Vladimir Lenin, Russia’s Communist revolutionary, famously observed that the “best way to destroy the capitalist system is to debauch the currency.” Indeed, monetary instability wreaks havoc with the markets and breaks down social classes. It destroys the savings of the middle class in particular.
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The myth that recessions and overheating can be prevented by central banks and that cheap money stimulates consumption and investment, thus boosting the economy, has led to low to negative interest rate policies in many countries. In reality, this policy causes speculative bubbles and crashes, destroys savings and strains the affected countries’ social fabric.
One crucial component of the Marxist-Leninist prescription for the West’s demise has thus been implemented. There is another one at work in today’s economy.
Savings endow their owners with freedom of choice. They also inspire healthy pride and self-confidence. Debts, on the other hand, limit one’s freedom, as third parties, the creditors, have their say.
This loss of freedom in a debt-driven society increases dependence on public welfare, especially in retirement. The IMF and some central banks, including Germany’s Bundesbank, now want to accelerate this alarming “socialization” process by proposing to confiscate a considerable share of citizens’ savings in order to cover government debt.
These “monetarist" interventions in the economy are amplified by overregulation and a mania for control. A combination of ever-growing government debt, an elimination of the incentives to save and an empowered bureaucracy is putting Western countries on a path to becoming planned economies.
‘The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation’
Once the currency is debased, savings taken away, property rights weakened to a point where they remain only on paper, a Marxist-Leninist “socialization” of the means of production is practically accomplished. It is worth noting how smugly the current talk of abolishing cash in favour of electronic accounts fits into the scheme of total state control.
Another important principle of the Leninist state was, “trust is good, control is better” (as a matter of fact, trust was utterly absent in the old Soviet Union). Today, citizens of Western democracies are subjected to ever-expanding, all-encompassing registration and monitoring. Tax systems are becoming more complex, which justifies additional layers of supervision. Personal finances are scrutinized under pretexts ranging from tax compliance to fighting terrorism, and private payments must be accounted for.
An excessive exchange of data to and between authorities has become the rule and this erosion of privacy meets little resistance. Lenin called those in the West who unwittingly helped the Communists’ cynical agenda “useful idiots”; nowadays, these are people who say to themselves, “I am honest, I have nothing to hide, and therefore I do not object to such controls.”
One thing is certain: the data will be misused, freedom further restricted. Lenin put it succinctly: “The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”
A free society can only grow based on freedom of choice and trust. In the early 1990s, the bankrupt and thoroughly compromised Soviet system left the scene. Incredibly now, the policies of the West’s leading central banks and governments are working to resurrect it under a different name.
When the newly born Soviet state needed Western technologies, Lenin was quoted as saying the “capitalists will sell us the rope with which we will hang them.” Nearly a century later, it looks like Western democracies are procuring the rope – and hanging themselves.