Where Keynes Went Wrong
And Why World Governments Keep Creating Inflation, Bubbles, and Busts
By Hunter Lewis
Among Top Seven Books Recommended Year End by Barron’s Economics Editor
Among Top Five Finance and Economics Books 2009 Recommended by 800-CEO-Read
Featured on Glenn Reynolds' Instapundit website
“…[An] impassioned…and…much needed book.”
—Gene Epstein (Barron's)
"Just what the world needs, and just in time. Keynes is demolished and his quack system refuted. But this wonderful book does more. It restores clear thinking and common sense to their rightful places in the economic policy debate. Three cheers for Hunter Lewis!"
—James Grant (Editor of Grant's Interest Rate Observer)
“Lewis has exposed with unmatched clarity the lineaments of Keynes’s system and enabled us to see exactly its disabling defects. Keynes defied common sense, unable to sustain the brilliant paradoxes that his fertile intellect constantly devised. Lewis’s book is an ideal guide to Keynes’s dangerous and destructive economics. . . .”
—David Gordon (LewRockwell.com)
“Lewis has done a service, even if in the negative, of concisely and critically summarizing Keynes's economic theories, and his book will make readers think.”
"A splendid book!"
—Patrick McIlheran (Milwaukee Journal Sentinel)
"[This] compelling, powerful, and extremely readable book...is fantastic....'Must' reading."
—Kevin Price (CBS and CNN Radio and BizPlusBlog)
"[This] highly readable...book fills a missing niche in the literature: a debunking of Keynes for the general reader....Lewis is an excellent writer [and] demystifies...a famously difficult author to understand....The work contains so many gems that it would be impossible [to list them all]."
—Robert Blumen (Mises.org)
"Defogs what Keynes said [in] terms that a layman can understand."
—Cecil Johnson (Widely syndicated McClatchy reviewer)
John Maynard Keynes died in 1946, but his thinking continues to dominate world economic policy. Bushonomics, Obamanomics, and the policies of the U.S. Federal Reserve have all ultimately been derived from Keynes's book, The General Theory of Employment, Interest, and Money, usually referred to as Keynes's General Theory or The General Theory.
What does Keynesian economics tell us about the Crash of 2008? First that crashes are an inevitable part of Capitalism—they reflect what Keynes called the "animal spirits" of private markets. Second that the Crash creates a downward spiral that feeds on itself. If Keynesian remedies are not promptly applied, there may be no economic recovery. These remedies, the essence of Keynesianism, include the U.S. Federal Reserve printing money and lowering interest rates, bailouts, and economic stimulus through deficit spending.
Where Keynes Went Wrong demystifies Keynesian economics. It reveals what John Maynard Keynes really said. And it offers a startling and persuasive argument that Keynesianism is leading us down a path not to genuine economic recovery, but to inflation, bubbles, and crashes.
More about Where Keynes Went Wrong
When the world financial system failed in 2008, world governments intervened decisively. Guided by Keynesian economics teams with impeccable credentials, they intended not only to "stimulate" the economy, but to "jolt" it back to borrowing and spending as usual. All of these actions were taken from a playbook devised by British economist John Maynard Keynes, author of The General Theory of Employment, Interest, and Money and by far the most influential social thinker of the past century.
But . . . not all economists agree. Following the Crash of 2008, some critics of Keynesianism ask: Isn’t the root problem that Americans have borrowed too much? Will even more borrowing, this time government borrowing to support deficit spending, really help us out of the bind we are in?
Is it right to borrow to finance bank bailouts? Will economic stimulus—also financed by government deficits—really help? Should the Federal Reserve be printing money so rapidly? Will this give us a genuine economic recovery? Can we really rescue Capitalism by trying to borrow and spend our way out of debt?
Also: are private markets really to blame for the Crash of 2008? Wasn’t government even more responsible? If so, can we expect government to fix the problem?
In short, should we be relying so completely on Keynes? What if he is wrong? What evidence is there that he is right?
These are important questions. If Keynes is wrong, then so are the economic policies of Barack Obama, George W. Bush, and virtually all world governments today. Instead of giving us a sustainable economic recovery, they will just lead to inflation, bubbles, and crashes.
Where Keynes Went Wrong presents the economic arguments that will shape our future in a lively, stimulating, and transparently clear style.
Who is this book for?
Where Keynes Went Wrong is written in a clear and accessible style. Anyone can read it. You do not need any prior education in economics.
Libertarians, followers of the Austrian School of Economics, readers of economist Ludwig von Mises and economic thinker and commentator Henry Hazlitt, and fans of congressman Ron Paul will be immediately drawn to its critique of Keynesianism and of government economic intervention in general. But Lewis makes clear this is not a politically partisan book—just the opposite. It faults both George W. Bush and Barrack Obama, in Republicans and in Democrats.
Lewis makes clear here and in other writings that the primary goal of economics should be to end world poverty and to do so in a way that is both economically and environmentally sustainable. In his view, Keynesian policies are not helping the poor, indeed are making matters much worse for them, and this point of view drives his critique of current economic policies.
Some commentators have recently linked Lewis's book to Ron Paul's End the Fed. There are parallels. Both are sharply critical of Keynes. Both generally reject what might be called Bush/Obamanomics. Perhaps a key difference between Lewis and other critics of Keynes and Bush/Obamanomics is that Lewis is not just a defender of free markets. He also would like to see a major expansion of the nonprofit sector of the economy, a theme developed in Lewis's previous book, Are the Rich Necessary?
In any case, the chief virtue of Where Keynes Went Wrong is that it clearly lays out, really for the first time, exactly what Keynes said. It therefore enables the reader, with or without the help of Lewis's critique, to reach his or her own conclusion about the validity of Keynesian economic policy prescriptions.
About the Author
Hunter Lewis is the author of six books in the related fields of economics and values, as well as numerous magazine, newspaper, and online articles. His much-praised book Are the Rich Necessary? was called "highly provocative and highly pleasurable" by the New York Times, "great reading" by Publishers Weekly, and "worth reading aloud on a family vacation" by Barron’s.
A graduate of Harvard University, Lewis co-founded Cambridge Associates, LLC, a global investment firm whose clients include leading research universities, charitable organizations, and families. He has served on boards and committees of fifteen not-for-profit organizations, including environmental, teaching, research, and cultural organizations, as well as the World Bank.