Reprinted from The COMMERCIAL and FINANCIAL CHRONICLE Thursday, February 19, 1953 Prosperity by Inflation Neo-Classical and Keynesian Approach to Business Stabilization By L. ALBERT HAHN, PH. D. Economist; Author "Economics of Illusion," Etc. International monetary authority examines popular forecast that depression is in offing but that it supposedly will be cur- tailed through government's ability and willingness to use deficit-spending and other inflationary devices. Dr. Hahn terms this a Keynesian planning illusion, contending that if applied to boom maladjustments, government spending will only lead to secondary deflation and ruin of State's credit. Urges imme- diate steps toward restrictive monetary policy. Contends for over a year we have entered last critical phase of postwar boom's upswing, with 1952 corresponding to 1926-1927. GENEVA, SWITZERLAND investment for enlarged and im- The United States is again flooded proved production will have with forecasts on the economic reached its peak, housing con- future. The consensus of opinion, struction will be lower. A pro- at least until tracted depression, however, is recently not to be feared if not for any seems to run other reasons than because the as follows: government will be able and will- The year 1953 ing to replace dwindling demand will be one of by deficit spending and other de- continuedhigh vices. level eco To a younger generation of nomic activity. A depression economists brought up to think of moderate along the lines of Keynesian em- ployment theory, such a forecast extentand duration is and argumentation seem entirely bound to set normal and in order. For they consider employment as depend- in during 1954 ing on demand, demand in turn at the latest. The boom will on propensities to consume and L. Albert Hahn end mainly to invest pre-destined or at least for three reasons: Armament calculable in advance. And they spending will decline, industrial believe in the ability of the Gov-