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By Allan H. Meltzer

During this rigorous learn of John Maynard Keynes's perspectives on fiscal idea and coverage from 1920-1946, Professor Meltzer argues that a few of Keynes's major rules were overlooked or misstated. whereas cognizance has curious about non permanent countercyclical guidelines, the most coverage implications were overlooked. Keynes put nice emphasis on ideas, predictability, and aid of uncertainty. in accordance with his theoretical paintings, he adversarial discretionary monetary adjustments and favorite principles to minimize instability and elevate the capital inventory. those guidelines are in line with, and supply proof for, the translation of Keynes's concept constructed the following.

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325). , p. 326); this presumes a growth rate of at least 3 percent compounded annually, slightly above Britain's long-term experience. , p. 21 The problem of the future will be how to use leisure. Old ideas will have to be replaced by the most sure and certain principles of religion and traditional virtue - that avarice is vice, that exaction of usury is a misdemeanor, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow.

Xvii) cautions the reader that Keynes's ideas had developed and changed in the seven years since he had started work on the book. He was aware that remnants of his past beliefs mingled with his newer views and that the old and the new were not always compatible. Keynes's revisions reflected his intellectual development, his experience during the period, and the events that gave rise to that experience. Many of these events are known, at least in broad outline. Britain had pursued a relatively deflationary policy during the early 1920s in an effort to restore the fixed parity with gold at the prewar exchange rate.

In the Treatise, a decline in profits reduces investment of all kinds, including working capital (raw material). When the ratio is above unity, the nominal cost of producing output is above nominal expenditure (MV). In Keynes's terms, costs increased relative to selling prices, so Keynes expected investment and output to fall. In his terms, profits were low or negative and (inventory accumulation) investment was discouraged. A fall in costs (wholesale prices) relative to (selling) prices increased profits and stimulated business investment in inventories and durable capital.

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