The Age of Befuddlement
I have had the pleasure of attending the New Orleans Investment Conference with the PanAm Post’s editor in chief, Fergus Hodgson, this week. It has been an eye-opening experience on many fronts. This evening, for example, Charles Goyette spoke on the failures of Keynesianism.
Goyette is a well-known libertarian author and speaker, having been on various news outlets over the decades. He started his talk with a critique of the United States’ debt ceiling predicament and drama, linking the “utter befuddlement” of the government in response to economic bubbles and crises. Case in point: when confronted with the size of the national debt, President Barack Obama had not even a general idea, according to Goyette, insisting that it does not matter anyway, since the US public owe it to themselves. In fact, a large portion of that debt is foreign-owned.
In another example, Ron Paul asked John McCain during a Republican Party presidential nomination debate about the Working Group on Financial Markets. McCain, at that point a lawmaker of over two decades, deferred to answer, noting he had a “team of experts,” thus falling to the debate fallacy of an “appeal to authority,” so this lack of knowledge is not isolated to one political party. In fact, Goyette went a step further, stating that Keynesian monetary policy was bipartisan in the United States.
Goyette also critiqued Karl Marx’s insistence that capitalism is doomed to boom-or-bust cycles until ultimate collapse, noting that Marx failed to take into account government intervention leading to malinvestment. Goyette called this belief in such a cycle, “The Ghost of Marx,” and rightly so. Central bank advocates act in a manner not unlike a child filling a busted tire by putting more air in the tire, rather than replacing the inner tube.
To finish up his talk, Goyette asked the crowd a question: where was investment capital originating? Only wealth from savings or real asset growth can indefinitely sustain a growing market. Artificial stimulus is, at best, a temporary fix, which always leads to an economic bubble and eventual collapse. That’s why Austrian economists foresaw the crisis, contrary to popular claims that “no one could have predicted.”
Financial journalists, he claims, have for the most part bought into Keynesian fiscal policy, and are therefore complicit in the formation of economic bubbles.