The latest news is that “the
government” (meaning desperate politicians) are considering pumping another $3
trillion so people have something to spend.
Of course, we’re still baffled why an additional $3 trillion backed by
government debt that is rising skyward is more secure than the $2 trillion
backed by private sector hard assets we propose for Capital Homesteading, but
then, we’re not politicians or academics.
All we can do is talk what seems to be common sense:
• What, Exactly, Are They Stimulating? We’re tempted to start this item with,
“Riddle me this. If the economy isn’t
running because people aren’t allowed to go to work and produce marketable
goods and services, how is giving out money to purchase existing goods and
services supposed to stimulate anything?
Here’s a crazy solution: if human beings can’t work, why not lend them
money to purchase automated machinery to replace their labor. This would generate income first to repay the
acquisition loan, and then consumption income to purchase the newly produced
goods and services, and all without the use of direct human labor.
 |
| "Can you believe those dumb Yanks fell for it?" |
• Inflation v. Deflation. Within
the Keynesian monetary framework, inflation is somewhat vaguely defined. In contrast, in the Austrian school of economics,
inflation is any increase in the money supply, regardless whether the price
level rises, falls, or stays the same.
In the Chicago/Monetarist school, inflation is an increase in the money
supply that causes a rise in the price level.
Deflation is defined similarly, i.e., for Austrian economists
(who don’t necessarily live in Austria, by the way), deflation is any decrease
in the money supply, regardless whether the price level rises, falls, or stays
the same, while for Monetarist economists, deflation is a decrease in the money
supply that leads to a decline in the price level. Keynes didn’t bother with being consistent or
logical. To Keynes, “inflation” meant a
rise in the price level after reaching full employment. Rises in the price level before reaching full
employment were due to “other factors” and are not “true inflation.” (General
Theory, III.10.ii, V.21.v.)
Deflation — to Keynes — meant a decline in the price level for any
reason (ibid., V.20.iv), although the only reason he cited was an
increase in supply that lowers prices. (Ibid., VII.22.vii.) Translation: in the Keynesian universe,
inflation and deflation are whatever Keynes said they were, whether or not it
makes sense. How do we define inflation
and deflation in the Just Third Way? Regarding
inflation, there are two types, cost-push, and demand-pull. Cost push inflation is a rise in the price
level due to a decrease in the supply of a good or service, or an increase in the
wants or needs on a good or service in limited supply. Demand-pull inflation is a rise in the price
level due to an increase in the money supply.
As for deflation, that is only a fall in the price level due to a
decrease in the money supply. All other declines
in the price level should be considered “currency appreciation,” meaning that
the unit of currency will purchase more than it did before, e.g., an
increase in supply or a fall in demand.
Of course, the Just Third Way understanding of inflation and deflation
assumes as a given that money is created only by backing it with the present
value of existing and future marketable goods and services, thereby linking the
money supply directly to what it is used to buy.
 |
| How Hitler rewarded Schacht |
• Hyperinflation. Many
people think that “hyperinflation” means simply high inflation. No, it means the surreal situation in which
people have lost faith in the currency and consider it worthless or nearly
so. As a result, the price level rises
faster than money can be created; the bizarre situation occurs that money can’t
be created fast enough to keep up with the price level. The only way to stop hyperinflation, as Hjalmar Schacht demonstrated in Germany following the First World War, is to implement a standardized, asset-backed currency and restore public confidence in it.
 |
| Pope Leo XIII |
• Rerum Novarum. A hundred
and twenty-nine years ago today, Pope Leo XIII issued the landmark encyclical Rerum
Novarum, “On Labor and Capital.” Most
people think that Rerum Novarum was the first social encyclical. No, it
was the first social encyclical to present a positive program to counter the
"new things" of socialism, modernism, and the New Age of which Pope
Gregory XVI had spoken in the second social encyclical, Singulari Nos (“On
the Errors of Lamennais”) in 1834. The new things were intended to replace all
existing forms of Church, State, and Family and establish “the New
Christianity.” What triggered Rerum Novarum specifically was the
conversion of many Catholics to the theories of the agrarian socialist Henry
George and the renegade priest Father Edward McGlynn in the late 1880s, sowing
massive confusion about the social teachings of the Church. Unfortunately,
despite Leo XIII’s strong advocacy of widespread capital ownership by “as many
as possible of the people,” he did not present a financially feasible way for
people to acquire capital without redistribution. In addition, the socialists
and modernists moved quickly to nullify the encyclical and declare it a new
socialist manifesto. At the same time, the capitalists took it as affirming
capitalism. It would not be until 1958 that a financially feasible method of
acquiring capital without cutting consumption was presented to the public (and
only partially implemented in 1973) that the problem would be solved, even
though it still awaits full implementation. Pope St. John Paul II voiced his
approval of this “Just
Third Way” above and beyond socialism and capitalism, and recommended it on
a number of occasions, but was ignored.
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| "BUY MY KEYNESIAN SNAKE OIL, NOT CESJ BOOKS!" |
• Shop online and support CESJ’s work! Did you know that by making
your purchases through the Amazon Smile
program, Amazon will make a contribution to CESJ? Here’s how: First, go to https://smile.amazon.com/. Next, sign in to your Amazon account. (If you don’t have an account with Amazon,
you can create one by clicking on the tiny little link below the “Sign in using
our secure server” button.) Once you
have signed into your account, you need to select CESJ as your charity — and
you have to be careful to do it exactly this way: in the
space provided for “Or select your own charitable organization” type “Center for Economic and Social Justice
Arlington.” If you type anything
else, you will either get no results or more than you want to sift through. Once you’ve typed (or copied and pasted) “Center for Economic and Social Justice
Arlington” into the space provided, hit “Select” — and you will be taken to
the Amazon shopping site, all ready to go.
• Blog Readership. We have had visitors from 36 different
countries and 40 states and provinces in the United States and Canada to this
blog over the past week. Most visitors are from the United States, Canada, the
United Kingdom, India, and Argentina. The
most popular postings this past week in descending order were “The
Theory of Happiness,” “A
Measure of Reform,” “News
from the Network, Vol. 13, No. 19,” “Dignity
of Work or Labor v. Human Dignity,” and “The
Purpose of Production.”
Those are the happenings for this
week, at least those that we know about.
If you have an accomplishment that you think should be listed, send us a
note about it at mgreaney [at] cesj [dot] org, and we’ll see that it gets into
the next “issue.” Due to imprudent
language on the part of some commentators, we removed temptation and disabled
comments.
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