The Endgame Of Keynesianism: Savings Confiscation To Force Spending Now

Tyler Durden's picture




 

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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Wed, 05/14/2014 - 14:50 | 4759964 OpenEyes
OpenEyes's picture

Bullish

Wed, 05/14/2014 - 14:53 | 4759974 ZerOhead
ZerOhead's picture

Bullshitish

Wed, 05/14/2014 - 14:53 | 4759981 CheapBastard
CheapBastard's picture

Burrish !

Wed, 05/14/2014 - 14:55 | 4759987 BobPaulson
BobPaulson's picture

They are already charging effective negative interest with inflation and service charges. 

Wed, 05/14/2014 - 15:04 | 4760016 lordylord
lordylord's picture

Anyone with brain would just take their saving out of the banks...but...what do you do when you can't buy anything with cash and can only use a government approved debt card (no, I didn't misspell debit)?  We are already moving towards a cashless society. 

Wed, 05/14/2014 - 15:09 | 4760043 Greenskeeper_Carl
Greenskeeper_Carl's picture

They won't have to force that at all. People are already doing it voluntarily. Pay for everything that keeps an electronic trail of everything you buy forever. That's why I don't understand some on this sites obsession with bitcoin. At least with our currency now, you have the option of getting cash out. Bitcoin is a central planners wet dream. Everything is digital and stored forever for easy tracing. In this age, nothing electronic is secure from prying eyes of govts. Why people think bitcoin is different is beyond me.

Wed, 05/14/2014 - 15:13 | 4760067 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

They don't need an electronic currency to know what you buy and sell.

Wed, 05/14/2014 - 15:28 | 4760148 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Yes, we are going to take away non-existing savings away from people to force them to spend. Who is the genius that thought of this one?

Wed, 05/14/2014 - 15:35 | 4760197 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

There's still some wealth in the upper middle class to squeeze. Then the uber elite will start feeding on the lower elite. The gap between the rich and poor grows greater every day. Neo-Feudalism here we come.

Wed, 05/14/2014 - 16:35 | 4760422 outamyeffinway
outamyeffinway's picture

If confiscation leads to more spending people need to figure out how to do better maths! Fuck! The stupid, it hurts!!! STACK BITCHES!!!

Wed, 05/14/2014 - 15:19 | 4760093 lordylord
lordylord's picture

"That's why I don't understand some on this sites obsession with bitcoin."

Anyone say bitcoin 2.0 AKA Fedcoin?  Fully backed by the US government and it comes with a high rate of inflation!

Wed, 05/14/2014 - 15:44 | 4760243 Petrus Romanus
Petrus Romanus's picture

" full faith and credit"

Obamma said it, Gotta be true!

Don't verbalize dissent, you dirty RACIST!

Get it.

Wed, 05/14/2014 - 16:41 | 4760443 outamyeffinway
outamyeffinway's picture

"Anyone say bitcoin 2.0 AKA Fedcoin?  Fully backed by the US government and it comes with a high rate of inflation!"

 

And all the fucktards who are negative on BTC right now will use that digital fiat shit like the bitches they are. BITCH ASS BITCHES!

Wed, 05/14/2014 - 15:31 | 4760162 PeakOil
PeakOil's picture

Beg to differ. Bitcoin is anathema to Central Bankers. They cannot print it or control it. As far as Bitcoin anonymity goes - the answer is it depends. Bitcoin is all about addresses and transactions. With some detective work addresses can be tied to identities. But not by default and not in all cases. There are ways to make uncovering identities using bitcoin addresses very difficult if not practically impossible. Similar laundering steps are required for physical cash also - if that is your desire.

Wed, 05/14/2014 - 15:52 | 4760273 BrosephStiglitz
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Absolutely.  One of these days Bitcoin is going to get slammed by legislation and a rival product based on similar technology, but modified to give the central banks a monopoly on its supply/demand (nationally) will step up.

People won't even need to dump Bitcoin as the media outlets plug the new competitor to death.  It will just be naturally adopted by vendors, individuals and companies and given favorable tax status.

Wed, 05/14/2014 - 16:13 | 4760338 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

They've done the same thing to Gold for a hundred years and it still exists. There are certain currencies which are relevant because they stand apart from the system.

Thu, 05/15/2014 - 01:27 | 4761695 JustUsChickensHere
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Bitcoin currently is missing true anonymity. Dark Wallet and friends are in the process of delivering that (there is a 'test only' alpha available right now).

When Dark Wallet is production stable, the main 'tracking' complaints about Bitcoin go way.  I would expect that by late this year or early next year.  Just in time to be a good way to protect against the coming bail-ins.

Wed, 05/14/2014 - 15:33 | 4760179 TrumpXVI
TrumpXVI's picture

When everyone takes their money out of the banks to put it under their mattresses, the government will simply decree that that cash will be worthless and is to be replaced with a New Dollar.  Everyone has a choice; spend all their savings, or replace their cash with New Dollars......worth substantially less....your choice.

This is why everyone needs to have gold and silver.....and guns.

Wed, 05/14/2014 - 16:47 | 4760472 outamyeffinway
outamyeffinway's picture

FUCK ME! Dude I think you nailed it. I must say that escaped me. Brilliant!

Wed, 05/14/2014 - 18:33 | 4760848 ljag
ljag's picture

Sounds like MPC changeover in the 'Nam. If this escapes you, talk to a V.Vet.

Wed, 05/14/2014 - 16:49 | 4760483 Intoxicologist
Intoxicologist's picture

No wonder my back hurts when I wake up.  Gold and silver are lumpy!

Thu, 05/15/2014 - 06:39 | 4761846 Dr.Engineer
Dr.Engineer's picture

I understand what you said but it is a very low probaility event.  At that point the government becomes the enemy and the people will revolt.  Remember, behind every blade of grass is a rifle in the US.  Many people aren't stupid.  They just have a high tolerance.

Thu, 05/15/2014 - 11:59 | 4762828 detached.amusement
detached.amusement's picture

When everyone takes their money out of the banks to put it under their mattresses, the government will simply decree that that cash will be worthless and is to be replaced with a New Dollar.  Everyone has a choice; spend all their savings, or replace their cash with New Dollars......worth substantially less....your choice.

This is why everyone needs to have gold and silver.....and guns.

-----------------------

true but what makes you think every and all businesses will stop taking dollars because the gov said stop using 'em?  how they do stuff where dollars are black market goods?  so it shall become here.

Wed, 05/14/2014 - 15:46 | 4760255 BrosephStiglitz
BrosephStiglitz's picture

People start to barter.  

And that is the end game for government and bankers alike..  You cannot tax barter goods, or easily value them.  Kiss your tax revenues goodbye big Govt.. 

Wed, 05/14/2014 - 16:46 | 4760468 quasimodo
quasimodo's picture

And that is the point when being a snitch will pay very handsomely...........I'm sure they have that base covered already

 

Wed, 05/14/2014 - 16:51 | 4760495 Hobbleknee
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Bartering is impractical. What do you do when you need the shoes, and you don't have anything the shoemaker wants?

Wed, 05/14/2014 - 17:40 | 4760687 Zymurguy
Zymurguy's picture

You'll need a new currency... like ammo.

Wed, 05/14/2014 - 19:48 | 4761084 No Quarter
No Quarter's picture

Then you figure out what the shoe maker needs and barter your goods with someone else that has the required thing. Not that difficult- was done regularly that way in the distant past. Money was just another conveinience for people. An accepted medium of exchange that allowed you to get the shoes and the shoe maker could get what he wanted from another vendor without having to make a couple fo trades to get to point b. 

Mon, 06/02/2014 - 08:11 | 4816347 Hobbleknee
Hobbleknee's picture

And what happens when you don't have anything that person wants either?  It could take an entire week to complete the chain. Money makes specialization possible. Without it, we're all reduced to subsistence living.

Wed, 05/14/2014 - 16:53 | 4760504 Intoxicologist
Intoxicologist's picture

They already ask you, when you file your taxes, if you had any barter transactions to report.

What I want to know is what dumbass would reply, "yes."

Wed, 05/14/2014 - 15:58 | 4760304 rbg81
rbg81's picture

I think you are missing the point.  This is a backdoor wealth tax.  The real purpose is that people will pay the Government to hold their bonds. In essence, the Government will make $$ on the deficit.  The bigger the deficit, the more $$ they make.

Wed, 05/14/2014 - 16:18 | 4760365 Mr. Delicious
Mr. Delicious's picture

solid fucking point, that.

Wed, 05/14/2014 - 14:57 | 4759993 timeless21
timeless21's picture

rubbish

Wed, 05/14/2014 - 14:53 | 4759978 Gene Parmesan
Gene Parmesan's picture

For safes and burial tubes.

Wed, 05/14/2014 - 14:57 | 4759997 john39
john39's picture

for hanging ropes and pitchforks...

Wed, 05/14/2014 - 14:59 | 4760005 LawsofPhysics
LawsofPhysics's picture

Optimist.  All you need to know now;

When fraud is the status quo, possession is the law.

Wed, 05/14/2014 - 15:10 | 4760048 OC Sure
OC Sure's picture

Possession is the law regardless of the status quo.

Wed, 05/14/2014 - 15:14 | 4760078 Headbanger
Headbanger's picture

And possession is done through the barrel of a gun.

Of course some ammo and a good aim are very handy as well!

Wed, 05/14/2014 - 15:29 | 4760152 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

In this case, go buy gold! I am not a gold bug, but it would make tremendous sense here.

Wed, 05/14/2014 - 16:17 | 4760358 BandGap
BandGap's picture

Or sorta good aim with 00 buckshot.

Wed, 05/14/2014 - 15:11 | 4760057 Greenskeeper_Carl
Greenskeeper_Carl's picture

Yep, and you can't go wrong with a liberty safe. I love mine. Libertysafes.com. If you guys are in the market, head to your local gun show. The safe shops in my area always have a big display, and give a lot better prices at the shows. Paid cash, had it delivered to my door a couple weeks later.

Wed, 05/14/2014 - 14:50 | 4759965 The Juggernaut
The Juggernaut's picture

Cue the run on bank, now.

Wed, 05/14/2014 - 14:54 | 4759983 Gamma735
Gamma735's picture

Exactly, why put your money in an institution that is just going to steal a little each month.  There will be many new banks in Europe, if they do this.  Everyone one will have a new bank branch under their matresses.

Wed, 05/14/2014 - 15:01 | 4760011 lordylord
lordylord's picture

We are already moving towards a cashless society (anyone say Bitcoin 2.0 aka Fedcoin?).  What do you do when you can't buy anything with cash and can only use a government approved debt card?

Wed, 05/14/2014 - 19:37 | 4761064 UselessEater
UselessEater's picture

The movie In Time is starting to look prophetic; Cashless & Controlled. Especially with fewer and fewer insider corporations running the businesses we need to purchase goods and services from. Fascism will dictate what medium of exchange the vast majority of us can be paid in and use.

Wed, 05/14/2014 - 15:10 | 4760050 Sudden Debt
Sudden Debt's picture

oke for negative saving rates...

but if you loan out money... do they pay you interest?

Wed, 05/14/2014 - 15:19 | 4760096 AmCockerSpaniel
AmCockerSpaniel's picture

What ever you put in your matress best be PM's

Wed, 05/14/2014 - 14:56 | 4759990 Eyeroller
Eyeroller's picture

Great new idea for the "Shark Tank":

A fire-proof matress with a hidden compartment for cash.

Wed, 05/14/2014 - 15:11 | 4760054 Things that go bump
Things that go bump's picture

Too late. I saw those on a link on this site several years ago.

Wed, 05/14/2014 - 15:41 | 4760215 lordylord
lordylord's picture

Easy fire-proof fix ->  Silver melts at 1760 F and gold at 2000 F.

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