Keynes' Legacy [Was: Re: Fw: [gang8] Fw: RATIONAL EXPECTATIONS

["Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>]

Re. the following:

> And finally to sum up, it's beyond me how you can blame post-Bretton Woods
> on Keynes and/or his followers.

Comment:

I don't equate Keynes with either his "legacy" or "followers".

In the post-Bretton Woods era, his "legacy" has been transformed by
self-proclaimed "followers" into the notion that the U.S. performs a useful
function as World Engine of Growth through the spill-over of Excess Domestic
Credit Creation into a Deficit on External Goods and Services account now
running at about $500 billion on an annual basis.

Gunnar


----- Original Message -----
From: "John Vertegaal" <vertegaa@xxxxxxxxx>
To: "POST KEYNESIAN THOUGHT" <pkt@xxxxxxxxxxxxxxxx>
Sent: Wednesday, May 14, 2003 5:20 PM
Subject: Re: Fw: [gang8] Fw: RATIONAL EXPECTATIONS


>
> Gunnar Tomasson wrote:
>
> >Today's world economic situation is fraught with danger - the onset of
> >world-wide depression is one of them.
> >
> >But the problem did not arise overnight.  Instead, it reflects
> >aggregated-demand sustaining monetary inflation of the post-Bretton
> Woods
> >era which, by now, has lost its potency.
> >
> >And, while unforeseen by the great majority of contemporary economists,
> >this very danger was underscored by Hayek's title of his IEA 1972/1978
> >booklet - A Tiger by the Tail - The Keynesian legacy of inflation.
>
> Sorry Gunnar, but blaming the current economic situation on Keynesian
> policies with respect to monetary inflation flies in the face of all
> evidence.
> First you seem to have a problem distinguishing aggregate demand from
> potential aggregate demand due to monetary inflation.  Second, the
> monetary inflation that has occured domestically in these past three
> decades has been the result of non-Keynesian 'inflation fighting'
> measures; i.e. raising interest rates, that far from diminishing such
> inflation only pushed it underground and out of sight.  Third, the global
> disequilibrium we current face has been brought about by anti-Keynesian
> free flowing capital.  Fourth, you are going to have a very hard time
> showing that the demand side for output has been at fault at all.
> And finally to sum up, it's beyond me how you can blame post-Bretton Woods
> on Keynes and/or his followers.
>
> John V
>
>