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Marc Faber wrote an interesting article for the Daily Reckoning in which he heavily criticizes our policymakers current economic policy.
I seldom become depressed, but when I consider that prosperity is created by “peace, easy taxes and a tolerable administration of justice” I really think that the U.S. and other Western governments are doing their very best to impoverish their countries.
The article has to parts to it and thus we have linked to both articles at the bottom of the page.
Keynes noted in the General Theory that, according to Gesell’s proposal, “currency notes (though it would clearly need to apply as well to some forms of at least bank-money) would only retain their value by being stamped each month, like an insurance card, with stamps purchased at a post office. The cost of the stamps could, of course, be fixed at any appropriate figure. According to my theory it should be roughly equal to the excess of the money-rate of interest (apart from the stamps) over the marginal efficiency of capital corresponding to a rate of new investment compatible with full employment.” And although Keynes found “the idea behind stamped money sound”, he nevertheless conceded that there would be difficulties in the implementation of this scheme:
But there are many difficulties which Gesell did not face. In particular, he was unaware that money was not unique in having a liquidity-premium attached to it but differed only in degree from many other articles, deriving its importance from having a greater liquidity-premium than any other article. Thus if currency notes were to be deprived of their liquidity-premium by the stamping system, a long series of substitutes would step into their shoes – bank-money, debts at call, foreign money, jewelry and the precious metals generally, and so forth…there have been times when it was the craving for the ownership of land, independently of its yield, which served to keep up the rate of interest; though under Gesell’s system this possibility would have been eliminated by land nationalization. (John Maynard Keyes, General Theory, London, 1936, Chapter 23)
Click here for part 1 of the Marc Faber Daily Reckoning Interview
Click here for part 2 of the Marc Faber Daily Reckoning Interview
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