J M Keynes never supported deficit financing in the General Theory or at any time in his lifetime


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Initial post: Jun 21, 2007 12:31:26 AM PDT
One of the strangest of phenomenons in world history is the near universal belief among economists and the general public that Keynes supported an activist policy of cutting taxes and running a budget deficit so as to stimulate current consumption spending.Keynes actually opposed such a policy in his lifetime.Keynes's position was that it was necessary to first increase investment spending.Keynes's solution is to maintain interest rates at low ,fixed levels permanently.This policy is practically identical to the policy proposed by Adam Smith in 1776.

In reply to an earlier post on Jul 29, 2010 8:39:27 AM PDT
Last edited by the author on Jun 14, 2013 10:54:14 AM PDT
asfhgwt says:
Keynes' "loan expenditure," i.e. government borrowing-and-spending, EQUALS deficit financing, made worse if the government does not pay back its loans from an income source and merely rolls over and increases its debt. This is what practically every government on Earth is doing right now.

Furthermore, anyone who thinks that burying money in bottles and setting people to work digging them up to "cure unemployment," is, IMHO, a crackpot. Keynes actually proposed this in Chapter 10 of his General Theory:

"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is...."

Posted on Aug 6, 2010 7:43:45 PM PDT
Last edited by the author on Aug 6, 2010 7:59:59 PM PDT
Carol says:
You totally take that out of context. He was comparing that to looking for gold, he was saying gold or banknotes doesn't lead to the wealth of nations. A wealth of a nation is based on houses and factories and stuff.

Money, i.e. gold and banknotes are important for exchange but if you have more gold and no new houses you do not have real development. If you want to see a crackpot listen to Ben Bernanke

This link is directly to "The General Theory of Employment, Interest and Money"
By John Maynard Keynes and he explains explains exactly what he means by the quote you gave

http://books.google.com/books?id=dQD9o31F1N4C&lpg=PP1&pg=PA116#v=onepage&q&f=false

"The analogy between this expedient and the gold-mines of the real world is complete"

For this to make more sense see page 330

http://books.google.com/books?id=dQD9o31F1N4C&lpg=PP1&pg=PA330#v=onepage&q&f=false

He quotes Mandeville

"for let the value of Gold and Silver rise or fall, the enjoyment of all Societies will ever depend upon the Fruits of the Earth and the Labour of the People; both which joined together are a more certain, a more inexhaustible and a more real Treasure than the Gold of Brazil or the Silver of Potosi."

In reply to an earlier post on Aug 13, 2010 11:59:30 PM PDT
Last edited by the author on Aug 25, 2010 10:58:30 PM PDT
NO.Loan expenditure refers to NOT funding the sinking fund that the British Government maintained for paying down the national debt during the Great Depression.Keynes would have diverted funding during the Great Depression and used it to fund infrastructure projects.
The rest is just a standard libertarian lie.You have deliberately misquoted Keynes.You deliberately leave out the rest of the quote,which is " It would ,indeed, be more sensible to build houses and the like;but if there are political and practical difficulties in the way of this,the above would be better than nothing "(Keynes,GT,p.129).

There are two possible conclusions to be drawn from your quote.The first is that you are a pathological liar who knows that he is deliberately misquoting.The second is that you are truly ignorant and are simply quoting from the pathological liar Hazlitt or some article that has appeared in "The Freeman ".
Either conclusion means you are not to be taken seriously.

In reply to an earlier post on Aug 14, 2010 12:03:20 AM PDT
Last edited by the author on Aug 14, 2010 12:04:37 AM PDT
Dear Carol,
You are correct.It is refreshing to find someone who has actually read the GT.You can find a great deal to support your comment in Volume 27 of the CWJMK ,pp.225-410
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Initial post:  Jun 21, 2007
Latest post:  Aug 14, 2010

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General Theory of Employment, Interest and Money
General Theory of Employment, Interest and Money by John Maynard Keynes (Paperback - June 1965)
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