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Now I Know Kaletsky Is Insane

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The real economic problem in Italy is not weak exports but inadequate consumer spending, which in turn undermines investment, employment and government finances. The best response to underconsumption and mass unemployment, not only in Italy but throughout Europe, would not be devaluation but a bold reduction in interest rates — at least to the “emergency” level of 1 per cent that revived the US economy in 2003, and preferably to zero


Where are the men in white coats to take this loony away?

Such monetary easing would encourage a cycle of consumer borrowing and spending, employment growth, rising property prices and even higher borrowing and spending.
Edited by zzg113

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LOL, What took you so long zzg?

No doubt Italy's rapidly diminishing reproductive rate is due to low consumption too, and nothing to do with living costs and and largely hidden increases in costs over earnings since the introduction of the Euro.

Now we must all be blind, it is obvious they they should borrow their way to prosperity.

Quite insane.

Edited by OnlyMe

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But if Wolf would have excited Say's scorn, what do you think he would have made of the even more egregious example of Anatole Kaletsky, economics editor of the London Times?

Unable to comprehend that savings are the fuel which powers the furnaces of entrepreneurial achievement and that monetary chicanery is an evil, per se, Kaletsky penned a recent op-ed in which he effectively argued that the best an Italian could do with any savings he did feel compelled to make was to lend them to his government so that they could be poured into the capacious gullet of the dole-dispensing, gluttonous, armed bureaucracy which it temporarily commands.

Furthermore, he brazenly exhorted the government to renege on its debt by withdrawing from the euro and then resuming the tired, old policy of constant devaluation, with the aim of masking the country's structural inefficiencies and its lack of international competitiveness in a mercantile miasma of monetary manipulation.

In a piece in which Kaletsky was ostensibly asking whether the recent referenda meant the euro might break up, he admonished us that such an outcome was likely—even desirable—unless those stubborn Germanic bankers at the ECB took his warped advice and launched their citizens upon an orgy of debauched money, speculative excess, and phoney well-being.

"There is little doubt that Italy could gain short-term economic benefits from leaving the euro," he wrote. "By devaluing its currency, Italy could immediately boost exports, jobs and manufacturing investment—as it managed to do repeatedly up to 1999."

But: how can you hope to prosper by selling your goods to foreigners at artificially discounted prices—all the while relying on the assumption that those goods' recipients will not be similarly misled into retaliating to your foolishness by taking some action aimed at suppressing the price of their competing products, or raising the price of yours?

Furthermore, Kaletsky—who wants Italians to become rich by giving away wealth—overlooked the fact that a falling currency is especially a problem in a resource-poor country like Italy where it can only drive up the costs of all those imports upon which its producers are so reliant.

Even more fundamentally, Kaletsky declined to tell us how one can build civic trust and maintain property rights—each so essential to the future of the commonwealth—by misleading workers as to the true value of their wages and confusing savers as to that of their hard-earned capital.

In any case, if its former path of perennial inflation and depreciation was supposed to have been so successful, Kaletsky might have explained why generations of Italian politicians fought to join the single currency and why there was near universal relief when the country did (somewhat dubiously) qualify for euro membership, some six years ago.

But our man had only just warmed to his task of dispensing economic snake oil. He went on to propose that:

"The government's liabilities . . . be transferred from a strong currency, over which it has no control, into a weak currency, which it could print at will. This may seem unfair and even fraudulent but such are the prerogatives of sovereign governments—legal opinion and historical precedent are both quite clear on this point."

Like some Renaissance condottiere-turned-princely tyrant, what Kaletsky was expounding here was the theory that only after clipping coins and expropriating its creditors, could Italy face up to its massive debts.

In recommending such an expropriation of savers, Kaletsky was, of course, simply echoing the sentiments of his master, Keynes, a man who had utter contempt for the bourgeois 'rentiers' to whose extinction he so looked forward.

We can imagine the shade of Say harrumphing with disdain as our scribe then wrote:

"The real economic problem in Italy is not weak exports but inadequate consumer spending which in turn undermines investment, employment and government finances."

Next, to emphasize that the lack of morality in his article was only to be matched by its complete absence of originality, Kaletsky gave voice to the monetary crank's characteristic hatred of 'usury,' by issuing a call for a "bold reduction" in interest rates, "preferably to zero"— adding, for good measure, "not only in Italy, but throughout Europe"

At this point, we must wearily observe that if, as Randolph Bourne famously remarked, "war is the health of the state," then the War on Capital is surely the most invigorating form of governmental violence in the Hegelian strategists' armory.

Indeed, in the article under consideration, the state-worshipping Kaletsky took as his leitmotiv nothing other than the blatantly Machiavellian theme that individuals should be seduced into ruining themselves in order that a debauched and dropsical Leviathan could better balance its books.

This is as perverse and as naked a piece of totalitarianism as you could wish to see—and its publication in the supposedly free-market London Timesshows us to what depths of intellectual depravity and Orwellian deceit we have been reduced by our ignorance of, or denial of, the wisdom of men such as Jean-Baptiste Say and his successors in the Austrian School.

How that evil genie must be laughing at our wilfulness and stupidity!

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Muppets. We're surrounded, governed and threatened by muppets who are doing their best to debauche the world's paper currencies.

When I see such lunacies published on mainstream financial press, I feel compelled to go out and buy as much gold as I can afford.

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what happens to all the debt? surely a strong currency is the sign of a strong economy?

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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