Article by Sebastian Wang.
Excerpt:
Keynes: Misused, Misunderstood, and Weaponised
Austro-libertarians often reject Keynes outright. But fairness demands a distinction between Keynes’s actual theory and what has been done in his name.
Keynes did not advocate permanent deficits or chronic inflation. His argument was specific: when private demand collapses as a result of previous political or banking mistakes, the state may need to support employment temporarily until confidence returns. He believed that deficits should occur in recessions, and budget surpluses should follow in recoveries. His famous dictum was clear:
“The boom, not the slump, is the right time for austerity.”
Nothing in that sentence resembles the behaviour of modern governments.
The post-war political class discovered that Keynesian rhetoric provided a moral cover for something they already wanted to do—spend without restraint. They kept the deficits but abandoned the surpluses. They celebrated “stimulus” and ignored discipline. And so Keynes’s emergency prescription became an open-ended licence for irresponsibility.
The tragedy is that Keynes wanted to stabilise capitalism. His followers hollowed it out.
The Unholy Synthesis: Politics, Banking, and the Illusion of Wealth
By the late twentieth century, the system had settled into a stable pattern:
- Governments ran structural deficits.
- Central banks bought their bonds, expanding reserves.
- Commercial banks multiplied those reserves through credit.
- Asset prices rose.
- Voters mistook asset inflation for prosperity.
- Politicians claimed victory.
It is a mutually reinforcing cycle. The state gets cheap debt. Banks get profitable leverage. Voters get rising house prices. And the economy absorbs wave after wave of malinvestment.
But the structure is inherently unstable. It requires ever-growing debt to sustain the illusion. It cannot tolerate honest interest rates. It collapses if credit contracts. It accumulates imbalances so large that no democratic government can address them openly without committing political suicide.
This is not capitalism. It is a form of monetary serfdom disguised as modernity.
Why the System Cannot Reform Itself
Reform would require at least three impossible acts:
- A political class willing to accept short-term pain to avoid long-term ruin.
- A banking sector willing to surrender its privilege of creating money.
- A voting public willing to accept falling asset prices and higher interest rates.
No such coalition exists. Every attempt at reform triggers electoral revolt. Every crisis invites a new round of emergency interventions that further entrench the existing machinery. The conclusion is harsh but unavoidable: The current monetary order cannot be reformed. It can only fail.