I am a reader of primary texts. One can be dismayed by the number of followers’ easy reliance on secondary literature to create interpretations of their leader’s economic ideas about the sources of society’s well-being. Distortive alteration and the recycling of unfounded ideas about conflicting influential economists’ theories is actually counterproductive. Only scrutiny of an author’s work can reveal false assertions. I’m proposing four authors I’ve scrutinised to find out what they really thought about my main teaching interests: money and credit, and their impact on prices, and the manipulation of the volume of either/both to affect purchasing power. It has been astounding to learn what theory applications, distorting their intent, bear their name.
I wrote...
Money, Investment and Consumption: Keynes's Macroeconomics Rethought
Money, Consumption and Investment debunks the myth that present-day Keynesian economics, which advocates government intervention and economic policies to sustain…
Grappling with the meaning of money and unraveling its impact on prices or on the creation of wealth is enduringly controversial.
Fascination with money - to eyes or pockets - is universal. Fisher understood this!
He defined money simply as what is acceptable in exchange for goods: bills, coins, cheques - legal tender - or other forms of debt.
Since inflation, for Fisher, is a monetary phenomenon, and as in classical physics, where one matter is equalised to another, in his economics, money-on-the-move is always balancing products-for-a-price; in the long run, too much money or too little does not affect wealth creation but only the level of price.
Fisher is a ‘must read’ because this, his ultimate conclusion, deprived of his many subtleties, is the basis of present macroeconomics.
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His motivation to investigate money concerned the welfare impact of inflation/deflation on purchasing power.
His model has capital and resources flowing whither returns are highest and bankers chasing the highest interest rate on loans, entrepreneurs, the best profit rate on investment, and merchants, the best price for products.
As pure credit, money can unceasingly feed demand for loans, generating the cumulative process whereby loan rate increases add to costs of production and prices. Wicksell’s conclusion: if loan rates lag behind the rate of profit, prices rise.
For stability’s sake, when prices are rising/falling, there must be an increase/decrease in the interest rate.
Central banks implement this rule of thumb, but, alas, without grasping Wicksell’s doubts about whether the greedy banking system considers public interest.
This work has been selected by scholars as being culturally important, and is part of the knowledge base of civilization as we know it.
This work is in the "public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work.
Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. We appreciate your support of the preservation process, and thank…
Take Hayek’s market economy as a Bohemian accordion orchestra.
As its instruments produce music, each elongates, pulls in air (analogous to money), and compresses, expresses air (money). Air-in (savings) is equal to air-out (investment). Fluctuating elongations and compressions are an essential feature of the orchestra (the economy).
For Hayek, interference with harmonious accordion (economic) activity infusing or restricting air (money) would spoil the music.
Economic fluctuations stem from preferences, spending for present enjoyment, or saving for future gains. Relative demands for end products or capital impact relative prices, costs, and returns, affecting savings/investment. Investment money, as IOUs, flies where returns are highest.
Hayek engages readers to prove that bank interventions’ tinkering with money is as capable of producing compassionate social outcomes as free individuals using their earnings as they wish.
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These seven works taken together represent the first integration and systematic elaboration of the Austrian theories of money, capital, business cycles, and comparative monetary institutions, which constitute the essential core of Austrian macroeconomics. These works have profoundly influenced postwar expositions of Austrian or capital-based macroeconomics down to the present day. The creation of such an oeuvre is a formidable intellectual feat over an entire lifetime; it is an absolute marvel when we consider that Hayek had completed it in the span of eight years (1929–1937) and still well shy of his fortieth birthday. Hayek’s…
Hicks envisaged an economy in which individuals choose to offer labour for income to purchase products of their effort or to spend time in uncompensated leisure.
His is a theorical economy: individuals and firms interact to determine current and future supplies and demands. It establishes the laws governing the price system regulating exchange and production.
In this world of transparent, free movement of goods and resources without government, regulations, banks, and unions, there is no room for monopolies or capital accumulation.
Money as intermediary is simply a unit of account. Growth is the outcome of needs, efforts, and mutual cooperation.
Value and Capital, a jewel, is the core of current microeconomics, but Hicks’ economy, in which inflation and income disparities are non-issues, is not a capitalist but a market one; ironically present microeconomists conflate the two.
Most economists associate volume of money with price-level (inflation/deflation), not Keynes.
For him, a macro price-level does not reveal the unsynchronized dynamics affecting the prices of its components: commodities, labor, capital, raw materials, profits; it must be decomposed.
When FunCorp invests in a rollercoaster, its decision is based on present costs and future returns (ticket sales, performance, stock options, etc.).
Windfall profits will lead to more expansion; losses, to curtailed activity. Both expansion, contingent on easy credit, or recession, on the tightening of credit, depend on bankers’ use of individuals’ savings and their creation of more deposits.
For Keynes, an institutionalised banking system is essential for a modern economy but he advocated, in the public interest, for strict rules on bankers’ abuse of credit, to mitigate the inflation/deflation rollercoaster.
2011 Reprint of 1930 American Edition. Two volumes Complete in One. Full facsimile of the original edition, not reproduced with Optical Recognition Software. Volumes One and Two of Keynes' classic work published in a handy one volume format. Exact facsimile of the original Edition. Keynes had begun a theoretical work to examine the relationship between unemployment, money and prices back in the 1920s. The work, Treatise on Money, was published in 1930 in two volumes. We reproduce this two volume edition in one volume. A central idea of the work was that if the amount of money being saved exceeds…
Money, Consumption and Investment debunks the myth that present-day Keynesian economics, which advocates government intervention and economic policies to sustain aggregate demand, is the policy realisation of Keynes’ own theory. In reality, the two approaches are antithetical. This book presents in-depth analysis on Keynes’ theories, as found in his General Theory of Employment, Interest and Money (1936) and A Treatise on Money (1930), and his debates with his harshest critiques, such as Friedrich von Hayek, and his strongest competitors, such as John Hicks. In monetary theory Keynes advanced so considerably on the theories of Fischer (1911) and Wicksell (1936) that his writings offer the best understanding yet today of the unstable financial world of stocks, speculation, and investment.
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