Hello, My name is John Maynard Keynes and I believe that I am the revolutionary figure in the field of modern macroeconomics.
Background
I was born in 5th June 1883 in Cambridge, Cambridge shire. I enjoyed 62 years of happiness in life but unfortunately died on the 21 April 1946. I was brought up in an upper-middle-class family. Both of my parents were intellectuals, my father was an economist in moral sciences at the University of Cambridge, where as my mother was a local social reformer.
In 1897, I won a scholarship to Eton College, in the University of Cambridge. I had a variety of interests in learning, such as classics, mathematics, philosophies and history. Later on I transferred to Kings College where I studied Mathematics and Economics.
My theories
As I have said, I believe that my theories are revolutionary as if opposes this traditional view at that time about employment. Before my ideas were exposed to the public, people have often thought that there is no need for government intervention, as economic rationality would solve economic problems such as unemployment. However, I believe that it is demand is a fundamental driving factor that determines the levels of employment instead of supply. Therefore, I argued that governments should intervene to strike out unemployment at the times of recession.
Sticky Prices - I believe that prices and wages are not so flexible. With the exception of the great depression in 1930s, I firmly believe that these two components do not adjust quickly in a short-term.
Animal Spirits - What I mean by Animal spirits are the 'instinct', the confidence of people in businesses. Therefore, if animal spirits are low in an economy that is currently facing a recession, the economy may be stuck in a recession. This is because people lack of business confidence and do not want to take risk. Monetary Policies such as reduced in interest rates may give slight incentive to firms to take a loan and invest in their company, however, this may not be possible if their animal spirits are low.
Government intervention - Expanding on my point about animal spirits. In order to solve this situation, expansionary fiscal policy is crucial to boost demand and economic growth, bringing back the economy into a desired level of employment and output. Fiscal policy is 'pulling' on the string and this is the real way to stimulate the economy, and make more confident in investing.
Background
I was born in 5th June 1883 in Cambridge, Cambridge shire. I enjoyed 62 years of happiness in life but unfortunately died on the 21 April 1946. I was brought up in an upper-middle-class family. Both of my parents were intellectuals, my father was an economist in moral sciences at the University of Cambridge, where as my mother was a local social reformer.
In 1897, I won a scholarship to Eton College, in the University of Cambridge. I had a variety of interests in learning, such as classics, mathematics, philosophies and history. Later on I transferred to Kings College where I studied Mathematics and Economics.
My theories
As I have said, I believe that my theories are revolutionary as if opposes this traditional view at that time about employment. Before my ideas were exposed to the public, people have often thought that there is no need for government intervention, as economic rationality would solve economic problems such as unemployment. However, I believe that it is demand is a fundamental driving factor that determines the levels of employment instead of supply. Therefore, I argued that governments should intervene to strike out unemployment at the times of recession.
Sticky Prices - I believe that prices and wages are not so flexible. With the exception of the great depression in 1930s, I firmly believe that these two components do not adjust quickly in a short-term.
Animal Spirits - What I mean by Animal spirits are the 'instinct', the confidence of people in businesses. Therefore, if animal spirits are low in an economy that is currently facing a recession, the economy may be stuck in a recession. This is because people lack of business confidence and do not want to take risk. Monetary Policies such as reduced in interest rates may give slight incentive to firms to take a loan and invest in their company, however, this may not be possible if their animal spirits are low.
Government intervention - Expanding on my point about animal spirits. In order to solve this situation, expansionary fiscal policy is crucial to boost demand and economic growth, bringing back the economy into a desired level of employment and output. Fiscal policy is 'pulling' on the string and this is the real way to stimulate the economy, and make more confident in investing.
Comments
Ludwig von Mises: Isn't it better for the government to not intervene at all especially during a recession? Shouldn't the government be saving instead to then channel these savings into investments in the future? This would then increase growth in the long-run which makes everybody happy. Maybe the investments (e.g. capital investments) may increase unemployment, but this also balances out in that this lowers wages which means firms hire more people which balance the rate of unemployment again/
Alan Greenspan: I agree with Ludwig von Mises's statements. I do not think that the government intervention is needed during a recession, because intervention can cause disruptions, including extending a recession or depression, as the market has a tendency to adjust naturally equalizing inadequacies.
Ludwig von Mises: Isn't it better for the government to not intervene at all especially during a recession? Shouldn't the government be saving instead to then channel these savings into investments in the future? This would then increase growth in the long-run which makes everybody happy. Maybe the investments (e.g. capital investments) may increase unemployment, but this also balances out in that this lowers wages which means firms hire more people which balance the rate of unemployment again/
Alan Greenspan: I agree with Ludwig von Mises's statements. I do not think that the government intervention is needed during a recession, because intervention can cause disruptions, including extending a recession or depression, as the market has a tendency to adjust naturally equalizing inadequacies.