Next Step for the US: Looks like Helicopter Money

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

Does this sound like a drug addict?

By Harry Dent, Economy & Markets

It just seems like human nature to ruin a good thing.

As much as I am a strong proponent of free market capitalism, and against complex regulations and central planning, I understand government’s role in all this.

Capitalism and democracy teamed up in the late 1700s to form the big bang in economics, or what I call “When Harry met Sally.” They’re opposites that balance each other – capitalism rewards people for their contributions, and democracy ensures that greed doesn’t take over.

We took Adam Smith’s theory of the “invisible hand,” limited government and laissez faire politics… and combined it with Alexander Hamilton’s doctrine of a stronger government to enhance capitalism. We invested in common infrastructures, established a central bank with uniform monetary policies, and implemented financial and legal systems – things free market capitalism can’t do alone.

That’s why, together, these two ideologies complement each other – so long as they don’t get in each other’s way.

But, John Maynard Keynes screwed that up when he came out with the worst economic theory in history during the Great Depression. His brilliant idea was that the government should fight downturns with deficit spending to offset declines in the private sector. He said that if it would help, the government should pay people to dig ditches and then fill them back up!

How uneconomic is that?

Related: Do you have market anxiety? VOTE here how market anxiety will affect your choice in the 2016 Presidential Election.

I’ve realized by studying history that it helps to get government involved when it comes to nurturing a developing country. They need infrastructure and export industries as such countries are rapidly urbanizing. It works – if government doesn’t overdo it!

China’s government has overdone it, while India’s needs to step it up. With their rapid and unsustainable urbanization, China has a GDP per capita (adjusted for purchasing power) of $12,116, while India’s is $5,591. Malaysia, one of the wealthiest emerging countries with $26,145 GDP per capita and 75% urbanization, is an example of a government that got it more right.

It was inevitable that government’s role would grow as we urbanized and grew wealthier. Urban areas are exponentially more complex to manage than rural areas. The trick is to have government do the right things and to do them efficiently. Otherwise, you over-plan and over-regulate and end up like China or Russia – or increasingly, the U.S. and Europe.

But that’s exactly what Keynes did. He thought governments should actively smooth out natural economic cycles through deficit spending. His theories got mainstream acceptance in the 1970s when Nixon said: “We’re all Keynesians now.” And ever since, this theory has been abused and is now destroying the golden goose of free market capitalism and democracy.

This chart shows the story on the fiscal side:


We started running nonstop deficits in the 1970s to offset that long recessionary economy in the summer season from 1969 – 1982. That was largely justified and inevitable. But then the real crime began.

We ran larger and larger deficits even in the greatest boom in history, when we should have run huge surpluses with burgeoning government revenues and falling social costs. Basically, we got hooked on the fiscal stimulus drug.

By the time the great boom started in 1983, we had government debt of $443 billion and a deficit that year of $208 billion. We added $1.8 trillion to the debt into 1990… another $2.5 trillion into 2000… $4.3 trillion more into 2008… and another $8.1 trillion between 2009 and 2015. Today, it’s a grand total of $19.2 trillion!

Greenspan made it worse by adding monetary stimulus, lowering interest rates every time we had a stock crash or recession – from 1987 forward.

And since huge deficits and low rates weren’t enough, Bernanke came along and added QE – straight injections of “crack” – much more powerful than merely setting short-term interest rates to zero. Now, long-term Treasury interest rates are at zero or negative when adjusted for three-year average inflation rates. The next step looks like helicopter money – sending checks in the mail to households!

Do you get the progression here? Does this sound like a drug addict?

Liberal economists like Paul Krugman think we should be running bigger deficits and more QE – on top of already runaway deficits and monetary policy. This is insanity!

Here’s the reality just ahead. My indicators say we are going to see the worst of this winter deflationary season from 2016 into 2022 (2023 for deficits on a one-year lag). If we added $8.1 trillion to the debt in the eight years between 2009 and 2015, I see at least 50% more in the next eight years, or $12 trillion minimum by 2023. That will bring us to at least $31 trillion in national debt…

And GDP will be at least 10% lower, say $16 trillion. That’s a government debt-to-GDP ratio of nearly 200%!

More on this from the preeminent government budget expert and former U.S. Comptroller General, David Walker, as our keynote speaker at the Irrational Economics Summit, October 20 -22 in Palm Beach. Walker will share his vision for the future of America, and how he thinks we can set ourselves on a course for financial responsibility, and save ourselves from ruin… a real insider’s take.

Does all give you market anxiety? VOTE here how market anxiety will affect your choice in the 2016 Presidential Election.

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

  64 comments for “Next Step for the US: Looks like Helicopter Money

  1. bead
    May 16, 2016 at 10:06 am

    Free/discounted rent! Just give the corporations the money and stipulate that they have to lower their prices for those who can manage the application paperwork. Profit guaranteed!

    The elephants will be front of the parade, first to the trough so let’s at least get something useful out of corporate welfare.

    • Petunia
      May 16, 2016 at 10:11 am

      Section 8 subsides are already coming to the suburbs, especially through the big corporate renters. They lobbied for it and, of course, got it. The WH says it will increase diversity in the suburbs. My old Florida neighborhood was already all Jews, Hispanics, and Blacks, are they going to add more white people?

      • bead
        May 16, 2016 at 12:49 pm

        My neighborhood lost its white drug dealers and white motorcycle “enthusiasts” from the Ninja loan era and gained Arabs and South Asians. I’m very happy with the trade.

      • muktar
        May 16, 2016 at 1:28 pm

        petunia: i thought jews were white. have you discovered some new genetic principle?

        • NotSoSure
          May 16, 2016 at 2:37 pm

          Ah but did they come over on the Mayflower. Otherwise you are not the whitest of the white.

          May 16, 2016 at 3:03 pm

          Jews are not “white”. Ever been to Israel? I have. They are from Yemen (Jewish), Sudan (Jewish) Eastern Europe (Jewish) and even Blonde/blue eyes Jewish. Stop looking at Skin Color. That is considered racists.

          Now, White is White. So, one can be Jewish and not the least bit “White” but White can only be White.

          Oh, so sorry. This sounds racist. What is even more amazing is that I was born in South America, which according to US and 1933 Germany Race Laws….I am Hispanic…yet, I have light brown hair, grey eyes and speak English. But, RassGesetz (Racial Laws of the US and 1933 Germany) have me as….Hispanic…(That is why I got a totally free scholarship to Graduate School back in the 1970’s since I was Hispanic. What a crock.)

        • d
          May 16, 2016 at 4:07 pm

          You missed the other thing after Jew’s, whites (particularly white males) are the next most heavily discriminated against group, on the planet.

          You are simply not allowed by all the other Major racist groups, to say that.

        • d
          May 16, 2016 at 3:54 pm

          They have still some Jews in Ethiopia, Yemen (Less than 10), Iran, china, Morocco, Egypt (Very few) among other places. They are mostly genetically native.m They have been driven out of the Saudi peninsular, Jordan, Kuwait, Syria Lebanon, iraq, Most of North Africa.

          Jesus was, A Jew, A rabbi, and a trouble maker/Militant.

          The fairy story part of him, is that he was Blond Haired, Blue eyed, and Fair Skinned. .

        • Petunia
          May 16, 2016 at 5:14 pm

          Jews are not all white and they do consider themselves a minority. As a Hispanic I don’t legally have a race in America. People who grow up in Spanish speaking households are all Hispanics regardless of race. In a rational country I would be white.

        • Thomas Belstler
          May 16, 2016 at 7:44 pm

          Many years ago when my wife applied for a promotional opportunity at her State job she naively put down that she was Hispanic because her father had come from Spain and her mother from Ireland. She was called into the Human Resources office and curtly informed that she had misrepresented her ethnicity in order to obtain preferential treatment by claiming to be a Hispanic. Sue, absolutely clueless about what they were talking about asked why she was not a Hispanic. She was told that the Hispanic designation for job applicant classification only applied to people from the island of Hispaniola.

  2. Petunia
    May 16, 2016 at 10:07 am

    Helicopter money may be coming because the Clintons will do anything to win, including bribing the base. The interesting part will be how much will it take, and who gets the money.

    When Bush sent out a $600 per person check, I think that was the amount. We didn’t qualify for it because we had no income that year. All the people that needed it, didn’t get it. I would have sold my vote for that check at the time, had I had the option. Openly buying votes might be the way to go, after all it’s capitalism.

    • nick kelly
      May 16, 2016 at 10:20 am

      When I have suggested a means of delivering helicopter money (without necessarily supporting the idea) it was to deposit it directly into accounts- one per personal account, limit one, maybe excluding accounts over 10K
      Very little overhead, processing, mail etc.

      • Petunia
        May 16, 2016 at 10:32 am

        I’m pretty sure if they do it on a general scale they will use a debit card. Debit cards are the way food stamp benefits and welfare are distributed these days. JPMorgan is the issuer of all these cards for those of you who didn’t know.

        • Coaster Noster
          May 16, 2016 at 12:30 pm

          “issuer of all these cards..” <- sorry, not true. On the West Coast, Bank of America issues debit cards in connection with unemployment payments. I have not received any unemployment for four years, but this account is still "active" (??!!) as Bank of America just sent me an update with new features!

      • d
        May 16, 2016 at 1:08 pm

        The homeless and the needy in most cases dont have, or cant get, bank accounts.

        This is the BIG flaw with the helicopter money theory.

        It will not reach those most deserving, or in need, of it.

        Therefore it is nothing but a pointless leftist vote buy.

      May 16, 2016 at 3:05 pm

      I’m a voting Whore. I’ll sell my vote for $100,000

    • Chip Javert
      May 16, 2016 at 5:39 pm

      Ah yes, the obligatory stab at capitalism; how PC of you. Capitalism says nothing about corrupt government printing fiat money to distribute to entitled voters.

      Ya gotta chalk this up to voters, not Adam Smith. And at some point, the voters aren’t just entitled, they’re corrupt, too.

      May 16, 2016 at 6:04 pm


      Speaking Spanish does not make you Hispanic. I speak German and a little bit of Arabic (I lived in both countries as a teen-ager) but I am not the least bit Arabic, even though I would love the special consideration given to Syrians being brought into this country. We are all equal, remember.

      Your country or “origin” or “birth” determines your ethnicity. This is why John Kerry’s wife, who was born in Africa, is African-American and is why I am Hispanic even though my dad is from Wales and my mom from Germany.

      I even learned a little bit of Chinese when we were based in Hong Kong, so I guess, according to your statements, I can pass as “Asian” and get benefits for that minority status, as a “protected minority” that other can not get, due to the color of my skin and last name and place of birth. I just love this equality.

      I, personally, have benefited greatly due to the lack of racism and the equality here, in America since being born and raised over-seas has provided me with scholarships, loans, lower interest rates and Small Business Loans due to the fact that, even though race does not matter, I was NOT born here as a “white” child, thus being equal, I have had opportunities, that I earned, due to the fact I was born Hispanic.

      Equality and equal opportunity has been good to me. Racists have insulted me, saying that I got a scholarship to Grad school due to my “country of origin”, but I just call them racists and they shut up and run away. Nothing is more important to me that equality.

      • d
        May 16, 2016 at 6:18 pm

        “Your country or “origin” or “birth” determines your ethnicity.”


        Your genetic make up determines you ethnicity, You country of birth or Origin determines you legal Nationality.

          May 16, 2016 at 8:05 pm

          Correct, but, on college applications, and job applications, I can “check” Hispanic, since I was born in South America to a Mom from New York and a Dad from Louisiana….but my “country of origin is ….in South America…..that makes me NOT White. That is the important part. We are all equal, BUT, if you are not white, there are programs for you since you are disadvantaged, as I was, coming from a filthy rich family that had their children born in South America….and colleges needed to admit “Hispanics” badly or get in trouble with Government agencies.

          I was accepted by 13 grad schools in my field since they NEEDED non-White people to satisfy the Government anti-racism directives. Believe me, racism is wrong and evil, and I did my part to make sure racism and the color of ones skin is never used as a barrier to equal opportunity. I did my part, and in return I had no tuition to pay for 4 years while the White students had to go into debt. Equality is the most important thing to me. I hate racism.

          This got me Pell grants, and a scholarship worth over $100,000 (back in the 1980’s) that was available ONLY for those who were African American, Asian American, Hispanic America, Pacific Island America, etc. Just as long as you did not check “White” you could get a scholarship based on Affirmative Action.

          I remember commenting to my girl friend at the time, that if she got pregnant she needed to have the baby delivered in Mexico, then it would be “Mexican American” and be entitled to scholarships, grants, maternity benefits, and other equal treatment under the law that are available to anyone who does not check “white” on government forms. I believe and support equality.

          You, sir, have no idea. I do since I have worked the system for decades.

        • d
          May 17, 2016 at 10:37 am


          Thats why I said the most heavily discriminated against group on the planet today are white males.

          O bummer and his PC Mob, wont have a bar of it,

      • Petunia
        May 17, 2016 at 1:54 pm

        You have no idea what you are talking about. As I said, the Hispanic designation is applied by the US govt to any child who lives in a Spanish speaking household, regardless of their race. You can be white, black, or Asian, it doesn’t matter. Where you were born doesn’t matter either, you can be a citizen or not.

  3. this one
    May 16, 2016 at 10:18 am

    Mr. Dent should be blaming predatory capitalists, particularly big banking, but Keynes is the favorite libertarian scapegoat so he’s sticking with it. The economic policies which have created the mess are not Keynesian but are the result of banker-friendly policies enabling the financial parasitism that is killing the host. Helicopter money isn’t Keynsian and Krugman isn’t either, being a trojan horse for the bankers. As for the national debt, for that you have to blame tax cuts for the wealthy, which were supposed to pay for themselves by generating investment in the U.S. but ended up with trillions getting shipped out of the country. Mr. Dent has no solutions because he is strangely unable to identify the real problems.

    • Vern
      May 16, 2016 at 12:49 pm


      I like to call them “glib” ertarians, they just don’t give a shit about anybody or anything but themselves.

      Today’s so called capitalism — basically, the normalization of sociopathy.

      May 16, 2016 at 3:40 pm

      Gold is money. Money is Gold.

      If we kept it that way, then there is no way we could be in this mess. GOLD prevents political and private banking corruption. This is why our Constitution says ONLY Gold and Silver shall be money.

      How did the sleazy bankers get around this? They issue “notes”. Why, “bank notes” are not money and thus they don’t need to be gold or silver and all we need to do is get the Whore Politicians to pass a bill saying “notes are legal tender for all debts public and private” (what the F does that mean?) and the stupid peasants won’t even know.

      We all asked for this and we all deserve what is coming. We have less than a year.

      • Bigfoot
        May 16, 2016 at 5:35 pm

        You might want to go back & actually read the Constitution instead or parroting the gold bug mantra. You are wrong! Please state the exact article & section of the Constitution that claims only gold & silver shall be money along with context. Rubbish!

        ‘We have less than a year.” Yeah, another psychic. Another year to what?

        Please to tell us exactly what bill was passed by the “whore politicians” saying notes are legal tender for all debts public & private. What year was this & why was this supposedly done? Your lack of knowledge regarding the history of the US & the various forms of money we have had, including laws regarding the various monies, shines through like a lighthouse at night.

        There are no perfect forms of money. Commodity based monies have there own sets of problems. GOLD does not prevent corruption of anybody! Where do you come up with this ridiculousness? Please to tell us how gold prevents corruption?

        • May 16, 2016 at 6:11 pm

          Bigfoot, I appreciate your comments. You just went over the line with one of them, and so I took out 2 lines or so of a long comment. Disagreement is OK. Look at McFadden’s long essay. It’s the way you said it. My judgement call. Maybe I was wrong. But it’s no biggie, imho.

        • Bigfoot
          May 17, 2016 at 6:37 am


          Roger that. I understand your position & it’s your blog. Sun came up today. Enjoy the day!

      • Agnes
        May 16, 2016 at 7:26 pm

        Mainly we have to have dollars to pay taxes..except maybe in Utah.

        • May 16, 2016 at 7:51 pm

          It is well to remember that more than 95% of what [asses for money in circulation id not money at all, in the sense of being created/printed by the FRB, but rather bank credit. Without the Draconian enforcement of the loan-loss reserve requirements, the banks will continue to create, and lend at interest, as much credit/money as the market will absorb while maximizing their profit.

      • Greg
        May 16, 2016 at 9:26 pm

        Agreed. We left the gold standard in the 70’s? Look what has happened in 45 years, think we will survive another 45??? If memory serves me right gold was $ 35 an ounce, so another 45 years will put it at 50,000 an ounce, if dollars are worth anything

    • Thomas Belstler
      May 16, 2016 at 7:53 pm

      I believe that what Mr Keynes really said was that in troubled economic times nations should spend more than they take in and then, when times get better, they should repay the debt and put away a surplus to be used during the next rainy day (what a concept, huh!!!!!)

      • d'Cynic
        May 16, 2016 at 9:02 pm

        And it was translated into political speak as: in good times – party, in bad times – party more.

  4. nick kelly
    May 16, 2016 at 10:33 am

    “and ever since this theory has been abused” (referring to Keynes)

    Exactly. Keynes advocated balanced budgets, but not balanced at year end. The government would be able to spend because it had accumulated a SURPLUS during the boom.

    So Keynes did not have a terrible idea (or whatever Dent said)

    BTW; of course all central banks including some very sensible ones operate on his principles when they add or remove liquidity in their economies.

      May 16, 2016 at 3:41 pm

      Seriously? IT is a game to serve the owners of the Banks.

  5. Bigfoot
    May 16, 2016 at 11:08 am

    “My indicators say we are going to see the worst of this winter deflationary season for 2016 into 2022 (2023 for deficits on a one-year lag).” My dog doesn’t agree. Perhaps I’ll ask the rabbits when they come onto the property this evening.

    Based on Dents’ “indicators”– Good luck predicting 2016 much less 6 or 7years out.

    Right after the “helicopter money” we will probably have a massive global capital levy. This is something the IMF is pushing for along with increased taxation on ‘non-moveable’ assets. Push us a little closer to that socialist utopia.
    Little factoid- In 1944 when the IMF was formed, gold represented 25% of their lending base & quotas. They still reportedly have 90,000,000+ ounces of gold. They have made huge profits on their gold holdings as they purchased most of their gold at $35 an ounce right up to the Nixon disconnect. Now that’s a buy & hold strategy.
    Maybe the helicopter will shower us with golden raindrops/////\\\\

  6. Nicko
    May 16, 2016 at 11:10 am

    I’ll predict, Clinton gets elected in a landslide, Dems take back congress and senate….China crashes, US recovers, all is well. :D

  7. May 16, 2016 at 12:19 pm

    16 trillion GDP but how much would be income without Gov support such as zero interest and stimulus. Zilch! now try and pay back 19 trillion in national debt. imagine when the shithitsthefan how much paper wealth gets destroyed.

    • Coaster Noster
      May 16, 2016 at 12:35 pm

      Why should we “pay back” national debt? We owe it to our own citizens! Running a government, and debt, is a far different animal than the popular press makes it out to be.

      Some people’s taxes go toward paying monthly interest on the the debt, other people collect that payment as monthly income. It’s absurd, with underemployment rampant, to worry about the national debt. Get more people earning a mid-level living, and the balance sheet will improve.

      • bead
        May 16, 2016 at 12:53 pm

        True so long as there’s a “race to the bottom.” I’m sure the Weimar folks thought this would work, too.

        • Thomas Belstler
          May 16, 2016 at 8:33 pm

          I suggest reading “Lords of Finance” by Liaquat Ahamed. It is an engrossing tale of the 3 major central bankers whose decisions led the world into the Great Depression. Great book! Each one of them, the German, the Brit and the American thought they were doing the right thing to save the world and instead plunged it into the financial abyss.

        May 16, 2016 at 3:46 pm

        Really? How much of this debt is held by Japan, China, Saudi Arabia, etc.?

        If we “owe it to our own citizens”, then let’s just take on MORE DEBT. IT is no problem. OR, let the US Treasury print US NOTES (which is what we are supposed to do as a sovereign nation) and pay off the debt.

        But, no. The right to print “notes” is given to a totally PRIVATE group of entities. 1913.

        • nick kelly
          May 18, 2016 at 9:16 pm

          The largest holder of US debt is US social security- about 2.5 trillion, next China about 1.3
          So any attempt to repudiate or monetize the debt has as its target US retirees.

      • May 16, 2016 at 10:10 pm

        In reply to why pay back the 19 trillion fed debt.
        if we dont pay back debt then money becomes worthless. if one borrows without intentions of paying it back its the same as stealing. zero percent interest is the FEDs way of stealing from those who did the right thing. Forceing savers into risky investments is another means of stealing. WE THE PEOPLE FOR THE PEOPLE! Bullshit!
        Our goverment is not our freind.

  8. James McFadden
    May 16, 2016 at 12:49 pm

    There is so much wrong with this article I don’t know where to start. This is just the kind of rewrite of history (mixed in with some facts to create an illusion of understanding) that I would expect from a free-market true-believer attempting to reinforce a mythology that supports his world view. Here is some analysis of this article.

    Adam Smith did not have a “theory” of “the invisible hand”. If you read Smith, you realize this was just a footnote in his attempt at understanding labor as a source of value and to understand the production system. To reduce Smith to the “invisible hand” is a propaganda effort to re-inforce neoliberal free-market ideology – an ideology that Smith new was detrimental to society. Although Smith is worth reading for historical context, his simplistic ideas are not very applicable to modern economics.

    “Adam Smith’s theory … combined it with Alexander Hamilton’s doctrine of a stronger government … invested in common infrastructures, established a central bank … and implemented financial and legal systems …” Boy does this ignore most of American’s economic history which consisted of protectionism (the opposite of free markets) which allowed American industry to prosper, slavery (as a mechanism to concentrate wealth), land theft from natives (which paid for much of the government), robber barons (who exploited everyone), and banking fraud, defaults and depression-recessions (throughout USA history). The central bank was a late-comer initially envisioned to bailout banks after the 1907 banking crisis when robber barons did not have the resources. After the Great Depression, the CB became a stabilization mechanism to set monetary policy and to prevent bank instabilities. Most recently Fed policy has been corrupted by neoliberal monetarists. They have used the fear of inflation as cover for wealth redistribution upward (to the investor class) using Fed monetary policy and direct money injections.

    “Capitalism and democracy teamed up in the late 1700s to form the big bang in economics … they balance each other … two ideologies complement each other” – They don’t complement each other – they are in conflict. Capitalism puts “maximum profits, and therefore the concentration of wealth, as the highest goal” while democracy is supposed to put “the general welfare” of people first. Capitalism is continuously attempting to undermine and corrupt democracy beginning with a government that only allowed white land-holders to participate, a government that enshrined slavery while simultaneously claiming “all men are created equal”, then overseeing the theft of native land to profit land speculators like Andrew Jackson and to fund the federal government, and later re-enforcing the rise of the robber barons by crushing labor movements and by protecting the profits of banks by crushing populist farmer movements. Most recently neo-liberal capitalism has corrupted our political, news and educational systems (using a scheme outlined in the Powell Memo), in an effort to create a mythology that free markets are equivalent to democracy when in fact free markets create plutocracy. In fact, neoliberal foreign policies explicitly undermine democracies to allow free market exploitation. Any democracy that resists these free-market policies is economically attacked or overthrown.

    Harry Dent’s summarizing of Keynes indicates that he has never read the “General Theory” nor does he have a grasp of the instabilities that Keynes and Fisher revealed, or more recently Minsky. He doesn’t understand how monetary theory works (why an expanding money supply is needed) or the instabilities associated with capitalism. He has no idea how a monetarist like John Hicks bastardized Keynes insights to make it fit into the neo-classical monetarist economic theory which ignores Keynes major contributions. If readers want to understand Keynes without reading the General Theory, I suggest they read chapter 8 of Jack Rasmus’ “Systemic Fragility in the Global Economy” – a good summary of the history of economics. Dent’s analysis reads more like it is from the Rush Limbaugh’s school of economic thinking.

    “trick is to have government do the right things and to do them efficiently” – this is just pro-corporate nonsense about government placing profits over people.

    “exactly what Keynes did. He thought governments should actively smooth out natural economic cycles through deficit spending.” Here Dent is partly correct before he twists history. Keynesian polices produced much prosperity for 30 years for many Americans beginning in the 40s, even with wasteful wars. But it wasn’t sustainable. What Dent fails to acknowledge is that it was the Milton Friedman faction of free-market thinking that took over in the 70s, not Keynesians. These monetarists created the boom-bust-bailout cycles that extracted wealth from the middle class for 40 years. During this period capital began shifting production to the third world to maximize profits – to regions where labor costs could be reduced (often with effectively slave labor) – destroying good jobs that supported a broad middle class. Monetarists, not Keynesians, produced the shift into McJobs. Capital also began the process of corrupting the political, media and educational systems (Powell memo) – to create an environment where pillaging was legal – the creation of our current neoliberal plutocracy.

    “We ran larger and larger deficits even in the greatest boom in history, when we should have run huge surpluses with burgeoning government revenues and falling social costs.” Clearly Dent doesn’t understand monetary theory. In an expanding economy you must have an expanding money supply – and government deficit spending is the source of that expanding money supply. But he is correct that the monetary stimulus, used to bailout banks and Wall Street, got out of hand. But to blame this on Keynes is nonsense. This Fed policy was a neoliberal strategy of wealth extraction for the rich – the retro-classicalists like Greenspan and Bernanke – creating booms and bailing them out when the inevitable crash happens – and suppressing wages with policies that kept unemployment high.

    To lump Keynes, Greenspan, Bernanke, and Krugman in the same mold shows a complete lack of understanding of economic theory and history. Greenspan and Bernanke are retro-classicalists – a group of supply-side monetarists that failed to learn the lessons of the Great Depression and still believe in the simplistic fundamentalism of Milton Friedman — no matter how often his predictions were/are wrong. Krugman is little better, as a hybrid-Keynesian he has rejected the key insights of Keynes and focuses on a monetarist solution from the demand side. The retro-classicalists and hybrid-Keynesians all believe in the simplistic models of the dominant schools of economics, which make absurd assumptions in order to turn the complex non-linear coupled partial-differential-equation calculus of a economic systems into a simplistic algebra of crossing supply and demand curves. MBAs like Dent are taught this nonsense at a very superficial level and become true believers since it supports their self-serving world view. If you want to understand the absurdity of this monetarist cult, where faith in free markets trumps reality, you should read Steve Keen’s “Debunking Economics.”

      May 16, 2016 at 4:18 pm

      Please, do some simple research on who started and own the “Central Bank”. Keynes was a pervert and sold out to his bosses. Everything you wrote is typical college nonsense, found in text books printed by the same corporations owned by those who own the central banks.

      As long as small, private, secret (ask for the list of stockholders of the Federal Reserve Company…..) print paper notes, we are going to be in this fabricated mess.

    • Chip Javert
      May 16, 2016 at 5:45 pm



      Thanks for the 1200 word comment on the 900 word article.

    • Agnes
      May 16, 2016 at 7:41 pm

      My favorite is still Antal E. Fekete. I loved “Ultracrepidarian Musings”.

    • Thomas Belstler
      May 16, 2016 at 11:00 pm

      WOW! A quick summary of at least a dozen books on US history and the operation of the economic and financial systems that I have read over the decades! Real US history is not what is taught in high school or even undergraduate studies and the economy and financial systems do not work the way the vast majority of people think they do. Mr. Richter provides some glimpses into the workings of the system but that is all they really are, quick snapshots.

  9. Patrick
    May 16, 2016 at 1:12 pm

    Bring on Helicopter money, I’ll buy silver & gold with it.

    BTW Dent is delusional that a massive expansion of the money supply can ever create ‘deflation’. If that were the case then prices of everything would be rapidly dropping while the dollar strengthens. Sadly he’s confusing Stagflation for Deflation and is leading his minions down a blind ally of destitution as the Dollar crashes.

    I don’t get how these Great Depression Simpletons believe 1929 has anything to do with 2016 – When the dollar was once backed by gold and cash supply fixed to paper currency in circulation VS today where Nothing backs the dollar and it’s no more than a number in a computer that’s inflated at the whim of governments.

    • Patrick
      May 16, 2016 at 1:22 pm

      If you believe that gold and silver will fall dramatically due to deflation then you must also accept that milk will fall to 50¢ a gallon, cars to $3500 and houses to $60k. Yeaah right, I should stash all my worthless dollars in a mattress cause I’ll be able to pick those up for practically nothing based on Dent’s rantings.

  10. r cohn
    May 16, 2016 at 1:39 pm

    I asked a question about helicopter money last week and received only 1 i researched it and came up with this information.

    QE was essentially an asset swap ,where the FED bought government and mortgage backed bonds in exchange for bank reserves .It was both a way to reduce the governments interest cost to a minimum,since almost all interest that the FED received on these bonds was then remitted back to the Treasury and a way to MANIPULATE bond prices higher to ARTIFICALLY reduce interest rates.But because QE only created reserves ,money did not go DIRECTLY into the economy.Any economist with even 1/2 a brain has come to realize that QE has not been efffective at boosting economies ,but has mainly served to increase asset prices with a disproportional effect upon those at the highest income levels.It is ironic that those who profess to being most liberal in their political philosophy have helped to foster the greatest inbalance of incomes and wealth in the history of the country .
    Although no one seems to be very sure as to what the mechanism of distributing HELICOPTER MONEY actually will be, many have referred to helicopter money as similar to an across the board tax cut financed by the FED.As such it would have be a coordinated action by the government and the FED.Given the current makeup of government in Washington ,increasing the debt ceiling beyond current limits does not seem to be the cards.But if Hilary becomes president and the the composition of the Congress becomes more liberal ,then the probability of helicopter money increases dramatically.
    Two more points.
    Once we get one dose of helicopter money what is to prevent more doses in the future?
    The Fed has mentioned that its goal is to reach 2% inflation.If the Fed does get its wish and inflation reaches %2,then money will lose 1/2 its value in 35 years.That is bad enough.But what is the probability that inflation stays at even 2% and does not move higher.IMOP very low.
    So if inflation does move higher ,will the FED and the government going to reverse its policies?

      May 16, 2016 at 4:22 pm

      Today’s 1% ARE the Liberals. They just fake it and prance around and say what the stupid public wants to hear.

      The “central banks” were created by and for the 1%. Ever since the Dutch importers/merchants got together with the Royalty of Holland, and created the first private central banks, it has been one scam.

      The British were next with their private central bank created in joint ownership by the Royal Family and the leading merchant families. (why do you suppose Queen Elizabeth II is the richest woman in the world?)

      • d
        May 16, 2016 at 6:22 pm

        You see to have a lot of factually issues.

        Including this one about mumsie

        (why do you suppose Queen Elizabeth II is the richest woman in the world?)

  11. Sound of the Suburbs
    May 16, 2016 at 1:47 pm

    Take away advertising and marketing and the private sector could be efficient, manufacturing demand for things people don’t actually want in the first place is not an efficient use of the world’s finite resources.

    I don’t know about the US or Cananda, but in the UK loads of the private sector output ends up in storage units.

    The UK consumer, bamboozled by yet more advertising and marketing campaigns, gets home with their new products to find there is no room for it in their house.

    They have to clear out some old stuff and put it into storage to make room.

    The nation is now covered in storage units housing the surplus products from the private sector.

    How is this efficient?

    Without advertising and marketing the private sector would supply what people wanted without manufacturing demand for things they don’t.

    This would be efficient.

      May 16, 2016 at 4:34 pm

      Buy a bigger house or rent a larger storage unit.

      By the way, this is why War is so good. The book “Report From Iron Mountain” explained why we NEED WAR. It uses up excess production.

      The British Government should demand that every storage unit be EMPTIED. They should give each “unit owner”, let’s say 5,000 Euros. Everything in the unit should be destroyed, crushed or burnt and the “unit owner” can buy new stuff to put in there.

      Here in America we can achieve such wealth and production by using MY concept: Every American car, over 5 years old, should be turned in by the owner. The Owner receives a check for $20,000 Federal Reserve Notes, credit, that must be used for a NEW car.

      Now, the used cars must be crushed and destroyed and no parts re-used. Now, you may think $20,000 would create inflation, but it won’t. It is a CREDIT.

      When you pick out the NEW CAR, it is financed over 5 years, using your $20,000 Federal Reserve Note Credit Coupon. You can always pick out a nicer car and add the difference. But, since no money is created or destroyed (only credit notes), there is no debt for the government, only you. AND, like Obama Care, if you don’t have any money, this $20,000 is a tax refund/credit even if you have no income and no taxes due.

      We can call is the ObamaCar Equality Full Employment Fairness Act.

      Imagine the production and employment if the US auto industry was manufacturing 25 Million units a year.

      • May 16, 2016 at 6:14 pm

        This is hilarious (I assume you meant it to be hilarious).

          May 16, 2016 at 6:40 pm

          Thank you Mr. Richter, for understanding that it is sarcasm, with the exception of the book “Report From Iron Mountain” of which I have a first edition, hard back, copy.

          The book, which was a Rand Corporation study, explains why if we did not have War, society would need to come up with some other “excuse” to unite the public and use up excess production. The primary substitution for War? Health Care spending…..sound familiar?

          The comments that “Federal Reserve Notes” are not money, is also factually true. This is how they got around the Constitutional restriction on money being only gold and silver. Federal Reserve Notes are not money (and they are not) but you are allowed to pay debts with them. Extremely clever and we have to thank Paul Warburg for this.

          Take a look at “currency” printed during the 1920’s to about 1965. They say that you can present the “notes” to the US Treasury, or a local Federal Reserve District bank (12 of them. Why 12? Want to guess?) for silver (or gold) and these “notes” can be redeemed in “LAWFUL MONEY”. Federal Reserve Notes (printed on the top of all you paper currency) is NOT money and not even American money.

          I have collected some of these old Notes. They actually say you can redeem them “FOR LAWFUL MONEY” which can only mean……they are not money……the most beautiful, clever, intelligent, awesome scam in history………………..

        • May 16, 2016 at 6:52 pm

          BTW, from Wikipedia about that book:

          “The Report from Iron Mountain is a book published in 1967…. It details the analyses of a government panel which concludes that war, or a credible substitute for war, is necessary if governments are to maintain power. The book was a New York Times bestseller and has been translated into fifteen languages. Controversy still swirls over whether the book was a satiric hoax about think-tank logic and writing style or the product of a secret government panel.

      • Nicko
        May 17, 2016 at 4:54 am

        I have storage containers rented out in two countries. This is a sad indictment on myself. Why do I have so much stuff? It must be some kind of ancient hoarding gene.

  12. May 16, 2016 at 5:17 pm

    RE: “His brilliant idea was that the government should fight downturns with deficit spending to offset declines in the private sector. He said that if it would help, the government should pay people to dig ditches and then fill them back up!”
    Indeed, but this was only the half of Keynes’s economic plan that was ever implemented, and indeed given the political realities the only half that can ever be implemented, as the other half prescribes paying down the public debt during the boom periods (possibly amassing a surplus), and limiting governmental spending to avoid competing with business for manpower and other resources to limit shortages and inflation.

    The other great problem with Keynesian economics in the current era is that while deficit spending does indeed still stimulate domestic consumer spending/demand, by and larger this does not stimulate domestic production resulting in in increased employment and governmental revenue, but rather increased current account balance of trade deficits/debt driving down the international dollar exchange rate, because much of the production of consumer goods is now located overseas.

    A contributing factor to the impotence of Keynesian economics is the mis/mal allocation of government funding into non and counter productive activities (for the majority), endless/pointless colonial wars and bridges to no-where. We know we are entering a 1,000 year drought cycle so why not fund massive desalinization and irrigation projects? This would provide domestic employment for our under/un employed engineers, scientists, technologists and technicians, as well as avoiding a future food shortage.

  13. Julian the Apostate
    May 17, 2016 at 3:59 am

    The opening sentence in Mr. McFadden’s diatribe applies better to his own comments than to Mr. Dent’s. He accuses Mr. Dent of not having read Keynes. The same may be said of Mr. McFadden in regards to the Framers. All of the ills he lays at the feet of “robber barons” et al have the big fat thumbprints of government intervention at their roots. While pure Capitalism has never existed anywhere on Earth it came closest in the period 1865-1900 and transformed the world. As soon as it reared its head it was beset on all sides by parasites. Like pure Capitalism pure Monopoly by Capital has never existed. To the extent it got (90% of the oil industry by Standard Oil) would not have been possible without the fat thumbprint of government keeping competitors like Nobel out. Keyne’s Original Sin was in believing that government could run ANYTHING efficiently. The Republic DIED and democracy-which the Framers despised-with the rise of barbarians like Jackson. Populism, vote buying and Manifest Destiny replaced an informed electorate. But the Framers built well and we have survived it all so far, albeit badly of late. “When force is the standard the murderer wins over the pickpocket, and society vanishes in a spread of ruins and slaughter.” -Ayn Rand. Rave on Mr McFadden. We are much amused.

    • James McFadden
      May 17, 2016 at 5:57 pm

      I sort of guessed Julian was of the Ayn Rand cult, and apparently has multiple personalities to boot. Here is my favorite quote about Rand.

      “There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves Orcs.”- John Rogers.

      Plus a little Keynes …
      “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”

  14. Dan Romig
    May 17, 2016 at 7:14 am

    The first central bank in the US was set up, largely by Hamilton, in 1791. Seven years prior to the ‘First Bank of the United States’ being established by a 20 year Congressional charter, Hamilton and Isaac Roosevelt (same family) founded the Bank of New York. The first publicly traded stock on the NYSE, year 1792, was the Bank of New York.

    History does indeed repeat itself. The Rothschild empire controlled both the First Bank of the U S, and after the War of 1812 (which was engineered by Nathan Mayer Rothschild), Congress granted another 20 year charter for the ‘Second Bank of the United States’ in 1816.

    Today we have the Fed which is a consortium of banks that are shareholders of the 12 regional Fed branches. They can’t buy, sell or use stock as collateral, but they can collect up to 6% annual dividends on the shares they own.

    Sweet deal for the member banks, eh?

Comments are closed.