Nice to have some level of discussion on an important topic, but it seems to have gotten sidetracked away from the main theme of the original article, which was trying to illustrate what is significantly different in this recession from previous ones. I believe some significant and valid points were made in this regard but have been overlooked in the rush to defend Keynes.

In truth, Keynes was more astute than he is ever given credit for. One of the main tenets of his concept was that governments should be stimulative in difficult times in order to promote the general welfare, BUT in times of growth, this stimulus should be withheld or reversed to avoid the invevitable excesses. Take away the punch bowl before the party gets out of control, in other words. Unfortunately, monetary authorities have mostly not only left the punch bowl in place but have kept replenishing it. Thus it has not been the fiat money system that failed us, but rather our failure to follow the rules so necessary for it to work as theorized.

Accordingly, inflation becomes a guaranteed, built-in result of every fiat money system that has ever been devised. The political attractiveness of inflation is simply too irresistible, especially when a significant number of aggresively self-serving politicians have gravitated to the halls of power, always eager and willing to exploit the system to the max.

Which leads me to wonder what it is that seems so attractive to sczech and T-man about the presently tottering, unbalanced and morally corrupt system that mis-guided Keynesianism has brought us? A system that has brought about an ever-widening gap between rich and poor, contrary to sczech's claim of wealth re-distribution. A system that has led to bloated over-consumption of land, resources and credit to the point that we are staring at disaster. Try as you may, you cannot put the blame for our present predicament on the gold standard, which was effectively dismantled in 1934. Not that I advocate a return to a gold standard; I haven't and do not now. But read what one rather well-known person has said about the gold standard in earlier days before he was hailed as the Master of the Universe:

Quote:
"In the absence of the gold standard, there is no way to protect savings from
confiscation through inflation. There is no safe store of value. If there were, the
government would have to make its holding illegal, as was done in the case of
gold.... The financial policy of the welfare state requires that there be no way
for the owners of wealth to protect themselves."
Alan Greenspan - 1966


This was written in his early days as a fervent disciple of Ayn Rand. In spite of my disappointment of his Federal Reserve tenure, I cannot find fault with this quote. Allegedly, when confronted once again with those words and asked if he would change any of it now, he replied, "Not a word of it."

But I digress. To sum up as succinctly as possible, what is different this time around is that the confidence game that was being played right until Bear Sterns defaulted last summer is no longer possible to resurrect; the cat is out of the bag; Humpty Dumpty has fallen and cannot be put back together again. Yes, absolutely every conceivable effort will be made to put Humpty back together, but the most that will be achieved is reassembling the empty, hollow shell, its inner substance forever lost.

I don't know what form the new Humpty will take; no doubt many will proclaim him as good as new, but it will be just one more lie of many lies that the nation has come to accept as truth.