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The BBC reported last night that the government is likely to introduce an incentive scheme at the budget (22 April) for car owners to scrap old vehicles in exchange for new ones. The move would probably involve a payment of £2,000 to trade in cars that are a certain number of years old.

A rather telling line is “car scrappage schemes are seen as targeting the root cause of the industry’s woes - a lack of demand for its products”. Of course the real root cause is not a lack of demand but an excess of supply; even in the boom Ford calculated that worldwide car over-production was around 24 million per year.

Instead of encouraging firms to adapt to the new “post-boom” world by producing less cars and making them cheaper by reducing costs (thus boosting real demand), they are subsidising people with taxpayers’ money to scrap perfectly good cars to buy new cars they didn’t want (or can’t really afford).

Not only is this just taking money from one taxpayer to subsidise another (robbing Peter to pay Paul the car salesman), it is just delaying the fact car firms need reform to survive at our expense (and the expense of whoever we’d have spent that money with had it not been taken as tax, as well as whoever the car buyer would have spent their money with instead - say a small shop - had they not been bribed to buy a car).

What’s more, most cars we buy are foreign made - so we are paying our taxes to boost sales of foreign cars. Even the motor industry accepts this, claiming that 25% of the purchase price is in the UK based sales industry as an argument - as if paying our taxes to boost sales of foreign cars and subsidise car salesmen is so much better!

The policy is of course being spun as “green”. Old cars pollute more than new ones - true - but the amount of pollution in the manufacture of the new car, to replace a perfectly good old car, isn’t counted but is vast. Some of the “greenest” cars ever made are the 1950s Land Rovers still being used now.

So with taxpayers losing out, local businesses losing out as people buy cars instead of other goods, and even the motor industry gaining little (not that it should be an excuse for subsidy even if it gained a lot) - why is the government still planning this rubbish? Oh wait, there’s an election coming and the swing seats in the Midlands are auto industry heavy…

At least Arthur Daley will be happy.

I often feel that good economists make bad investors, and the reverse example of Keynes proves this. His economic policy caused disaster, but Keynes made a killing of 13% a year on average during the Depression investing for King’s College, Cambridge, whilst the stock market as a whole dropped lower each year. And thinking about it, if I was a great investor I’d probably not waste time writing economics books.

If only more shared my view, as I am really starting to get a headache - a Keynsian headache.

It’s all the fault of Polly Toynbee, who’s articles should never be read. Well actually it’s not just her fault, but her article triggered it.

She accuses David Cameron - and everyone who agrees with economic policies that work “with the grain of human instinct” and a “government liv[ing] within [its] means” - of being “economically illiterate”.

Far better to follow Keynesianism she says, a theory Keynes himself said is counter-intuitive. He wrote about the problem of the “thrift paradox” - if people try to increase their saving, there will be a decrease in spending, and supposedly a fall in employment and production.

Indeed if everyone saved everything and spent nothing this would indeed occur, as would starvation. But the problem is we need money available to borrow for new businesses and business expansion, overdrafts, mortgages etc; and for banks to lend out money, savers have to put it in.

The fundamentalist following of the “paradox of thrift” Keynesian dogma by daft governments lead saving to be discouraged (it’s taxed at 20%, pensions too are taxed), the savings rate dropping to near zero, and banks to become dependent on money borrowed short term from international investors (mainly the Chinese).

But that money was only ever a limited resource - there is only so much money - and only available whilst investors thought they were making a good investment. But the mortgage backed securities they bought were based on ever booming house prices, something bound to end sooner or later, as they knew many “sub-prime” borrowers were, well, sub-prime and libel to default.

When it appeared these mortgages were losing money, the investors stopped lending, called money back, and Northern Rock went bust. No one lends money to a business that’s losing money and has no realistic plan to stop losing money, which neatly explains why the government failed to borrow at yesterday’s bond auction.

So why can’t they realise we need savers?

But of course Mr Keynes isn’t just responsible for the crazy notion of saver hating. No, among other pearls of wisdom dished out by the supposedly “great” economist - why does he always get called “great” on TV? It’s a peer pressure thing if you ask me!- is the concept of borrowing your way out of debt. Got a huge credit card bill, struggling to repay your mortgage, in negative equity? What you need is more debt!

When challenged about the sanity of such a policy in the long run he famously answered: “In the long run we are all dead.” He should know all about that, he died in 1946, conveniently before the dire results of his crackpot theories fully reached their zenith in the 1970s.

It’s really time to return Mr Keynes to the crypt.