Today’s Brew 6-24-16

Man on the Margin delivers today:

The Dismal Science:


The Keynesian demand-side model began as John Maynard Keynes’ explanation for the Great Depression in his unreadable tome, The General Theory of Employment, Interest, and Money. Keynes Magnum Opus is practically gibberish in its jumbled complexity. Written in 1936, the General Theory is open to so many interpretations that it produced multiple branches of “Keynesianism”. The gist of demand-side theory is that due to “irrational behavior”, “a bubble”, or some other unexplainable phenomenon, the stock market suddenly cratered in 1929 and goods piled up with a disparity between upper classes who desired to save and lower classes who had no money to buy. The solution, in hindsight, was for government to step in and buy the surplus goods by either borrowing from or taxing the upper class and distribute them to the lower class through public works. Monetarist predecessors, close kin of Keynesians, saw the huge pile of surplus goods and believed if only the Fed could expand the “money” in circulation, the excess goods could be purchased without deficit spending, taxing, or borrowing. The market failed and it was up to government to solve the problem unhindered by the automatic monetary constraints of the gold standard. Today, the demand-side model of active government intrusion into the market to stimulate aggregate demand dominates academia, financial media, political policy, and economic thought globally.

Today’s Brew 6-1-16

Steve Parkhurst reviews Who Needs The Fed? by John Tamny at Big Jolly Politics:

Book Review: Who Needs The Fed? by John Tamny


Tamny begins his concluding thoughts this way, “The point here is that the federal government is the biggest credit destroyer of all. It’s not just the initial spending on wasteful programs that is so economy crushing; it’s the fact that government programs never die, no matter their worth.” Ever hopeful, Tamny continues later, “There’s so much to be optimistic about precisely because the answers to our prosperity are easy. Reduce the weight on freedom and credit creation that is government, and the quick result of doing so will be immense prosperity.”

Who Needs The Fed? is not a dense economics book like the macro or micro economics of our youth. This book is written much more clearly than those old textbooks, and is actually interesting. The many rather short chapters make their case and then move along to the next. Tamny’s utter disdain for the Fed is both evident, and humorous along the way. But his book is not an angry diatribe, instead it is a fact-filled, example-laden approach to understanding a complex entity.

John Tamny’s credit has skyrocketed upward with this book. Read the book, you will know what that means, and you will learn a lot more along the way.