Economics Questions

Re: Keynes and printing money

Jonathan M. F. Catalán — Fri, 20 Jul 2012 20:07:42 GMT

In The General Theory, Keynes advocates lowering the rate of interest, below the "marginal efficiency of capital."

Re: Keynes and printing money

Neodoxy — Fri, 20 Jul 2012 17:51:55 GMT

He thought that monetary policy could be a lot less effective than fiscal policy because of the liquidity trap, but nonetheless that it was useful, if not in directly causing businesses to spend then by giving the government more money to work with (lower interest rates, higher amount the government can spend), although in the Keynesian dreamworld the government would have a large surplus waiting on the eve of every recession.

Re: Keynes and printing money

Smiling Dave — Fri, 20 Jul 2012 17:21:28 GMT

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

[From Economic Consequences of the Peace. Source: http://en.wikiquote.org/wiki/John_Maynard_Keynes]

Re: Keynes and printing money

John James — Fri, 20 Jul 2012 15:55:04 GMT

Well, where would the money the government spends come from?

But you're right, there is a difference between Keynesian Economics and the Economics of Keynes.

Keynes and printing money

ITGF — Fri, 20 Jul 2012 15:28:54 GMT

One often reads the claim that Keynesians advocate 'printing money.' But did Keynes ever actually do that? My understanding is he thought monetary policy impotent in a serious recession and so recommended expansionary fiscal policies. But is there a quote anywhere in which he specifically advocates loose money or easy money or quantitative easing or currency debasement or outright printing money?