Keynes

Keynes, in his publication of The Social Consequences of Changes in the Value of Money, makes an astounding number of novel points when considering the time in which he lived (considering the Great Depression, etc). Though seemingly radical, Keynes’ prophetic writing on economics changed the way Europe and the United States of America deal with monetary issues. The initial, and very poignant, sentence in this work is, “Money is only important for what it will procure,” is a wonderful way to start the summary of the way money affects a society. This opening thought, though relatively simple, allows for the explanation of the way investors, businessmen, and earners are uniquely affected by inflation and deflation in relating to the distribution of wealth.
Keynes goes onto explain how this distribution of wealth, a very concrete occurrence, differs from the production of wealth, which seems to fluctuate according to society’s fear of it (monetary value) fluctuating (in regards to inflation or deflation). This is clearly expressed in paragraph 40, “The fact of falling prices injures entrepreneurs; consequently the fear of falling prices causes them to protect themselves by curtailing their operations.” In essence, the fear or happiness of society, therefore the cessation or overproduction of goods, is more powerful then the actuality of the monetary circumstances. In other words, if one thinks something bad will happen, or vice versa, one will take the necessary precautions and, without trying, create the predicted outcome. Keynes also makes is very clear that he is optimistic about government power being useful in getting the economy back on track, even if it means going into debt. This idea reflects our government today, but was practically unheard of before his time. He states this anti laissez-faire attitude in paragraph 23, “…I think, that it is not safe or fair to combine the social organization developed during the nineteenth century with a laissez-faire policy towards the value of money.”
It does not seem correct to “agree” or “disagree” with any of Keynes’ points. I live in a society where everything Keynes describes is happening all around me and affecting me on a personal level. I live in a rented apartment; therefore I am naturally negatively affected by inflation. This leads into one point of Keynes’ that I do agree with in paragraph 45, “Of the two [inflation and deflation] deflation is, if we rule out exaggerated inflations such that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier.” I agree with this opinion because unemployment continues to be a devastating problem in our society today (which I believe to be a more pressing problem than inflation of rent prices; however, everything is related and if one cannot afford a place to live, drive, etc. then how will one work?). What will happen to our current society as outsourcing becomes more common? Big businesses, businessmen, and certain investors will continue to make a lot of money, but what will happen to American earners? If, as Keynes expresses, all three of these “classes” are, in a way, linked with each other (see paragraphs 29 and 34), what will happen when, for example, the increasingly wealthy American businessman no longer pays the American earner a higher hourly wage because he can find someone overseas to do the same job for less? One could then question the morality and human nature of an increasingly greedy society.
The fact that Keynes changed the way that America and many other parts of the world deal with their monetary issues makes what he has to say very profound. He not only predicted many occurrences, but made observations about inflation, deflation, and our economy in general that hold true today. I have also posted a link to the government Web site stating the details about the consumer price index for the United States. According to #5 under the heading “Suggestions for Writing” at the end of the Keynes’ section in our book, “Keynes says that over long periods of time money will depreciate in value.” I thought this would be an interesting conversation piece. So, check it out! http://www.bls.gov/cpi/home.htm