Chapter 6: Capitalism in peril
The overtaxation of capital has harmful consequences (not only in the concerned countries, but possibly in the world at large). It decreases the incentive to save so that firms may not be able to invest as much as would be desirable. Therefore, a substitute to voluntary savings may be developed, namely an increase in the quantity of money, since the creation of new monetary units is the counterpart of credits supplied by the banking system. But these credits do not correspond to voluntary savings and they create distortions in productive systems, as is explained by the so-called “Austrian theory of the business cycle”. Thus economic crises are the consequences of state interventionism, namely the overtaxation of capital and the arbitrary characteristics of monetary policies: Funding by monetary inflation replaces funding by voluntary savings.
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