The Endgame Of Keynesianism: Savings Confiscation To Force Spending Now
Submitted by Patrick Barron via Mises Canada,
From today’s Open Europe news summary:
Reuters: ECB readies negative deposit rate and target liquidity for June
WSJ: Bundesbank ready and willing to back further easing of ECB policy
Reuters reports that the ECB is working on detailed policy plans for its June meeting including cuts to all interest rates and targeted liquidity operations to boost lending to the real economy. The ECB could also announce a plan to purchase asset backed securities (ABS) which would come into force later this year. Meanwhile, the WSJ reports that, according to unnamed sources, the Bundesbank is willing to support such unprecedented steps to ease policy, if inflation got unacceptably low. The euro dropped sharply on both reports.
“Negative deposit rates” means that the banks will charge the customer for saving money and placing it in the bank.
According to Keynesian theory (if there really is such a thing) government needs to spur “aggregate demand” in order to stimulate the economy to increased production. Keynes had no respect for savings... only spending.
He called the consequences of savings to be a “paradox of thrift” in that if we all save instead of spend, then the economy will go into a death spiral. He was completely ignorant of capital theory, which explains that REAL capital, not paper money capital, comes from deferring spending ON CONSUMER GOODS in order to increase spending ON CAPITAL GOODS.
The money that we save is not destroyed. It goes into the lendable funds market to finance long term capital investment that will pay future dividends, both literally and figuratively, ensuring MORE goods in the future.
It is a mark of the fanaticism and desperation of the Keynesians that they would resort to threats of money confiscation in order to prevent people from saving and force them to spend in the present. This is shear and utter madness... some might say it is theft on a vast scale, perpetrated by government fanatics.
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