Keynesianism is dead, killed on the 20th of May 2020 by the British market who for the first time in history paid the British government to borrow their money.
BoE ponders using negative rates for the first time to spur recovery, the paper version of FT says on its frontpage today.
“I can’t think of an economy where negative rates are a worse idea than the UK,” said Kit Juckes, a strategist at Société Générale.
“The economic benefits are dubious but the power of a cocktail of negative rates and massive quantitative easing to weaken the currency seems clear and if the pound falls enough, it will make QE harder,” he said.
The debt fueled British economy is quite different from frugal Germany where ten year bonds now go for -0.4% a year.
Not only are you thus failing to get added value on your savings, but you are also to see the amount of your savings fall despite your savings being utilized by others.
That makes this a calamity for a debt based money, which currently is all national money in every single country.
It does so because money is created when it is loaned, and then destroyed when the capital is paid back. On top you have interest, which is meant to cover the cost and some profit of engaging in these loaning operations, as well as some incentive for savers to give you custody of their holdings which then can be used in bank to bank value transfers.
If instead the banks are receiving less than they are paying out, then the bank first of all has no incentive to loan out anything and plenty of disincentive.
Second, the amount of money is contracting as new money is not being created through interest, with the aim being to force an increase in general prices, including the price of bread.
Third, the amount of ‘public’ money is increasing, with that being the amount owned or owed by central banks or the government.
So ‘private’ money is contracting while ‘public’ money is increasing, which means basically Marx’s prediction is coming to fruition.
Following some generally respected analysis of debt based economies, though to much disagreement with the solutions proposed, Germany’s Marx found it inevitable that through a series of booms and busts the economy would reach a stage where the state/banks basically own all of it.
It is difficult to comprehend how two great economists can reach the very opposite conclusion on the role of savings in the economy, with John Maynard Keynes stating savings decrease growth, while the Austrian German school of economics says savings increase economic growth.
You can expect disagreement of course in any field, but such fundamental disagreement over such a fundamental matter is incomprehensible.
Yet currently in the western world the diktats of Keynes rule very supreme in an almost unquestionable atmosphere and with no public debate or input in as far as for example there is no political party currently that pledges to apply Austrian economics.
The conservatives used to be such a party, as was the case for Republicans, with both having their libertarian wings which are and have been fully ignored since 2008 to the point there currently is no real political opposition in the halls of power to these astonishing trajections that now some call purely communism.
One Man Against All?
When some 2009 mined bitcoins moved, plenty were quick to say it is not one of the addresses thought to belong to Satoshi Nakamoto, the bitcoin inventor.
Yet it is difficult to see who else it could have been considering it was mined just a month after the genesis block.
Plenty of course can say it could be one of some other people that were mining at the time, with some classic deniability here that kind of has the hallmark of Nakamoto.
A deniability that one could have easily let slide if a hugely political event did not happen yesterday in even England now falling to negative interest rates that marks the beginning of a very new era and the beginning of very different national money.
That’s because these negative interest rates are not quite the market. They are the work of primarily the central bank buying government debt in a distortion of market forces and in a distortion of any constrain on monetary devaluation to the point the government effectively no longer operates on taxes, but on printed money.
Any attempt thus to properly manage the unit of account we all use has gone out of the window, without one vote in any country, without any say by any people. Except Nakamoto.
The Bitcoin Vote
You can imagine the trembling of those gathered at the roundtable of the Bank for International Settlements (BIS) as they feel some sort of disturbing force without it being present in the room.
They do not fear any armies or governments but this code, they detest it with gusto and engage in competitions of who can be most vulgar in expressing their anger at a money which rejects fully and fundamentally all they stand for as the Austrians so reject their god Keynes.
A fixed money, that just by some line of code fully takes away any and all their power and subjects them to a political order or where the government is concerned to public accountability in funding itself through taxes not theft.
It must feel for some of them like some wizard spoke and thus at least for some of them they maybe were disturbed from a trance of this is the way without question.
A human frailty, that trance, and our pleasure to enjoy in different settings at times, as is the pleasure of seeing that it was a dance and not a living.
A marching dance of further digging the graves of earth and towers above without much question nor much thinking in a step by step fall to a detached reality.
So sweet thus this Nakamoto slap to say hey, there are other men in this land who need not access to your masts to fly on red carpets just as high.
For conversation is changing, as is politics. Some have finally realized you do not need to ask to command a seat at the highest table for the battle of ideas knows no gods and if it does then we are all gods.