John Maynard #Keynes (pronounced k[eey]nes, not k[ay]nes, the clue lies in the second name, which is spelled m[ay]nard and pronounced the same, not pronounced M[ee]nerd) claimed that wealth came from consumer spending, whereas Ludwig von #Mises teaches that production is the source of wealth (hence stimulating consumer spending reduces busines investment and keeps the economy in a slump): it depletes the sum of loanable money in bankaccounts, so investments cannot be made so easily; less money available for business loans means higher interest rates – the price of loans) – supply & demand, a concept which I thought lay at the heart of #economics.
While I can see the merits of the argument from both sides, I do wonder if Mises’s arguments still holds in, say, the Dutch economy, with as good as no factories (other than for e.g. chocolate bars) because the Dutch economy stands almost completely on two pillars (all right, three):
– Transport (inc. international)
– Services (people working in offices, or repairing bicycles/shoes/etc.)
– Plus agriculture (food, flowers – exporting tulips all over the world)
– Foreign factories (this may be considered a fourth pillar, but I have my doubts about that, hence this post)
It is quite amazing that there is so much wealth in this little country here. So where does that come from? Under normal circumstances there is quite a decent amount of saving going on among Dutch bank account holders. Not for long anymore, though: what with the Euro & the ECB wrecking the economy the way they do, they might be depleting the saved capital available for business investment, and thus they will prolong/worsen the recession.
Negative interest amoynts to a penalty on saving money How the hell does the government dare penalise people for having more economic sense than them?!?
But where does the Dutch wealth come from? Investments in cookie factories which then have to get repaid by candy purchases by the people? (The entire economy can’t float on that, we’re not that obese asan entire nation). Dutch businesses still invest in factories – abroad, so there is no direct line from Dutch investment into the Dutch factory-worker’s pay check.