Debauching the Dollar

We have been reading a wonderful paper on the use of this expression, “debauch the currency.”  The feature topic is simply who said it first, Keynes or Lenin, but the investigation takes us into the world of interwar inflation and communist revolution.

The best way to destroy capitalism is to debauch the currency.

It’s timely because many pundits trace today’s loose monetary policy back to Keynes – pundits on the right, mainly, as in “those damned Keynesians at the Fed.”  In fact, Keynes warned against inflation.  He cites Lenin to make the point that loose money is the enemy of capitalism.

As a disclaimer, Jeremiah was for monetary stimulus before he was against it.  Quantitative easing is long past being helpful, and everyone expected Chairman Bernanke to announce a reduction – at least $10 billion per month – at last week’s meeting.

Keynes writes that, “by a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”  He goes on to say that not one man in a million will be able to detect it.

People are smarter today.  We have all noticed the confiscation.  Pension funds are going underfunded, and savings accounts are being robbed.  Inflation hasn’t cut loose at the supermarket yet, but it will.  Meanwhile asset-price inflation is piling up in the stock market – and whom does that enrich?

By directing hatred against this class the European Governments are carrying a step further the fatal process which the subtle mind of Lenin had consciously conceived .

Keynes observed that in times of rapidly rising prices – share prices, today – the entrepreneur class “cannot help but get rich quick whether they wish it or not.”  We added the italics because billionaire hedge fund managers are now starting to complain on CNBC – you have to see it to believe it – that it’s just not sporting anymore.  Yes, this must be the apocalypse.


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