Monday, May 6, 2019

Dirk Ehnts — Keynes on the quantity theory and techniques of recovery (letter to FDR)

Changes in expenditure rather than changes in the money stock are causal in economic performance. Changes in money stock do not necessarily result in changes in expenditure. Velocity of money depends on liquidity preference. If the money stock increases while the population increasingly desires to save rather than spend, no change in economic performance will follow. A chief point of the General Theory is that spending as "effective demand" drives an economy. As a consequence fiscal policy is more influential economically than monetary policy in that it concerns spending which can be targeted through specific appropriations.

Here we are with MMT reiterating the point that Keynes was making to FDR in this letter.

econoblog 101
Keynes on the quantity theory and techniques of recovery (letter to FDR)
Dirk Ehnts | Lecturer at Bard College Berlin

1 comment:

AXEC / E.K-H said...

Links on Dirk Ehnts’ ‘Keynes on the quantity theory and techniques of recovery’

Scientifically, Keynes is long dead ― more precisely, since the General Theory. Keynes got Profit Theory wrong. This means that the whole analytical superstructure of the GT is scientifically worthless and that Keynes’ policy proposals had NO sound scientific foundations. After-Keynesians failed to spot Keynes’ foundational blunder to this day. This again proves that economists are scientifically incompetent. For details see:

Forget Keynes

Macroeconomics ― dead since Keynes

How Keynes got macro wrong and Allais got it right

Keynes’ intellectual nonexistence

Marshall and the Cambridge school of plain economic gibberish

Post-Keynesianism vs MMT: a Zombie debate

Keynesians ― terminally stupid or worse?

From Keynes’ fatal blunder to the true economic model

Egmont Kakarot-Handtke