Abenomics didn’t work because Keynesian Economics doesn’t Work

Posted by PITHOCRATES - March 16th, 2014

Week in Review

If President Obama and the Democrats had their way do you know what they would do?  All out Keynesian economics.  To the max.  Huge government stimulus upon huge government stimulus.  Keeping interest rates at or below zero so they can borrow as much as they’d like to pay for their deficit spending.  Or just printing the money to spend.  That’s what they’d love to do.  Because they don’t understand economics.  All they know is the politics of Keynesian economics.  Power.  It allows the government to spend far more than any other economic system.  And that lets them buy a lot of votes.

President Obama and the Democrats look at the Chinese with awe and reverence.  They would love to have the power the Chinese communists have.  So they could do whatever they wanted to do.  Just like the Chinese communists do.  And when Prime Minister Shinzo Abe revealed his three arrows of Abenomics the left was impressed.  Large-scale government spending.  Aggressive monetary easing (like all that quantitative easing Ben Bernanke was doing with the Federal Reserve).  And structural reforms.  Government just taking over the economy to fix it and correct all the failings of the free market.  This is what the Democrats want to do in the United States.  Because they are so conceited that only they are smart enough to fix the problems in the economy.  So how has this Keynesian assault worked in Japan?  Not so good (see Blow for Abenomics as Japan’s economy grows less than expected by Rebecca Clancy posted 3/10/2014 on The Telegraph).

Revised data from the government showed that gross domestic product growth was 0.2pc in the three months to December 31 and 1.5pc for 2013…

While the data still marked Japan’s best annual performance in three years, attention will now turn to the Bank of Japan’s monetary policy statement on Tuesday, as weakening growth before next month’s tax hike may push the central bank into a fresh batch of monetary easing measures.

“With Japanese data weaker than expected and their April consumption tax hike imminent, the state of the Japanese economy is cause for significant concern,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor…

Mr Abe swept into power in 2012 on a promise to catapult the Japanese economy out of a decades-long slump, but his policies have met with mixed success.

The weak data hit markets in Asia, with Japan’s Nikkei closing down 1pc at 15,120.14, while China’s Shanghai Composite plunged 2.9pc and the Hang Seng dropped 1.8pc…

While authorities blame the country’s holiday season for the weak results, they add to growing worries about the Chinese economy, with the latest surveys on its key manufacturing sector showing weakness.

Abenomics didn’t work.  Because Keynesian economics doesn’t work.  Government spending and artificially low interest rates just don’t create robust economic activity.  All they create are cronyism.  Malinvestments.  Asset bubbles.  And more painful and longer lasting recessions.  As history has shown.  Especially the deflationary spiral of Japan’s Lost Decade that they’re still trying to recover from.  And the Chinese may follow suit.  For they have nothing but exports.  And you cannot build robust economic activity on exports alone.  You need a thriving middle class.  Which China doesn’t have.

History has shown over and over never to vote for Keynesians.  For their policies never help the people.  They only help those in power.  And their crony friends.  Who get richer while the people get poorer.  The ruling Chinese communists are doing well but the majority of Chinese are still impoverished rural peasants living on subsistence farming.  And President Obama and his crony friends (especially those on Wall Street) have all been doing very well thanks to a booming stock market.  While median family income has fallen during his presidency.  Proving yet again the mistake it is to vote for a Keynesian.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , ,

Comments are closed.

Blog Home