the public
sector. The resources devoted to the public sector always come at the expense of
the private sector. The presumption that government spending can actually be a
means to the creation of productive and therefore surplus value is to indulge in
an illusion, yet our politicians seek to engage in such illusions on a regular
basis. Eventually however, the future becomes the present and the effects of
previous economic policies, government interventions and expenditures prevail. We
are seeing distortions on a number of fronts, many of which have not revealed
themselves as of yet, but will press upon our economic reality in ways that the
government will not be capable of providing solutions, even temporary ones.

Even Marx was well aware of the illusions behind such government expenditures:
"The sum that was lent to the state no longer has any kind of existence. It was
never designed to be spent as capital to be invested, and yet only by being
invested as capital could it have made itself into self-maintaining value . . ..
No matter how these transactions are multiplied, the capital of the national debt
remains purely fictitious, and the moment these promissory notes become un-
saleable, the illusion of this capital disappears."

The charade can only be maintained as long as the growth of government

expenditures is at a rate below the accumulation of capital, when the equilibrium
shifts and the distortions present themselves the dislocation is no longer
containable and there is a growing threat of consumption of a far greater
proportion of productivity and thus the extraction of surplus value increases. The
inclination of those in government however, is to increase expenditures, as we are
currently witnessing; this action, particularly under the already burdened system,
will only exacerbate the problems. The parasitic claims of the government
continues to fasten onto flesh of this country, it lives and thrives on the backs
of the people by passing the burden of debt for the various spurious programs onto
the working class of this country through increasing reductions of their living
standards, the depreciation of the labor value of their wages and the increase of
social controls.

As with former Administrations, the new Administration will continue to press

forward with exactly the same policies that created this growing and chronic
economic dislocation in the first place. The point will come however, when the
government must institute severe cuts in every area that it has assumed
responsibility in its expansion of the welfare/warfare state. The conundrum will
come when those who have lambasted free market capitalism run out of scapegoats
and must admit that the malfunctioning within the economy is due to the character
of the policies of government intervention and Keynesian-based economic theory.

'Should government refrain from regulation (taxation), the worthlessness of the

money becomes apparent and the fraud can no longer be concealed.' -John Maynard
Keynes

'If all the bank loans were paid up, no one would have a bank deposit, and there
would not be a dollar of currency or coin in circulation. This is a staggering
thought. We are completely dependent on the commercial banks for our money.
Someone has to borrow every dollar we have in circulation, cash or credit. If the
banks create ample synthetic money, we are prosperous; if not, we starve. We are
absolutely without a permanent money system. When one gets a complete grasp upon
the picture, the tragic absurdity of our hopeless position is almost incredible -
but there it is. It is the most important subject intelligent persons can
investigate and reflect upon. It is so important that our present civilization may
collapse unless it is widely understood and the defects remedied very soon.' -
Robert H. Hemphill, Federal Reserve Bank of Atlanta

In Liberty and Eternal Vigilance,

Republicae