Stephen David Mauldin
6 min readNov 15, 2020


“Zero Money”: First Principles Thinking About Monetary Value

Change the Money, Change the World (10)

Part Two (A)— “Keynesian Economics”: The Naming of the Beast

Cycles of bad governance — a welcome death to inflationary monetary policy

“Regular crises perpetuate the past by reinvigorating cycles which started long ago. In contrast, (capital-C) Crises are the past’s death knell. They function like laboratories in which the future is incubated. They have given us agriculture and the industrial revolution, technology and the labour contract, killer germs and antibiotics. Once they strike, the past ceases to be a reliable predictor of the future and a brave new world is born.” ― Yanis Varoufakis

The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy by Yanis Varoufakis 2011

At the time of this writing, it is the beginning of what may come to be known as the Great Depression of the 2020s, and the pin that popped the bubble was the Covid 19 world epidemic. If that seems rather hyperbolic, then this is at least a period initiating a sea change in global economics. As suggested by the quote above, this paradigm shift was incubated for many decades. The main feature of this shift was and continues to be an eroding trust in the dollar as the world reserve currency, a result of the cycles of recessions, both perpetrated and successfully resolved by expanding the supply of fiat currency decoupled from gold. It is no secret that governments of both major political parties collude in continuing to pile greater, and eventually unsustainable, credit and debt on future generations. Clearly they have had no choice but to authorize public bailouts of large private businesses, or else commit political suicide by allowing the recessions to degrade into a massive world depression. This was clear in 2008 when it was certainly obvious, but probably at the time there was no better idea. Anticipating a new Great Depression in the 2020 crisis, fiat printing was again the immediate response. However, It may no longer be the case that a better policy is unavailable, and it can no longer be the case if recessionary forces are understood to be beyond being stopped by the power of of a continued inflationary monetary policy. A brave new world needs to be born, arguably is being born.

In his classic critique of John Maynard Keynes, “The Failure of the ‘New Economics’,” Henry Hazlitt notes in a passage entitled “Equilibrium of an Ice Cube”:

“It is not too difficult to account for Keynes’s misuse of the term “equilibrium” and for the uncritical acceptance of this misuse by so many writers. The older economists thought of equilibrium as an actual state of affairs. They contrasted “stability” with “disturbance,” a “period of equilibrium” with a “period of transition.” But any living economy is always in “transition” — and fortunately so. An economy that had reached completely “stable equilibrium” would be an economy that had not only stopped growing but had stopped going.”

Watching the failure of the “New Economics” by Christopher Whalan

The Failure of the New Economics by Henry Hazlitt 1959

Henry Hazlitt, a famous and prolific economic journalist and follower of the Austrian school of economics founded by Ludwig von Mises. published his book in 1959. It is a long, literally line by line commentary and devastating refutation of John Maynard Keynes’ 1936 book “General Theory”. However, Hazlitt’s attempted disruption of Keynes’ influence in 1959 was itself a failure as it flew in the face of political will at the time. I have given but one significant quote. Hazlitt’s analysis is painfully detailed so it can only be summarized here:

Needing “stability” to be maintained is simply an assertion of a role of governance, a path to manipulation of the market. The idea of the market forces always being in transition, on the other hand, suggests a monetary policy of minimal intrusion on prices and wages. The Fed does the opposite with manipulations such as arbitrarily changing the interest rates, changing the lendable allowances for banks, or at the extreme, printing money based on nothing. Hazlitt defended robustly the “actual state of affairs”, mainly meaning the equilibrium natural between prices and wages, the latter driven by the former. Instead, an inflationary monetary policy by the Fed has been mirroring with a fiscal policy by the government to devalue the dollar steadily. Devaluation, loss of buying power of the dollar, has been reflected in increasing prices, but without an adequate commensurate rise in wages. Bad governance has decoupled from the natural market forces Hazlitt argued were the “actual state of affairs” that should be left in play.

I have been making the argument for the disruption and replacement of the functioning paradigm of a theory of monetary value dominated by the fiat dollar, indicated by the meme “Keynesian economics”. Actually, Keynes had argued for an international currency that may have avoided U.S. economic hegemony. Nonetheless, Hazlitt’s refutation of Keynes’ theory for government interventions reflects the disruption I am advocating. This refutation has a historical foundation in the Austrian school theory of value. The Austrian theory is characterized by not restricting natural market forces. Additionally, I am emphasizing that governance should manifest a true reflection of scarcity by first principle thinking based on an idealistic ontology.

Ludwig von Mises published his Austrian School masterpiece “Human Action” thirteen years after “General Theory”, but by that time Keynes’ theory had already been established as the model of economic theory of governance. Keynes, has been the darling of the monetary and fiscal policy cabal keeping the USD as the world currency reserve. This inflationary policy has had the support of government funded academia for 80 years. Hazlitt clearly refutes Keynes’ “stable equilibrium” conception. However, quickly after Keynes championed his General Theory in 1936 it became the policy bible of both major political parties in the U.S. government. Hazlitt was ignored. The principles argued in Mises’ Human action were eclipsed by Keynes’ political allure — Keynesian theory is a perfect vehicle for control by a faction of elites. F.A. Hayek in 1945, even before Hazlitt. logically destroyed Keynes’ General Theory, pointed out the hubris of the political power within the U.S. government in this regard. Hayak’s analysis is described by Dwight Lee of the Foundation of Economic Education (FEE) upon their reprint of Hayek’s “The Use of Human Knowledge in Society” originally published in the September 1945 of The American Economic Review:

“Informed economic decision-making requires allowing people to act on the information of “time and place” that only they have, while providing a system of communication that motivates us and informs us on how best to do it. Market exchange and prices generate the information and motivation. Yet economics students are invariably taught that the market works properly only if all participants have perfect knowledge. This is nonsense, as Hayek explains. If everyone had perfect knowledge, the case for the market would largely disappear. The market is essential precisely because it allows people to benefit from widely dispersed knowledge when no one has more than the smallest fragment of that knowledge, not even government planners. Every time a government plan restricts market exchange, ignorance is substituted for knowledge.”

On Hayek’s The Use of Knowledge by Society — Dwight Lee article for FEE

The Fed has no real idea what adjustments will actually be a true prediction of what will happen between real market forces. These adjustments are rather, politically influenced, and are observed functional mainly in manipulating a rise in stock prices in the short term. It is adjustments for the short term, before the periodic crises that afflict a debt and credit cycle, before the larger cycle of such crises that culminate in a situation requiring ever more massive money printing. The Federal Bank is ever engaged in a kicking of the can of systemic collapse to some future government administration.

So Hayek did not address “General Theory” directly as Hazlitt does so thoroughly later, but we see already in Hayek the point of there being hubris at the core of Keynes’ thinking. As Hazlitt critiques him early in “The Failure of the New Economics:

“It is precisely Keynes, as we shall find, who starts rebuking the real economic world for not acting according to his theories — as when he contends, for example, against all experience under free economies, that wage rates ‘ought” to go up or down or adjust themselves to ‘the price level’ uniformly and simultaneously or not at all.”

The Failure of the New Economics by Henry Hazlitt 1959

Change the Money (1) Preamble — Monetary value true by nature

Change the Money (5) Introduction (1) — Zero Money & First Principles

Change the Money (8) Part 1 (A) The technological solution

Change the Money (9) — Part 1 (B) Philosophy, politics & protest

Change the Money (11) Part 2(B) Market forces/crime against humanity



Stephen David Mauldin

DOB 1946 Retired Counseling Psychology M.S. Consciousness Studies — Interests: Citizen Diplomacy, Digital Currency