Re: Liquidity Preference and State Theory of Money

[Harry Veeder <eo200@xxxxxxxxxxxxxxxxxxx>]

Gunnar wrote:

<SNIP)
>
> For, by joining Ohlin et al. in debate on a NON-issue insofar as "the
> process of capital formation" is concerned, Keynes overlooked the BIG
> issue - namely, that the "equality between saving and investment:" is NOT a
> function of "the level of income".
>
> That "saving" - 'finance' provided by suppliers of factor services - and
> "investment" - net factor content of the economy's work in progress - are
> one and the same thing at ALL levels of income.

When you say this, do you have in  mind Keynes' type of saving
(where saving = income - consumption spending) or the alternate type known
as the flow funds account as described in my recent post 'NIPA and saving'.
If you have in mind the former, then I agree.

Also, if THAT TYPE of saving and investment are one and the same thing, then
a boost in consumption spending does not boost that type of investment.


Harry Veeder