John Maynard Keynes has been one of the most influential figures in economics. He advocated government deficit spending to stimulate demand in order to drive economic growth. His theories had a vast influence on 20th century economics, and they have been
credited with saving capitalism.

Right now we are seeing the negative results of the policies that he has advocated.

Keynes' most famous statement was, “In the long run we are all dead.” Aye; but we have our children to think about. And the people who do not do that are scoundrels who leave the world in a worse shape than they have found it.

Deficit spending has proven to be a disaster. We see that with Argentina; we see that with Greece. Deficit sucks the investment out of the productive sectors of the economy, leaving less money available for investment in business development. The result
is a sluggish economy and, in case of default on the debt, a huge economic crisis.

Keynes's second most famous statement has been the argument that economy – and in particular the stock market – are governed not by “rational self-interest,” as is the premise of classical economics, but by “animal spirits.” Animal spirits is
a judgmental term; but there is a truth to what Keynes said on this matter. Most economic decisions are not made based on “rational self-interest.” They are based on psychological factors. And it is important that this argument be made.

Why are most economic decisions based on psychological factors? Because, time and time again, we see superior marketing dominating the marketplace with inferior products. With VHS vs. Beta, Microsoft vs. Borland, and fast food chains vs. mom-and-pop
shops, inferior product has dominated the marketplace by virtue of superior marketing. Marketing is based on psychology; and the inferior products that rise to dominance do so through a superior use of psychology.

Keynes himself was a master in playing the stock market; and his insights on what it is based on still hold truth. But his advice for deficit spending was a disaster. Deficit spending is justified in addressing emergencies such as the Second World War
and the 2008 recession. But as a way of life it is a key to ruin; and we have the example of Argentina and Greece to show that.

In recent history, it was the Clinton administration that did anything effective about the deficit. The economy boomed vastly under Clinton, allowing me as a person in his early 20s to earn $80,000 a year. I have not earned anything close to that in the
following decade. Clinton achieved both economic growth and fiscal sanity. The administration that followed destroyed both.

Keynes got some things right, but many things very wrong. Deficit spending is a burden that people place on their children. As a parent I have nothing but hatred for people who do that. My daughter deserves to live in a better world than I have. And it
is my duty as a father to make sure she does.

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