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Interest Rate & Deficits – The Real Crisis

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Many academics are truly amazing. They talk in circles, assume they are far above everyone else, and thus pontificate from the Ivory Tower without ever stepping foot out the door. There is a growing  consensus that deficits no longer matter. WHY? Because they cannot explain how government has run persistent deficits yet nothing has happened. Therefore, we are dealing with a new paradigm shift in academic thinking.

In 1962, Thomas Kuhn wrote The Structure of Scientific Revolution, in which he gave birth to the term “paradigm shift” (p.10). Kuhn argued that indeed all scientific advancement was by no means evolutionary. Instead, he put forth that scientifica advancement was really a “series of peaceful interludes punctuated by intellectually violent revolutions”, and in those revolutions he saw as “one conceptual world view is replaced by another”.

Academia has made a Paradigm Shift and has convinced itself that deficits certainly are no longer relevant. This dramatic change in thinking to this “new age” is not unlike the first age of “new economics” (Keynesianism) where academics became convinced that it was their destiny to manipulate society for its own good. The theory was government was CAPABLE of managing the economy and could eliminate the business cycle so we would never again face a recession or a depression. Paul Volcker in 1979 publicly went on record in his Rediscovery of the Business Cycle that the Keynesian age of new economics failed. So here we are with academics once again postulating that government need not balance the budget and just spend all the time with no impact upon the economy.

This economic revolution has truly been a metamorphosis that has brought the world to the brink of total disaster. These people are clueless. They have no idea of what they speak and of course they just never consider the consequences of their errors. And when their ideas fail like Communism and Socialism costing tens of millions of lives, well that is just OOPS! Sorry about that!

Marx’s ideas of trying to manipulate the economy that Keynes followed, have been responsible for more deaths than atomic bombs. How many died in China and in Russia under Lenin by force to adopt these new economic theories. This one will also blow up in everyone’s face but they are already so committed to this new “paradigm shift” they will never say they were wrong.

This whole idea has led government to manipulate interest rates down to reduce their deficits at the cost of pension funds and life insurance companies. What are the consequences of manipulated interest rates and statistics to support this debt that does not matter?