Desiring Machine

Interesting read on “Ten Recurring Economic Fallacies, 1774-2004” by H.A. Scott Trask. Key take away wasteful war financing is rarely accounted for properly.

Some highlights that interested me:

[T]he consequences [of the civil war] were a national debt that soared from $65 million in 1860 to $27 thousand million ($2.7 billion) in 1865, and a massive redistribution of wealth to federal bondholders.

And the insane response of Cheney to Paul O’Neill’s sensible logic.

Three years ago, when then treasury secretary Paul O’Neill objected to the Bush administration’s policy of guns, butter, and tax cuts he was told by the vice president, Dick Cheney, that, “deficits don’t matter.”

Of course, they don’t matter–to him, but they matter to the country. John Maynard Keynes’s prescription for curing a recession included tax cuts and increased government spending. “We are all Keynesians now” should be the new motto inscribed on the front of the Treasury building in Washington.

However, Keynes taught that once the recession was over government spending should be reduced, taxes increased, and the deficit eliminated. Current American policy is to continue deficit spending after the recession is over, and to borrow in peace as well as war. One longstanding criticism of such policies is that government borrowing “crowds out” private investment, thus raising interest rates.

The plutocrats are a drag on our economy. Vote them out of office.