Wednesday, July 21, 2010

Savings That Once Went

A FOLLOW-UP TO THE PREVIOUS POST

Are savings fully and promptly converted into investment spending? It depends upon economic conditions. The time of Bastiat and Say was the time Keynes identified as "the greatest age of the inducement to invest." That age, some 150 years in length, was the economic peak of the cycle of civilization.

Bastiat and Say reported what they saw in the world of their day. They saw full, prompt, and automatic conversion of savings into investment spending. But what was true in their day is true no longer. Nor does it become true simply because today's self-slotting economists endlessly repeat their words.

We are past the peak. We are on the downhill slope of the cycle of civilization. We can arrest the decline if we face it. But if we choose to deny the possibility -- if we refuse to confront it -- we are clearing the way for the Dark Age to follow our civilization.

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