And then there is the impact on our own living standards. For comparisons and precedent, we need only look at Japan. Our politicians and central bankers have not learned from Japan\’s crisis, which preceded our own. We are, therefore, destined to follow Japan\’s disastrous record of lost decades of economic activity. As in Japan, so here: a broken banking system, crushed by the weight of unpayable debts on its balance sheet, fails to lend to businesses at affordable rates.
Just as here, Japan\’s politicians and central bankers exaggerated the risks of inflation, reflecting the concerns of bankers and creditors – who fear inflation will erode the value of their outstanding loans.
Japan, with government debt at what is it, 220% of GDP, with every culvert and ditch in the country concreted over and most with their own bullet train station, shows that not being Keynesian doesn\’t work?
While Keynes is largely defined (by his enemies) as a fiscal activist, he was first and foremost a monetary economist. In other words, he believed that if governments and central bankers would only fix the money system – by lowering rates of interest for all borrowers (not just the banks); by injecting QE into productive, socially useful projects; and by restructuring the banking system – the rest of the economy could be helped to recover.
Bollocks: Keynes is famous for pointing out that the projects didn\’t have to be socially useful or productive. There just had to be projects.