Is the Economy a Perpetual Motion Machine?

[W]e need to remind ourselves that we are hearing myths that not only represent wrongheaded economic thinking but that are also driving the US economy into a deep depression through reckless spending and resource destruction. The actions of Obama and the Beltway are political in nature, but they have the veneer of economic "theory."

If I can put the whole Keynesian set of fallacies into one statement, it would be this: the modern Keynesians believe that the economy operates like a perpetual motion machine, with government spending being the "grease" that keeps it from slowing down. The "friction" in this economic machine, according to the pundits, is private saving. Eliminate it, and the economy goes on forever, adding energy and expanding indefinitely.

Such a notion, of course, is nonsense and dangerous and delusional.

Propping up foundering banks and institutions with fiat dollars and seizures from succeeding firms penalizes the productive and rewards failure. By not allowing the economy to correct naturally via recession, government is prolonging, nay, preventing the financial system from sorting things out.