Dr. Krugman (NYT Columist) authored an article on February 8th entitled “Europerspective ”, an interesting piece in as much as it nicely illustrates one perspective that is often proffered as in the Centrist-Liberal “FEI” whose greatest contribution is its illustrating how distructive these perspectives truly are. The following is my contribution to Dr. Krugman’s comentary, I trust you will find it interesting.
“We might consider that the monetary policy of the EU is yet another indicator of Keynesian Theory’s failure as a both a model and as an applied science. The sclerotic nature of central bureaucratic controls prevent the necessary requirement of adaptability in the face of fluid economic realities. It also indicates how productive wealth creating economies, such as in the case of Italy, become burdened by social experimentation (entitlements) whose demands always trend in excess of available resources. As in the case of France, Germany, Greece and Spain (not to the exclusion of others) and particularly here in the U.S., how the Keynesian approach, operating within the ex post facto regime, response is always benign and I would suggest that this is largely because it attempt to prognosticate based on historical data which records only, presumably, what occurred and not why “what” occurred. It would, therefore, be my opinion that as in the case of the E.U. and the U.S., that the missing link is the “motive force” that should be measured and not the latent outcome. As is the case with the U.S. economy where Gov’t expenditures have moved beyond the 51% component of GDP, the E.U., continuing in the direction of these same extremes, will suffer in the same way. The failure, primarily, is the direct result of holding to the belief that “debt funded spending” is the equivalent of spending funded by true productive wealth. Sadly, as has always been the case, a substitute is never the equal of the real thing. In the absence of productivity fueled and funded by functional investment, what is left is only speculative and this produces the type of predation we have seen by Wall Street the effects of which are Global in nature. The locust always seeks a new field to plunder, in the case of Wall Street, they simply create them.”
Curtis C. Greco, Founder