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Anyway: It is in fact the case that Hans and his ilk want to let banks go bankrupt! Think about it. Right now things are bad, but how would the situation be if we had a couple of bank runs?
I mean his fews on sound national investment policy is that all Germans should bring there cash to the Kanzleramt and stuff it into the mattress of Angela Merkel.
But more seriously: In read an interview with Hans Werner Sinn from 2009 where he pointed out that in fact there is no serious risk of inflation, but instead a serious risk on an Japan style deflationary trap. Yet, then he went on and advocated tirelessly for the last 5 years for policies that would push us ever deeper into exactly this trap!!
There it says
Joseph Schumpeter veröffentlichte im März 1929 in der Zeitschrift Der Deutsche Volkswirt einen Aufsatz, in dem er erklärte, dass sich Deutschland wegen einer angeblich zu hohen Lohnpolitik und der Sozialpolitik in einer Depression befindet, die durch eine Mischung aus Lohn- und Preissenkungen sowie Austeritätspolitik bekämpft werden sollte. Dies war exakt das Konzept der Deflationspolitik Brünings. Friedrich August von Hayek empfahl damals (auch den Vereinigten Staaten) eine Deflationspolitik, um die Lohnrigidität zu brechen.
Short Translation; Joseph Schumpeter recommended a policy of slashing wages and austerity (sounds familiar?) to fight the great depression in Germany.
The article also states that the general philosophy (not necessary directly related to Schumpeter) was
Die aus der Deflation entstehende Depression sei heilsam, gerade weil ,,untüchtige" Betriebe beseitigt würden.
Translation: The Depression was a good thing, because it would crush 'unfit' companies.
Now this does not specify banks. But clearly, the concept of creative destruction was right there and it was considered to be of particular importance during a depressed economic state.
Creative destruction is the core of his thinking. And in in discussions in the UK about demand stimulus to fight the great depression he ahd the same position: Nothing could be done.
Remember Germany's current account surplus continues to accelerate:
A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
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