During the last quarter of the 19th Century the economy went from massive booms to busts, over and over. Banks failed and failed and failed. Savings were wiped out. There was no recourse, government was small and ineffective...unable to help Americans. From the late '20's until the start of WWII the economy experienced the Great Depression and the system was close to failing...socialism and communism were considered by many. The economist John Maynard Keynes came up with several brilliant, [to me] ideas. He believed that we needed a stronger, more powerful government...a countervailing force to the wild "robber barons,"...to help Americans. But more important, he said that when the economy recessed or depressed, for whatever reasons, it was the responsibility of government to "prime the pump" by creating money and introducing it into the economy to get things going again. At first glance this seems like printing-press inflation. But Keynes said, and this was the brilliance...the money introduced into the economy would gently be REMOVED when the economy rebounded and consumers and corporations sent taxes to government. It worked, there was no inflation. In the mid 60's LBJ wanted his "Great Society" and also wanted to massively increase our involvement in Vietnam...the "Guns and Butter" concept. But how to pay for both? LBJ, the Fed and the Treasury, went to the printing press. The consequences a decade later were appalling; Because the printing press money was not gently removed we experienced a true inflation. Prices rose. Gold ran from $215/oz. to $875/oz. Silver ran from $3/oz. to $50/oz. Many other goods and service prices that consumers and corporations needed similarly rose. To make ends meet, mothers had to seek employment...and the effect on children for nearly two decades has been sad. And now, the fellow in the room what has no corners, the Fed and the Treasury, [the Trifecta,]is doing it again. I suspect it will help for a short time, [how long I don't know.] Longer term, the probability is quite high that it will not work.
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