On Wed, Jun 17, 2009 at 2:15 PM, Doug Henwood <dhenwood at panix.com> wrote:
>
> On Jun 17, 2009, at 1:59 PM, SA wrote:
>
> Well, although I'm not for "mere manipulations" of money, I disagree here.
>> A monetary policy that produces 3% unemployment instead of 7% unemployment
>> will definitely change productive relations and social structure. Hence the
>> Kaleckian argument about the politics of full employment.
>>
>
> Monetary policy can easily raise unemployment. But the reverse isn't always
> true - stimulative policies don't always lower unemployment.
>
> But if you had tried that argument out on Marx, he probably would have
>> thought it was pure monetary crankery. It's not his fault - he lived at a
>> time when all leading bourgeois economists believed in the neutrality of
>> money. He never read Keynes.
>>
>
> Well, no. That's not really what Marx thought. E.g.:
>
> <http://www.marxists.org/archive/marx/works/1894-c3/ch33.htm>
>
> But it is a serious event in business life nevertheless when, in time of
> stringency, the Bank of England puts on the screw, as the saying goes, that
> is, when it raises still higher the interest rate which is already above
> average.
>
> "As soon as the Bank puts on the screw, all purchases for foreign
> exportation immediately cease ... the exporters wait until prices have
> reached the lowest point of depression; and then, and not till then, they
> make their purchases. But when this point has arrived, the exchanges have
> been rectified — gold ceases to be exported before the lowest point of
> depression has arrived. Purchases of goods for exportation may have the
> effect of bringing back some of the gold which has been sent abroad, but
> they come too late to prevent the drain." (J. W. Gilbart, An Inquiry into
> the Causes of the Pressure on the Money-Market, London, 1840, p. 35.)
> "Another effect of regulating the currency by the foreign exchanges is that
> it leads in seasons of pressure to an enormous rate of interest." (Loc.
> cit., p. 40.) "The cost of rectifying the exchanges falls upon the
> productive industry of the country, while during the process the profits of
> the Bank of England are actually augmented in consequence of carrying on her
> business with a less amount of treasure." (Loc. cit., p. 52.)
>
> But, says friend Samuel Gurney,
>
> "The great fluctuations in the rate of interest are advantageous to bankers
> and dealers in money — all fluctuations in trade are advantageous to the
> knowing man."
>
> And even though the Gurneys skim off the cream by ruthlessly exploiting the
> precarious state of business, whereas the Bank of England cannot do so with
> the same liberty, nevertheless it also makes a very pretty profit — not to
> mention the personal profits falling into the laps of its directors, as a
> result of their exceptional opportunity for ascertaining the general state
> of business....
>
> Talk about centralisation! The credit system, which has its focus in the
> so-called national banks and the big money-lenders and usurers surrounding
> them, constitutes enormous centralisation, and gives to this class of
> parasites the fabulous power, not only to periodically despoil industrial
> capitalists, but also to interfere in actual production in a most dangerous
> manner — and this gang knows nothing about production and has nothing to do
> with it. The Acts of 1844 and 1845 are proof of the growing power of these
> bandits, who are augmented by financiers and stock-jobbers.
>
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