“The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
— Vladimir Lenin

Keynesian economic theory was adopted by the US in the early 20th century. It was a part of the supportive reasoning for central economic planning through the Federal Reserve. Keynesian economic theory is also responsible for the massive government debt that has been created since then, supported with the theory that government can boost the economy by increasing its own spending. This has encouraged loose fiscal policy and spending binges that can only be rivaled by drunken sailors.

Keynesian Economic theory is best summed up by this example: The government pays someone to dig a hole and pays someone else to fill it. The fact that nothing productive is taking place doesn’t matter, according to Keynes, the spending alone stimulates the economy.

That is about as far from common sense as one can imagine.

In one of John Maynard Keynes writings, he acknowledged the quote from Lenin found at the top of this page where Keynes preached against “uncontrolled” inflation. The interesting thing is however, Keynes’ theory accepts “mild” inflation. Inflation is a sort of hidden tax. The reason the government inflates the money supply is primarily because it can no longer tax or borrow from the market in order to pay for its own expanding bureaucracy and programs, so it borrows the money from the Federal Reserve instead. This money of course is simply printed.

Just as taxes take money out of the hands of private citizens immediately, inflation takes money out of the hands of citizens in the future by reducing the purchasing power of their savings. There are many things wrong with Keynesian Economic Theory, but this is certainly one of the most destructive. The other problems with this theory are discussed in the video below.