University Economic Propaganda Exposed

When we hear of propaganda we often think of Cuba, North Korea, the former USSR, and communist regimes. Never do we think of the United States of America. Yet for decades since the Woodrow Wilson presidency (1913-21) we have been indoctrinated with lies from progressives. Some courses at our universities are filled with more than 50% lies and misinformation designed to help the elites maintain power over us. My subject, economics, certainly qualifies as over 50% lies.

The real question for most university students is not the crap they learn in college but will they become part of the ruling elite. If they are deemed politically correct AND desirable then they move on to the top echelon of politics and Fortune 500 corporations. If not they will struggle to make a living like the rest of us mortals. The vast majority do not make the cut and college becomes a selfish pursuit of self congratulations. Ego fulfillment at a very costly financial price, sometimes paid by the student, but more frequently by the taxpayers. For the lucky few, Obama, Bush, Kerry, Pelosi, Immelt, they move on to the corporate boardrooms, congressional aids, powerful bureaucrats, senators, presidents, and become our rulers.

It is not unusual for a college text book to contain over 50% lies, some would say propaganda

We teach our children to “question authority” but only if it fits the script given to them by our government schools and universities. I was taught these same lies in my government high school and university and just assumed the lies were the truth. Today when I teach my students economics I refuse to go along with the lies. I teach the truth.

The following is a actual text from a college text book, quoted word for word, used in 2011 at a national four year institution.

To my students:

Example of fallacy economics taught in the press and college text books. Pay attention and learn why it is important to question authority. Answer the questions at the end. Good luck.

“The Great Depression and World War II were a turning point in the United States in terms of economic thinking and the role of government. Up until this time, Classical theory dominated economic thinking, and the US was primarily a market economy with very little intervention by the government in economic activity.”

This is false. In 1913 the Federal Reserve was created giving the private bank the power to control the money supply.

In 1913 the federal income tax was established, initially at 7% of personal income, but by 1917 it was 67%.

Is it any wonder most of the worlds intellectual talent comes increasingly from other countries

In 1925 when England wanted to return to the gold standard the English central banker, Montagu Norman (1920-44), persuaded American central banker, Benjamin Strong (1914-28), to pursue a monetary policy of low interest rates,for the propose of devaluing the dollar and strengthening the British Pound from $3.50 to $4.80, and rapid monetary expansion that created a real estate bubble and stock market bubble. When Strong died, 1928, his predecessors raised interest rates and the boom was over, officially October 24, 1929.

The stock market and real estate bubble of the 1920’s was created by the Federal Reserve and its Chairman Benjamin Strong’s easy money policy designed to weaken the dollar, and conversely strengthen the British pound.

“In 1929, the stock market crashed and the financial system experienced massive bank failure; unemployment skyrocketed and the Great Depression began.

Herbert Hoover was president and responded with a “hands off” policy, and a commitment to balance the federal budget. Classical economic thinking prevailed that market forces bringing adjustment in the product and labor markets would eventually correct the disequilibrium in the economy.”

This is false. Hoover raised taxes from 25% to 63%, went from a budget surplus ($738 million) to a deficit of 4.5% ($2,602-millions) of GDP, and passed the Smoot-Hawley tariff act of 1931 that raised tariffs to a effective rate of 41%, destroying world trade and spreading the Great Depression to Europe and Canada.

Presidents Warren Hardy (1921-23) and Calvin Coolidge (1923-29) were the economic heroes of the “roaring 20s” because they cut taxes from 73% in 1921 down to 25% by 1925. Federal spending was cut from $5,062-millions in 1921 to $2,908-millions in 1924, a 43% reduction, and they stayed out of the economy.

Hardy and Coolidge are referred to as “laissez faire” or hands off presidents by economist who know their economic history and Hoover as a “statist” or interventionist who tries to “drive” the economy out of the ditch.

“As things worsened, people became discontented with this approach and elected Franklin D. Roosevelt as president. He began the New Deal policies of relief and recovery. The most immediate problem was alleviating the problem of unemployment and the human suffering it caused. Curbing deflation, restoring profitability to business, and stability to the banking system were additional goals of New Deal legislation.”

Many economists incorrectly assume deflation is a problem. Deflation is simply prices correcting for the loss of purchasing power of individuals and helps people who lost jobs to be able to afford goods and services. Deflation is the economy adjusting, which to Austrian economist is a good sign of reallocation of resources to productive uses and good times ahead. We need deflation because it signals to our private sector economy that some good and services are needed and some have been overproduced and are no longer needed.

Governments and central banks do not like deflation because the industrialist and elites who own capital face harsh consequences for their business decisions and possible bankruptcy from overexpansion during the boom years. Government policy has traditionally been to try to “re-inflate” assets bubbles, or to throw money into the economy exasperating the problem of overproduction and the boom. This favors the elites at the expense of the average consumer that benefits from lower prices. The average man benefits from deflation because his or her purchasing power is increased.

“The 1930’s were a decade of recovery and retreat as the business cycle continued its volatile course, and they mark the beginning of the social safety net that includes Social Security.”

The Social Security Act of 1935 is considered the turning point by many economist of the United States changing from a capitalist society to a socialist society. Up to that time the government consumed only 5% of the GDP, today federal, state, and local government consume 45.4% of the GDP.

FDR’s economic policies were a failure. After seven years and record deficit spending ($9,468-millions with a deficit of $2,920-millions in 1940), higher tax rates to 79%, and increased federal regulations, unemployment was 14.6% in 1940.

“When the United States entered WWII, we were faced with the task of mobilizing a massive war effort. This meant gearing up from a point of serious underemployment of capital and labor. We managed to do this by increasing government control of resources and converting those resources from civilian to military use. The federal government also implemented a series of price controls and rationing of raw materials and finished products overseen by the War Production Board and the Office of Price Administration. Food, housing, and transportation were not included in these control measures.

By the end of WWII, the ability of the government to solve the problems of allocation and distribution of resources was considered successful because of the victories in Europe and the Pacific. The Depression was over, and the US economy emerged from the war as a world leader and a mixed economy. This move away from a classical view of dependence on market forces to bring correction when the economy was in disequilibrium to the Keynesian view of active intervention was made into law when Congress passed the Full Employment Act of 1946. This law established the Council of Economic Advisors and the Joint Economic Committee of Congress, and set a mandate for the federal government to use fiscal policy to promote steady economic growth and full employment.”

WWII consumed 37% of the GDP, millions were drafted into the US Army, and debt climbed to historic highs. Not what I would call positive in any manner.

After WWII the federal government cut spending from 92.7 billion in 1945 to $29.7 billion in 1947. When this happened the economy grew from $223 billion in 1945 to $269 billion by 1948. Cutting federal spending worked in the 1920s as well as the 1940s after WWII to improve economic performance.

It is sad that 70% of the country not paying attention to our politicians believe in lies like those above. 90% of our economists believe in fairy tales from John Maynard Keynes that promote the power of centralized governments.