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Vatican bank’s president criticizes America’s Keynesian economic policies

January 14, 2011

L’Osservatore Romano has published an op-ed piece by Ettore Gotti Tedeschi criticizing the United States’ Keynesian economic policies.

Tedeschi, who has served as president of the Institute of the Works of Religion (the Vatican bank) since 2009, writes that the British economist John Maynard Keynes urged nations in economic crisis to print more paper money, to raise taxes, and to stimulate demand by promoting consumption, increasing public spending, bailing out failing businesses.

Tedeschi then states that the US has been nationalizing private debt-- primarily by bailing out banks that made imprudent loans-- and promoting zero interest rates “in order to sustain a GDP growth necessary to compensate for the collapse in birthrate.”

These policies, says Tedeschi, in essence transfer wealth from poor people who have been saving money to the wealthy: “governments, entrepreneurs, and bankers.” In addition, zero interest rates “are not sustainable and are dangerous” and “permit or require governments to manage the economy.”


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  • Posted by: pdhow5802 - Jan. 18, 2011 5:55 PM ET USA

    It's the Keynesian policies that crippled America in the 1930's with Roosevelt, and since the Carter era. When Harding did nothing in the 1920's, 18% unemployment was quickly turned around. He's right about Keynes.

  • Posted by: Ignatius184 - Jan. 16, 2011 9:37 AM ET USA

    We also can not foget the hidden tax that the government is placing on the poor of this country. As the Fed prints more money to bail out the over spending of our government the dollar become worth less and less. This inflation hurts the poor as the wealth they have has less power to purchase the things they need to live. It is immoral and, along with the artificially low interest rates, will only create another bubble to burst in the future.

  • Posted by: jflare293129 - Jan. 15, 2011 5:23 AM ET USA

    extremeCatholic, I'm thinking you'd best have some resources to demonstrate your point. So far as I know, you're still paying taxes if you receive a refund. You've overpaid, yes, but you've still paid taxes.

  • Posted by: extremeCatholic - Jan. 14, 2011 9:24 PM ET USA

    Tedeschi has incorrect facts. Over 53 percent of the U.S. federal budget is transfer payments to individuals (social security, Medicaid, unemployment, food stamps, etc.) and 25 cents of every dollar spent by individuals today is in the form of wealth transfered from a net taxpayer to a net tax beneficiary. More than half of all Americans no longer pay income taxes.