'Since both Keynesians and monetarists are big on the 'empirical testability' of their theories (which as we have often pointed out is utter nonsense), they should perhaps slowly but surely begin to ask themselves how it is possible that the economy is still in one of the worst contractions since the Great Depression after their recommendations have been implemented with such gusto..''What
the graph of the total public debt indicates is that the government has arranged its fiscal affairs precisely along the lines recommended by the adherents of Keynesian thought. Public debt began to explode into the blue yonder with the onset of the secular contraction in the year 2000, as the biggest credit and asset bubble in all of history suffered its first major setback. By massively growing fiscal debt as well as the money supply, the authorities managed to create a 'second wind' for the expired bubble, which resulted in yet another artificial boom from 2002 – 2007, with real estate becoming the asset bubble of choice. The faltering of this boom then was met with an even bigger interventionist response, once again consisting of massive deficit spending combined with an equally massive expansion of the money supply.
This time, the rate of growth of the fiscal debt accelerated even more, while contrary to the 2002-2007 boom, the monetary inflation was no longer driven by credit expansion on the part of the fractionally reserved private banking system, but rather direct monetary pumping by the Fed, i.e., outright debt monetization. It is probably no coincidence that in the period beginning in 2000, the true money supply of the US has increased by a roughly similar amount as the public debt, namely by about 155%.
Since both Keynesians and monetarists are big on the 'empirical testability' of their theories (which as we have often pointed out is utter nonsense), they should perhaps slowly but surely begin to ask themselves how it is possible that the economy is still in one of the worst contractions since the Great Depression after their recommendations have been implemented with such gusto. The Keynesians insist that only massive deficit spending can lead the economy back to prosperity, while the monetarists insist that the Fed must print money by the truckload to keep 'deflation' at bay. They hold that this will ensure that the economy is brought back on the path to prosperity. Well, all of this has been done – in spades. So where's the prosperity? Just asking. Probably it is 'just around the corner'.'
- Acting Man,
Debt, Money Printing and Prosperity, July 27th, 2011
Context(English/Dutch) Haptopraxeology/Haptopraxeologie III - 'The unnumerability and uncalculabilty of the emotional inner life.' (
‘..Contrary to the assumptions of the “positivist” school, we do not consider empirical evidence alone sufficient to confirm or refute a scientific theory..' - Jesús Huerta de Soto,
Money, Bank Credit, and Economic Cycles (
pdf), page 476)
