I’ve read all of Keynes’ ‘General Theory of Employment, Interest, and Money.’I determined to read every word to be sure he’d never discovered what I have discovered, the real reason why the use of monetary policy is sometimes like “pushing on a string.”
I have already revealed and explained that reason, so here a few words about reading Keynes’ General Theory.
It was a great exploration into the mind of a genius.
That whole experience was an education about a man I’d known about since 1983. Even before that I’d implicitly understood much of the macroeconomic theory he’d advanced by understanding its effects on money and its perception during the difficult economic period of the Great Depression years. My father labored to understand money, and from trinkets and nominal currencies he had as memorabilia from WWII, he and I theorized endlessly about what money really is. At age 5 or 6 I wanted him to explain to me why the native children on islands in the South Pacific wouldn’t simply hand tiny eye-like marine shells (their money) in for lunch money at school, as I’d handed 25 cents to my teacher for lunch, or put a shell in the coke machine as I did my nickel and penny. From that initiation into my philosophical quest I finally determined exactly what money is. Long after my father’s death and after a lifetime of experimental thought I finally hit upon just exactly why its use by the Federal Reserve’s Open Market Committee is not so useful today, as we are seeing well demonstrated in our current economy. It’s because it’s sterile.
Reading Keynes was as though I’d been on a casual walk and happened upon a city park, one that was beautiful, multi-layered and revealing, with flowers and manicured ornamental plants. I struggled to fully absorb what it offered in countless pathways that could be taken again and again without discovering a new formerly unseen pathway that would in its own meandering way cross the others again in some manner. Try reading it and you’ll see what I mean. I discovered that Keynes had been like the architect who designed the park grounds, but more. He’d also calculated the hydrology of the water basin and its topography; he’d experimented with the geology of the underlying strata; he’d determined the rates of rainfall and solar warming and allowed for the correct placement, cultivation and grooming of all its plants and animals. He’d financed it, staffed it, and he’d done its accounting, payroll, taxes, signage, marketing; and he’d been the caretaker, the security, and he was the gatekeeper, ticket-taker and immediate supervisor for all things, large or small. And to do all these metaphorical things, he’d strived to accomplish the task by working from a similar sort of Einstein-inspired need for a ‘Single Unified Theory’ of employment, interest and money that could answer every question it was given. Keynes easily understood Classical Theory and taught it admirably, but then he turned on it and picked it apart piece-by-piece, likely while savouring the notion that he’d been at first so grounded in its principles. But Keynes never reached what must have been his ultimate goal, and he never really understood what money is.
Apparently, neither does the FOMC.
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