Confidence

Despite the current depressed state of our economy, and the dismal outlook on employment (matt), reading the complaints Keynes raises against the English government and the English Bank’s propensity to follow a policy of "negation, restriction, [and] inactivity" made me thankful to be around at a time where economics is better understood, especially by our governments. Indeed, it was interesting to reading how Keynes puts forth an argument for increased government expenditures and lowered interests, when I feel many of us take the positive effects of such fiscal and monetary policies as given. When he argued against restricting capital expenditures, I almost felt as if I was reading some antiquated article questioning the validity of bloodletting as a cure for nausea.

Personally, it’s been a while seen I’ve taken Macro so I’m not as clear on the effects of lending to foreign entities. I understood Keynes was opposed to decreasing interest rates as a response to high unemployment levels, if they could not secure that the borrowed funds would be utilized to modernize the country, but do bank currently place such restrictions? Would I not be able to get a loan in China if I meant to spend the money in Australia? Are such restrictions justified economically?

I found his take on the increased vulnerability of manufacturing nations, when compared to primary producing nations, interesting. He gives good reason why that my be the case including a lack organized contraction, increased rates of self-employment, slower production cycles, and increased social costs to unemployment, but is that currently the case? I always thought the opposite was true, but maybe the integration of economies thanks to trade and specialization has eliminated this buffer for primary output nations…

Although I’m uncertain as to what Keynes would think about the current economic state, I’ll postulate and say he would suggest that the Central Banks should continue to do what they can to help borrowers and consumers recover their good spirits (144). If Jordan’s article is right, then confidence is, again, an issue decades later.