I am reading Keynes Hayek: The Clash that Defined Modern Economics and I am once again amazed how similar the economic problems and solutions of 1920’s and 1930’s are to today’s problems and solutions. Last night I heard James Grant on Consuelo Mack’s Wealthtrack make the classical Hayek argument against government intervention in the market. Since I am convinced that we cannot “grow out of our mess” because the consumer has too much personal debt and the age of our population should result in reduced consumer spending compared to previous generations, the logical conclusion is for our government entitlement programs to migrate to “pay-as-you-go” financing. The process of weaning Social Security, Medicare, and Medicaid from deficit financed programs to sustainable programs will be difficult. Here is what John Maynard Keynes said about it.
There has never been in a modern or ancient history a community that has been prepared to accept without immense struggle a reduction in the general level of money income.