Power & Market

Secretary Yellen's Dream Date

Bloomberg reports that Treasury Secretary Janet Yellen’s pick for a dream date lunch would be none other than John Maynard Keynes, who Bloomie reporter Christopher Condon describes as “the founding father of modern macroeconomics.” I thought John Law held that title. 

This pronouncement happened during a speed round of questions in Detroit while chatting with Michigan Governor Gretchen Whitmer. “I would choose John Maynard Keynes,” said Yellen. Keynes “changed the way all of us understand business cycles, public policy and financial markets.”

Murray Rothbard referred to Keynes in his History of Economic Thought class class as simply “Maynard.” In his Forward to Henry Hazlitt’s The Failure Of The ‘New Economics’, What Yellen reveres so much, Rothbard called a “Keynesian holocaust” in his Forward to Henry Hazlitt’s The Failure Of The ‘New Economics’. Yes, there's been bubbles, busts and inflation ever since. About Keynes, the man, Yellen’s dream date, Rothbard wrote, 

John Maynard Keynes, the man — his character, his writings, and his actions throughout life — was composed of three guiding and interacting elements. The first was his overweening egotism, which assured him that he could handle all intellectual problems quickly and accurately and led him to scorn any general principles that might curb his unbridled ego. The second was his strong sense that he was born into, and destined to be a leader of, Great Britain’s ruling elite. Both of these traits led Keynes to deal with people as well as nations from a self-perceived position of power and dominance. The third element was his deep hatred and contempt for the values and virtues of the bourgeoisie, for conventional morality, for savings and thrift , and for the basic institutions of family life.

There “is really a bipartisan understanding that he really hit deep insights into how economies work,” the Treasury chief said. Macroeconomics “as a distinct discipline began with Keynes’s masterpiece, The General Theory of Employment, Interest and Money, in 1936,” according to an International Monetary Fund note.

Rothbard in his Forward to Hazlitt’s critique of Keynesianism, wrote that Hazlitt “in this vitally important and desperately needed book throws down the challenge in a detailed, thoroughgoing refutation of the General Theory.” 

The General Theory was anything but a masterpiece. As Hazlitt explained,

Now though I have analyzed Keynes’s General Theory in the following pages theorem by theorem, chapter by chapter, and sometimes even sentence by sentence, to what to some readers may appear a tedious length, I have been unable to find in it a single important doctrine that is both true and original. What is original in the book is not true; and what is true is not original. In fact, as we shall find, even much that is fallacious in the book is not original, but can be found in a score of previous writers.

During her gushing the Treasury Secretary noted that President Richard Nixon famously said in the 1970s “we’re all Keynesians now.”

Not all of us.

Pre-order the 4th Expanded Edition of Early Speculative Bubbles & Increases In The Supply of Money today. 

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