Coversyl & Grapefruits

L'eutanasia del rentier

Viewed the revival of Keynesian theory, and since many might not take kindly to the solutions of the so-called neokeynesiani but remain firm and confident in supporting the considerations of Keynes, it may be useful to read some passages of the General Theory (and the Keynesians 'have never read the sacred text of their master?)

General Theory of Employment, Interest and Money

Page 314-315

The situation, which I regard as typical, is not one in which capital is so abundant that the community as a whole has no reasonable use for it, but one in which investments are made in conditions that are unstable and can not last because they are made on the basis of expectations that are bound to be disappointed.

may be the case, and often it really happens, that the illusions of the boom make sure that the particular capital goods are produced in such abundance that the product is, for each criterion, a waste of resources, which can happen even in the absence of a boom. Leads, you may say, at malinvestimento.

But above and beyond that there is an essential feature of boom ovvero che investimento che in condizioni di piena occupazione renderanno, diciamo, il 2% sono fatti con l’aspettativa che rendano il 6% e come tali conteggiati. Quando arriva la disillusione, invece, l’aspettativa viene rimpiazzata da un “errore di pessimismo” con il risultato che gli investimenti che avrebbero reso il 2% in condizioni di piena occupazione ora hanno un rendimento atteso negativo; ed il risultante collasso dei nuovi investimenti conduce ad uno stato di disoccupazione in cui gli investimenti, che avrebbero reso il 2%, hanno davvero un rendimento negativo.

Il rimedio al boom non è un più alto tasso di interesse ma uno più basso perché ciò renderebbe il boom perenne. Il rimedio al boom non è il tentativo di eliminarlo per tenerci in uno stato di semi-crisi, ma di abolire le crisi e mantenerci permanentemente in un stato di quasi boom

p.371-372

“ Si giustifica un tasso di interesse moderatamente alto con la necessità di produrre un sufficiente incentivo a risparmiare. But it was shown that the actual level of savings is necessarily determined by the level of investment (for Keynes savings = investment ever and the second is to determine the first and not vice versa note) and the level of the latter is promoted by a low interest rate provided it does not try to stimulate it in this way beyond the level which corresponds to full employment (if we do, according to Keynes, we get only price inflation). So it is in our best interest to reduce the interest rate so as to equate the marginal efficiency of capital in a situation where there is full employment.

[..]

Who has an interest in capital gains because capital is scarce, the same way as the landowner may receive a rent because land is scarce. But while there may be real reasons for the scarcity of land there is no real reason for the scarcity of capital [according to Keynes as long as you print money] Therefore, in practice [..] an increase in money supply can be implemented until the capital ceases to be a little [..] that means euthanasia of the rentier and euthanasia as a result of the growing power of the oppressive capitalist to exploit the scarcity of capital "