Tuesday, March 13, 2012

Keynesian Inflation Propaganda - 1933 Style

This is a great 1933 MGM propaganda piece on inflation. It presents the Keynesian view very well.

What it doesn't do is explain that the major unemployment at the time was the result of government regulations preventing wages from adjusting to the overall lower price level. If they were allowed to do so, Keynesian inflation gymnastics would not even be a thought on anyone's mind.

Further, the clip does not point out that newly printed money does not reach everyone at the same time and those that get it first (usually the banksters) get an edge over everyone else.

Finally, the clip gives the distorted impression that spending is what fuels an economy. Spending above costs is the key for survival of an individual business, but for an overall economy it is production that makes an economy grow. And production can take place without money printing. Say's Law = supply creates its own demand.



  1. Such in depth analysis. The value of the dollar goes down, the cost of living goes up, and magically, wages go up and everybody suddenly has a job. It's a miracle!

    Now let's see how long it takes somebody to recognise that Keynes didn't write his famous book until 1936, but this was made in 1933. The genius of Keynes was getting credit for something that not only doesn't work, but what he didn't even invent.

  2. Can you clarify the following statement in the article?
    "Spending above costs is the key for survival of an individual business."

  3. There's also no update or addendum to show that the depression lasted another 15 years after the "magical inflation." They also have to paint debt owners as evil so no one questions why it's good to screw them by repaying them with dollars that are worth less than those that were borrowed.

  4. While watching this video, I'm really struck by the part around 4:30, where he explains that after inflation sets in the dollar goes down, so the cost of living rises. Then magically our incomes rise too!

    I also just love how "the foundry starts doing business again," but then after that, there's a complete inability to think beyond the short term. A problem compounded by the inability to look beyond the short term into the past. All this guy cares about is that people are not buying stuff right now. Why? Who cares about that, inflate!

    The Civil War example is great too. "The price of commodities rose steadily, more than 100%, and look what happened to the stock market, it went up, and up, and up!" He then goes on to show how well the inflation will boost the stock market after the next round of inflation hits. Why don't we just quadruply the supply of dollars, the stock market'll go sky high! Imagine the prosperity. We all know how well that worked - the depression continued until we were all 'saved' by conscription and working in the death factories.

    I would love to see a mock propoganda film made with this kind of optimism but instead it sings the glories of abandoned factories, entire industries exported, cities in decay, low paid nametag-and-hairnet service industry jobs, a world beating prison population, the shitty quality of new construction compared to stuff built 100 years ago, people abandoning their native counties and states because of taxes, etc.

  5. "You didn't understand it then, and you probably don't understand it now. So I can speak freely."

    Best line of the video.

  6. What a hoot. I love how it glosses over the fact that the recovery will take place in different segments of the economy at different times, but that commodities will rise across the board. So what happens to those not fortunate enough to catch the stimulus/inflation wave? Of course, to a central planner only the aggregates matter, so the unemployed guy just has to suck it up.