In 1943 — the same year Samuelson got it wrong — Keynes was giving a lecture at the Federal Reserve and was asked by Abba Lerner about the possible economic problems of the post-war period. Keynes’s reply is significant:
“Keynes harshly rejected the risk of post-war stagnation, holding that because of Social security there would be a large reduction in private saving and so that would be no problem.” (Colander and Landreth 1996: 202).[emphasis added]Woods, like other Austrian ideologues, seems utterly ignorant of this. What kind of analysis of the post-war boom ignores what Keynes — the founder of Keynesian economics — thought about this question? The truth is that Samuelson was simply wrong; Keynes was right.
Everyone got that? Because of Social security there would be a large reduction in private saving and so that would be no problem.
I guess "Lord Keynes" told us. Seriously, average people simply do not believe that government spending and deficits cause prosperity. Heck, average people don't even know that deficits and money dilution are purposeful government programs instigated by a gang of knuckleheads known as Keynesians. It's our job to tell them. And don't forget that LK still does not understand the basic Austrian concept of economic calculation.
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