from Silver Doctors:
Keith’s goal today is straightforward: To make you mad. Not at Keith, of course, though what he’s written today is sure to ruffle quite a few feathers…
My goal is to make you mad. Not at me (though I expect to ruffle a few feathers with this one). At the evil being wrought in the name of fighting inflation and maximizing employment. And at the aggressive indifference to this evil, exhibited by the capitalists, the gold bugs, and the otherwise-free-marketers.
So, today I am going to do something I have never done. I am going to rant! I am even going to use vulgar language (which is totally justified).
In researching several recent articles, I re-read old passages from Keynes. Consider these snippets:
“For a little reflection will show what enormous social changes would result from a gradual disappearance of a rate of return on accumulated wealth.”
“In short, the aggregate return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour-costs of production plus an allowance for risk and the costs of skill and supervision.
Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity value of capital.”
Keynes wrote this crap in The General Theory of Employment, Interest, and Money in 1936. Before I pick it apart, I want to cite again what he said 14 years earlier, in The Economic Consequences of the Peace.
“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become “profiteers,” who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”
“Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
“…the fatal process which the subtle mind of Lenin had consciously conceived.”
So this fucker (that’s wanker in English), in 1922, clearly describes how to overthrow capitalism. At that time, he couched it behind Lenin’s alleged words (it’s controversial whether Lenin really did say this). But it’s clear that he understood it, much more clearly than his latter day critics.
Then in 1936, he writes of “enormous social changes” of a “gradual disappearance of a rate of return on accumulated wealth.” No longer does he hide behind Daddy Lenin.
And to what social change would he be referring? Would it be “to destroy the Capitalist System”? And what the hell does a “gradual disappearance of a rate of return mean”? This means pushing the rate of interest down to zero.
Keynes well knew that asset prices are the inverse of the rate of return. He understood that this meant that asset prices would skyrocket! And he notes that this “does it [the destruction of the capitalist system] in a manner which not one man in a million is able to diagnose.”
“The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.” Today, this is called the problem of inequality. Which the capitalists and otherwise-free-marketers actually defend. They think that this rising disparity between asset owners and wage earners is a feature of free markets! Keynes knew better.
Getting back to Keynes, he said, “all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”
A gamble and a lottery. Huh? Like speculating on stocks, ICOs, precious metals, real estate, and everything else?