Thanks for pointing that out. It is easy to forget.

That is why the market should set the cost of capital (interest rate) by supply and demand, instead of some group of elite individuals whose first duty is to its own system banks.

Keynes said that the rentier should not be rewarded for merely owning money. The cost of capital should be driven to zero. His method was to drive the cost of capital to zero so it was free. Well that is what we have, at least if an individual is trying to loan it out. What I could never understand in Keynes logic is that he appeared to not recognize that money is stored up labor and stored up labor should be worth something (in my opinion). Because to store it means I have put off consumption. If I have put off consumption till a later time when I spend the money there should be time value in that. But that is not the way Keynes saw it. His idea was that consumption was what creates wealth rather than production and the time preference and the putting off of consumption is a negative rather than a positive attribute.

So the way I interpret Keynes is that we should go out and immediately consume everything we can and not save anything for tomorrow or next year. The great consumption will make us all prosperous. The Austrians believe that production is where the wealth is generated and that there is time value in delaying consumption.

That is why the Austrian school economic thinking looks a lot more sane to me. They believe in time preference and that there is a value in consuming later rather than immediately and that the market sets that time preference via interest rates. That is in a free market, rather than in a central bank make believe market. People wanting to consume in the present are willing to pay for the privilege (take out a loan and pay interest on it to consume immediately) whereas people willing to put off consumption (save up labor via savings of money) benefit by earning interest on the capital saved.

I am not an economist and no expert on either Keynes or Austrian economics but that is my rudimentary understanding of the main differences and the Austrians make a lot more sense to me. But we are definitely living in a Keynesian economic world right now with no sign of change in sight.

John