Hi, LGL:

 

"Keynesianism basically wrong"? Well, I've just picked up some training from you on how to "respond at all" -- ha, ha, ha.

 

In modern society, government does have a role to play in the economy. Government tax and regulatary policies and central bank monetary policy decisions have a direct impact on the performance of the economy.

 

In the face of this reality, Keynesianism represents a plausible theory of macro-economic management to counteract cyclical economic downturns, which holds that full employment and a stable economy depend on the continued governmental stimulation of spending and investment through adjustment of interest rates and tax rates, deficit financing, etc.

 

In the meantime, Milton Friedman's monetarist view that money is the most important factor in the economy is also great. Now in his 90s, Economist Friedman still calls for steady money supply growth. He is 100% correct.

 

As mentioned before, 2/3 of the U.S. currency is outside the U.S. and part of the money (i.e. part of the printed paper) created by the Federal Reserve simply disappears through wear and tear.

 

If the Federal Reserve fails to keep money supply growth steady, a lack of liquidity is sure to happen, leading to deflation. Although the Fed recently cut its target Fed Funds rate to 1%, there is no sign that inflation will re-surface.

 

For instance, the price of gold has fallen below $350 per ounce, and the U.S. dollar has firmed against other major currencies. These are not signs of inflationary pressures. The Fed should continue to increase money supply by purchasing long-term Treasury securities on the open market.

 

Judging from the measures taken by major industrialized countries to stimulate economic growth and job creation, you can see clearly that Western government policy makers continue to hold Keynesianism and Friedman's monetarism in great esteem.

 

Tell me why they have yet to give your numerous theories about reviving the economy any serious consideration, even though you claim to be as consistent and coherent as you possibly can. Because they lack the training to comprehend your consistency and coherency? 

 

"Iraqi guerilla movements could be maintained far longer than the Viet Cong"? Ha, ha, ha. Do you know how huge the scale of materials transportation from the Soviet Union and Communist China to North Vietnam was?

 

During the Vietnam War, Soviet material support kept flowing to North Vietnam through Communist China's railway system. Apparently unwilling to expand the war to Communist China, America's B52's never bombed Chinese railways. With material support to Honoi uninterrupted, there was no way for the U.S. to win the Vietnam War.

 

Now in Iraq, no substantial material support can reach Saddam Hussein's Baathist loyalists without being detected by the CIA's monitoring system. Once the CIA finds out where these Baathist assassins hide their ammunition, U.S. troops will rush to seize it. 

 

Your so-called "Iraqi querilla movement" is unsustainable without substantial material support from rogue states. And if any rogue state dares provide material support to Iraqi Baathist insurgents, it will be punished by U.S. forces.

 

The U.S. could easily expand the war into Syria or Iran by air to cut off supply lines to Iraqi insurgents if either of them fails to behave. No U.N. resolution is needed. There is no reason that either Syria or Iran would want to challenge the U.S.

 

I am a conservative. It should not be any news to you. Legislation that enhances the security and safety of the capitalist Free World is desirable in my view. If you think the Patriot Act is McCarthyism, that's your problem.

 

Some conservative commentators believe Senator Joseph R. McCarthy was right on some issues because in the 1940s and 1950s, secret agents on Soviet payrolls did infiltrate American society. Don't you watch historical documentaries?

 

I was just trying to look at the issue of terrorist (and communist) infiltration from a historical perspective as a reminder that certain historical events might recur at a 60-year interval -- as the ancestors of the Chinese suspected more than 2000 years ago.

 

Sincerely,

 

Robert M. Liu