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Issue Analysis

Keynesians' Recipe for Disaster

Bernanke Keynsian          There is an old saying, “too many cooks spoil the broth.”  That very well could be true but an even truer statement is that too many Keynesians ruins the currency.  Once again Peter Diamond is expected to be considered to fill a vacate spot on the Federal Reserve Board.  Peter Diamond is a strong supporter of Keynesian economic policies that expand the government and devalues our currency.  
           Diamond’s Keynesian stance is most evident in his support for the president’s stimulus package.  He has even gone so far as to advocate for more stimulus, and even for the Federal government to bail out state governments.  In the past Diamond has supported raising taxes in order to extend unemployment benefits.  As if his Keynesian credentials were not “impressive” enough he is also on record supporting QE2, the raising of taxes in order to fund Social Security, and the bail outs given to big banks during the financial crisis.  In his praise of the Stimulus Diamond has said, "was unquestionably extremely valuable.”
           All of these policies that Diamond supports would decrease the value of our currency because they all encourage the government to spend more money, which it doesn’t have.  This would then force the government to print more money, which would cause higher rates of inflation and hasten the destruction of the U.S. dollar.  Senators Shelby and Toomey have expressed similar fears over the nomination of Diamond.  Senator Shelby has described Diamond as, “In short, Dr. Diamond is an old-fashioned, big government Keynesian.”  These Keynesian economic policies Diamond advocates seeks to increase the size of government and further interfere with the business cycle, which will only make future economic downturns worse while increasing our dependence on the government for economic salvation.