Keynes without the debt

http://z6.invisionfree.com/Bill_Still_Reforum/index.php?showtopic=188

Something along the lines of FDR's New Deal, or Obama's economic stumulus would work to restore an economy if the money was issued instead of borrowed The reason why the US economy still sucked until WWII is because FDR tried to finance his recovery by borrowing the money, and the economy crashed again from interest payments and the Fed's open market operations. Periods of economic depressions are essentially 'money famines' and the solution is straightforward in theory but politically difficult.

I believe the article is correct in advocating 'Keynes without debt' as solutions to economic depressions. Public works projects such as highways and railways are highly effective at putting people to work, and also provide economic benefits once they're completed. Even paying people to build a pyramid in the middle of nowhere would solve the 'money famine', along with spending on armaments, which is essentially the same thing except it has geostrategic purposes.

My main point of disagreement with the article is its rhetoric about Adam Smith and 'free market capitalism'. Adam Smith's 'invisible hand' works very well when it comes to industrial capitalism; but not with financial capitalism. By industrial capitalism I refer to Henry Ford's method of business - to produce better goods, for lower prices while paying higher wages. With businesses competing to produce better and cheaper cars, the end result is everyone in society was better off - having access to affordable cars, high wages, and Ford himself made lots of money.

However, it fails with financial capitalism. Financial institutions like banks don't produce 'real' wealth; they produce debt. By following Smith's invisible hand they're working in an industry that strives to increase society's debt burden and ultimately leave everyone worse off. It's the same deal with society's 'vices' like addictive substances and gambling.

-david