Historical
accuracy of the basic economic thoughts of reality
still ruling in
most of Europe
The diagnosis:
The
throughts of John Maynard Keynes became a clue to the nearly every macro
economists in the After War Period. The Keynesians have for many years been on
their way out. What Keynes really told the world of managing macro economics in
a nation, and what the implications have been of the blind use of his theories and that state-debt
suddenly did not matter at all i the 1930s ought to be told.
John
Maynard Keynes officially represented British
authorities in Reparation Commission in
June 1919 in Paris after the World War I. In 'The Selected Writings' on John Maynard Keynes, vol. 17 is written in chapter 1 page 3: "When Keynes
left the Paris Peace Conference and resigned
from the Treasury in June 1919, he gave up his influential role behind the
scenes and emerged into the limelight as a publicist an propagandist. For the
rest of his life he was occupied successive attempts to persuade the world to
come round to his own way of thinking".
In
the first chapter of his 'Revision of the Treaty' Keynes separate between, what he calls 'the
interior' and 'the exterior' opinion.
'The
exterior' opinion was the public one told by politicians and newspapers, while
'the interior' was that of journalists, that of civilian servants and advisers
behind and above the scenes, expressed in closed circles. He wrote this last
opinion in 'The Economic Consequences Of The Peace' in August and September
1919. He shows himself very critical towards the decided (later on reduced)
claims on Germany, and he is also very critical towards the resulting consequences
for Europe. He gives a very flattering expression of President Wilson and of the
British Prime Minister Lloyd George, who were participants at Conference. Keynes thought
that 'the exterior' opinion was ready for exposure of 'the interior' opinion.
Keynes
was famous for his book, but now some month followed, where his own future
should be decided. He left his job in Treasury July 21st 1919. But he did not
leave the scene. He only moved to 'the exterior' picture, to the
propaganda-making section serving 'the exterior' opinion, as he called it
himself.
In
1935 Professor L. V. Birck wrote:
"Politician is like a class, even when they seldom understand the economic
problems, and their outlook is limited to the next day of selection; and the
state can no longer count on the loyalty of its citizens. Economically
undermined by a 10-ciphered debt that every time it has to be renewed, forces
the state to beg its bread from door to door of the High-Finance, the state is
not apple to pay the lower-classes the social, antirevolutionary insurance
premium that the public social security is, and the wealthy that gradually have
accutomed to the inflationary or debtcreated value of the capital, turn angry
against the taxes that seem to them without any relation to the visible
benefits, they have from the state, and also reach out the hand for these
sources of income, the state have outside the taxation, and on which there by
capitalization can be build private capital' (unquote from : 'Under the
High-Capitalism').
Mine: The Danish national debt is December
31th 1999 nearly 13 ciphered (1 trillion), or 1000 times
larger than in 1935, the value of the production that should cover it today and
in the future is not. If they reach out today? Yes, it must clear as the light
of the sun. The capital move to interest-bearing goods outside the production
or even to goods outside the legal production. I could mention 175 ways to get
through without the responsibility of the state, and I could mention 175 ways
in which the state beg capital-owners by paying not existing money to stay.
In
1922 L. V. Birck could account
in detailles the capital of the state in 'The World Crisis And Denmark' “...
The income of the capital is the raising of loans and sold values, and its
expenditures are the return of loan and investment of money...About the future
there is of my opinion 3 ways to go, and all ways are equally impossible for
the moment, because the time has been missed" 1. "To do
open and honest bankrucptcy. It is an awful unjustice against those people, who
by accident have the papers". 2 "Then you can try to pay back".
"Immediatly after World War I England paid
down its national debt, the second year it paid its interest, and third an
forth year it did, what other decent nations did, paid interest by increasing
the floating debt' - shortrun debt, as book-debt or debt in current account".
3."Finally you can destroy your currency", and
try to do it just as quickly as other indebted nations. Just after World War I
(1922) Birck wrote in the same book: "It do not help to believe that the
world can go out of the war without looking different than before or that those
people who have got these papers (debtpapers, German Marks and inflated and
debt-disvalued shares) should live secure from them, what they require".
"These
papers have to be destroyed in one way or the other, society can not exist, if
it has to pay interest of these money, it is a crisis that is comming over the
world in one or another way, and that will have to hit us even along the way of
sympathy, because we are close connected to each other in Europe. The same can
be said about the shares that are 1000 millions from, what they were at the
maximum, and they have to be written down with 500 millions within the next 1½
to 2 years. But all the writing down of our values can only be done with
individual losses". "I claim, what is happening now (1935) is a world
revolution, which in reality is much bigger than that the Bolscheviks are
making, where some citizens are killed and some workers are shot. The capital,
as the world believe it has is not present, it has to be written down with 30
to 40 p.c. It may harm you and me, never the less it works in many respects
very revolutionary. It has happened before" (unquote L. V. Birck in 'The World
Crisis and Denmark', 1922).
[1] Try to compare the note (the words of L. V. Birck, 1922 and 1935) just written with the following from
a book of Professor Joergen Pedersen (1939):
'Topical Economic Questions':
Under "Must national debt be paid back"?
"...it
is not a natural law that national debt ever should be paid back. The state
must naturally pay back a loan, when the payments have to be paid, but if it is
not convinient to decrease the debt, the payback can always be done by taking
another loan... It is true by both raising a loan and by paying back that the
only thing that matters is in what way it effects the economic life or the
welfare of the society. It can not be given grounds for paying back national
debt, if the effects that the paying back has is not wanted. If there is strong
demand for labor under full employment at a moment in the society, the result
can only be higher wage that necessary
will lead to a rise in the prices, then it is perhaps convinient to
collect more tax than necessary to cover the running expenditures, that means
pay back the debt, because in that way the demand for resources will decrease.
Before such condition has occured or better, before you wish to reduce the
demand and the income of the society or a least stop its increasing, it obviously
can not be given grounds for reducing the national debt..."
"When
the state (on the other hand) is paying out money, it always receives the most
of the amount from one or more citizens, and directly it creates an income in
this way that correspond to the expenditure reduced by the part that goes abroad. If we for a moment assume that there is
balance of the payments understood, as to every importincrease there is an
export increase of the same amount, there
is created with every expenditure an income of the magnitude in the
society".
“If
the state in the same tempo, as it gives money away, collects taxes that are
paid of means that the taxpayers otherwise would have given out for demand, or
raises a loan that is yielded from money, that on the other hand would have
been given out for labor and materials, there will obvious not neither be a
smaller nor a larger total income in society, the only thing that happens is
that the state now confiscates some resources that on the other hand would have
been confiscated to private purposes, or would have benefited other persons
than those who have the money now".
"If
the state on the other hand get the concerned money by taking it from its
account in the national bank and the national bank does not tightening the
credit elsewhere, or the state borrow on the market of bonds and the national
bank by convient buying of bonds prevents a fall in the courses, the
expenditure of the state means (not alone) that there is created directly a
whole new income of the same amount, but that those, who receive the money,
again give some of it to people, who once again increases the expenditures. In
this way an expenditure of the state creates for example within a year an
increase in the income of the society in the same year, an income that perhaps
is 2-3 times bigger than the paidout amount of money, and because the taxes in
this country with the existing laws of taxation are about 25 p.c. of the
income, will such an expenditure in the concerned or the next year perhaps give
the state and municipalities an increasing tax-income to an amount the half or
three forth of the amount that can be the basic of the new expenditures or it
can be used for lowering the taxes".
Under
"The balance sheet of the state":
"If
you actually want to operate with an idea of balanced sheet of the state as an
expression of its economic situation, it must be the ability of the citizens to
pay taxes compared with the expenditures that state is planning..' “ (unquote
Joergen Pedersen in: 'Topical Economies
Problems', 1939)
Keynesianism, that Joergen Pedersen here is making
marketing for, deals with problems of the society in a very unrealistic way.
They are made to formulations of problems in a mathematical language of symbols
or something just as limited, there has to be cleared up (as here) a logical,
coherent chain of thoughts that neither fit the problem, as it really is, nor
include all those things that practically effects the solution of the problem.
For
example the influence on the economy of the funds or the inflation have an
inferior place in the works of Keynes and in the works of his epigones.
The same can be said about the national debt, as it
appears. The new system (at that time) that should be built up in the after war
period, should give exactly free admission to incur national debt. And it
suddenly did.
The
targets for the society are always something like employment, activity and
similar. The effect of the public sector on the economy is not interesting to a
Keynesian, and you will at once be in doubt if the declared targets for the
economy are anything but to 'the exterior' opinion, as Keynes himself called
it. The whole entrance in the Keynesian way of thinking give evidence of a
fatal need of interest of reality, for example if the assumption all together
and each of them draw a true picture at all of the reality, that they seek to
give predictions to. It will be a special problem to the Keynesian to try to
cover himself up behind assumptions all the time, so what he has said, is
logic, when all assumptions have been remembered. If these logical relations,
scholastic rides tell anything about the effects of different
political-economic actions from the autoritives towards some correctly
described phenomena in the society do not in principle interest the Keynesian.
Here he has secured his retreat. It is a very central part of the Keynesian
learning to train this.
Therefore do not listen to the Keynesian, he will coax
you to do, what he believe in, and if you do not understand, what he is telling
you, he will explain to you at last by referring to your lack of education.
I
have to inform the reader that Joergen Pedersen, who became a Rockefeller Fellow,
perhaps could have got the Nobel Prize instead of John M. Keynes. Pedersen was
not very known in the Swedish Academy, and many of his earlier things were not
written in English.
From
1994 they are talking about paying back the national debt in Denmark. But
nothing of the kind happens, the debt still rises every year. If the national
debt was beginning to be paid back the unemployment would increase, the
keynesians would tell you. The unemployment in Denmark is between 500,000 and
700,000 or 17-24 p.c. of the laborforce in 1999. I wil try to give an total
presentation of the unemployment-accountiong-problems below. The keynesians
pupils who always work and always talk, tell you that the unemployment in
Denmark is about 150,000. Taht is the figure when you look at the unemployed
members of unemployment-security-system. The other do not exist. They did not
in the Soviet Union either.
In 1933 the unemployment was 33 p.c. (the highest ever
in Denmark) of the labor force (accounted in 1933). In September 1939 (when the
World War II broke out) the unemployment increased 16,000, even
if 20,000-30,000 were called in to the military. In the years before it had
been reduced by public occupational work (‘New economics’ or ‘Recovery’ made in
USA), by exporting more to Germany, which were preparing for war, and by
national debt.
At this time
the unemployment were especially reduced by the so-called 'kick-starting'
operations. That the money was destroyed in this way did nearly nobody
discover, because the war also made a new international monetary system that
was based on credit-economy alone.
That the effect
of this blind using of the theories of Keynes led to a public sector ruled by
bureaucratic principles, a public sector that was a good deal larger than the
things ruled by private, individual dispositions, and a colossal national debt
ought to have been foreseen, but the theories did - very convenient - not tell
this, the theories that were followed blind.
Papers of national debt are in no
way just an interior economic instrument. Today all countries in Europe tried
with changing luck to get foreign currency by following this death-route either
in order to import or in order to convert from Loan-Debt to Government Paper (e.g.
Bonds) until the Euro began in 11 countries 1999. Loan-debt is the most
pressing burden.
Building on Keynes’ theories the
debt and the dependence were secured.
"...the Europe that is
shaping now is temporary the Europe of the banks, its heros are Rothschilds and
Rockefellers, and a
entire new hagiographi has grown up to fête them", Anthony Sampson wrote in 1968 in 'The New Europeans'. Hodder & Stoughton. England
1968.
Keynes himself knew very well
of the New World Order. But he was of the the opinion that the this project
could not realized without letting it be known by the public.
Did Winstone Churchill know. Yes he did.
A
quotation:
"The one who cannot see that on Earth a big
endeavour is taking place, an important plan, on which realization we are
allowed to collaborate as faithful servants, certainly has to be blind" -
Winston Churchill - (33 Degree Freemason)
But
did John Maynard Keynes really not contribute in any other way to the solutions
of the today problems?
Some
other articles on the subject might help:
A New International Monetary System