Monday, August 13, 2007

'Overturning the Existing Basis of Society ...' Whoa.

One more on the Fed and the mortgage crisis. The following quote by John Maynard Keynes is a favorite of David's, and he insists that I put it out there, so that his Fellow Citizens (yes, he said those words) will understand that inflation is basically an unlegislated tax levied by Washington to keep the government rolling in dough. He recommends that you read the whole blasted thing. (It quotes Lenin, no less, who was apparently right on this one point.)

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.

Not that this has anything to do with economics (or much else, for that matter), but what I find most interesting about Keynes is not his influence on American economics, but the fact that he was a member of the Bloomsbury Group, and therefore knocking-around buddies with Virginia Woolf and E.M. Forster. Cool.

1 comment:

Anonymous said...

I'm not a big fan of Kenyes (I prefer the Austrian school myself) but he was absolutely correct about this observation on inflation.

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