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Trump & Schacht: Death Economy Methods in Declining America

22 1 6
14.02.2020

“I am thrilled to report to you tonight that our economy is the best it has ever been. Our military is completely rebuilt, with its power being unmatched anywhere in the world — and it is not even close,” Donald Trump told the country at his State of the Union address on February 4th, 2020.

Such words are laughable to anyone familiar with basic economic data. The 1950s, was a far better time, when the wages of American industrial workers significantly increased, and the US was the trading center of the non-Communist world amidst the post-war economic expansion, was a far better time. Currently, living standards in the US are not rising. The slight increase in wages does not cancel out the rise of debt, the crumbling infrastructure, the low wage economy, and many obvious woes. These woes propelled Bernie Sanders, with his message of “Democratic Socialism”, to nearly steal the spotlight at the Iowa Caucuses.

However, Trump’s emphasis on military spending, as well as his stoking of fears about immigrant crime, points to the underlying reality of America’s economic management since 1945. In essence, what can be called “Death Economy,” a particular application of Keynesianism have been relentlessly applied, and their ability to boost growth is running out.

How Should The Government Spend Money? Keynes vs. Schacht

Prior to the financial meltdown that swept the western world in 1929, it was common for observers and commentators to declare “Ford has overtaken Marx.” The application of assembly-line production to efficiently churn out goods as specifically applied by Henry Ford, was said to have disproved Marx’s theory that capitalism is prone to cyclical crises of overproduction. The thesis of “Ford has overtaken Marx” was an earlier incarnation of what is now called “The Efficient Market Hypothesis” by economists.

However, the market crash of 1929 and the prolonged episode of mass unemployment, malnutrition and homelessness that gripped the United States, Britain, France, and many other countries seemed to restore Marxism’s credibility. As Americans starved, lived in “Hooverville” encampments as migrant workers, more consumer goods were being produced than ever before. Ford was building more cars, General Electric was creating more radios, but the people could not afford to buy it.

This is what spawned the rise of 1st Baron John Maynard Keynes, the British economist whose ideas emerged and live on to this day. Keynes was very opposed to socialism and Marxism, but he was also highly critical of the capitalist market. Keynes argued that Marx was wrong about the problem being “overproduction,” but instead labelled the problem causing frequent crises on the market as “under consumption.”

Keynesian economics is essentially the notion that the government should spend money. A commonly used description of Keynesian economics is the government hiring people to dig holes, and then hiring other people to re-fill those holes. While some observers might see it as pointless, those hired diggers, tend to purchase products with their government-created incomes, thus adding value to the economy..

Franklin Delano Roosevelt implemented in his practice his own application of Keynesian economics with the New Deal. After dispatching his staff to study the achievements of Stalin in the Soviet Union during the 5-year plans, Roosevelt created the Works Progress Administration in 1935. Unemployed Americans were hired into the Civilian Conservation Corps, and put to work paving roads, building new highways and post offices, and creating other “public works” that would have a long term economic benefit to the country. Key West Highway, LaGuardia Airport, Hoover Dam, and many other construction projects expanded access to electricity and better enabled the improvement of transportation across the United States.

In Germany, after Adolph Hitler took power in 1933, his chief economist was the longtime financier........

© New Eastern Outlook