October 03, 2018 Wednesday
Bedtime Story
When Keynes mentioned Lenin
Now let us what Keynes wrote about Lenin
and in general how damaging mismanagement of currency through hyperinflation can
be to the citizens.
I had to spend few nights of yours and mine
into the history of early Soviet Union as it has a direct bearing on what
Keynes wrote in his 1919 classic ‘The Economic Consequences of Peace’.
“Lenin is said to have declared that the
best way to destroy the Capitalist system was to debauch the currency.
By a continuing process of inflation,
governments can confiscate, secretly and unobserved, an important part of the
wealth of their citizens.
By this method they not only confiscate,
but they confiscate arbitrarily; and, while the process impoverishes many, it
actually enriches some.
The sight of this arbitrary rearrangement
of riches strikes not only at security, but at confidence in the equity of the
existing distribution of wealth…
Lenin was certainly right.
There is no subtler, no surer means of
overturning the existing basis of society than to debauch the currency.
The process engages all the hidden forces
of economic law on the side of destruction, and does in a manner which not one
man in a million is able to diagnose.”
By the word “debauch” Keynes is referring
to devaluation of currency through runaway inflation or hyperinflation whose
root cause is government budget deficits that are in turn financed by money
creation (rather than by borrowing or raised taxation).
The mistakes of the government are then
transferred to nearly everybody in the population in the form of almost
complete wiping out of the purchasing power of private savings.
Even though there are lots and lots of
paper currency in market, in effect the money begins to flee abroad as people
tend to buy safer stable currencies of other nations or hoard some other means
of wealth such as precious metals, land and/or properties.
The economy gets distorted with people
aiming to hoard wealth in the form of either property or gold.
It is obvious from his writings that Keynes
not only saw an economic disaster in the making as a byproduct of this
disastrous treaty but rightfully containing within it a potential of something
more sinister arising out from the anguish caused by it.
It was evident to Keynes that while Germany
was being humiliated with the offensive terms of treaty the Germans had not
been annihilated.
It was a dangerous thing to do.
Some believe that the allies should either
have destroyed or dismembered Germany or come up with a peace treaty that was
more fair and gracious.
If peace was being offered then there should
have been an attempt to embrace her as a full-fledged partner into the family
of nations.
Stay tuned to the voice of an average story storytelling
chimpanzee or login at http://panarrans.blogspot.com
Good night Mon Ami and my fellow cousin ape.
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Another great educator and a teacher that I am aware of is
Professor Subhashish Chattopadhyay in Bangalore, India.
While I narrate stories, Professor Subhashish an electronic
engineer and a former professor at BARC, does and teaches real mathematics and
physics.
He started the participation of Indian students at the
International Physics Olympiad.
Do visit him here:
All his books can be downloaded for free through this link:
For edutainment and English education of your children, I
recommend this large collection of Halloween Songs for Kids:
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