I imagine Paul Marks probably has a faily good handle on it all, but if, like me, you’re struggling to keep up with the recent financial shenanigans in the EU, Detlev Schlichter has an excellent, brilliantly clear, summation of the “solution” on the Cobden Centre blog.
Summary of the summary? It’s not good. Not good at all. One thing that’s been bothering me with all this talk of recapitalization is how you can recapitalize anything when you don’t have any capital either. As Schlichter explains, you can’t.
Anyone who has any savings stored in the euro-area should be extremely concerned about what is going on here, and in particular about the tone of the debate. When the mainstream speaks of ‘unlimited’ resources of the ECB, they do in fact mean unlimited. The creation of new euro-currency units will be without ANY LIMIT. And the remaining inflation will also be without limit.
They’re just making it up. So much – as hinted by the quote I’ve used for the title here – for “capitalism”.
Indeed, I’ve been thinking a bit lately – prompted in part by other Cobden Centre posts (they’re very good over there) – about Keynesianism’s contempt for savings. Savings, say the Keynesians, are money that isn’t being spent – “idle” money – conveniently ignoring the fact that they’re being lent out by banks and invested in stuff; ie, being spent.
But here’s the thing: savings are capital, right? I mean, not all of the capital that exists is savings – there’s bricks and mortar, machines, and whatnot – but at the root of it all, you need actual wealth that’s been stored up so you can buy the sort of hardware-capital that Marx famously characterized as “the means of production” in the first place.
So – and here’s where I risk making a fool of myself even among Austrians – isn’t Keynesianism, in a very literal (if only partial) sense, actually anti-capitalist? In other words, it may be pro-market (for a certain value of “market”), but it’s not a capitalist market that it favours. Normally, I hate being proved wrong, but I can’t help feeling I’m missing something here. Keynes was wrong, but surely he wasn’t that wrong?