Tuesday, September 16, 2008

Keynes confuses me

So I dug the first essay. Fed straight into my memories of Macro with the ideas of steady state levels of investment and savings. With some detailed reading I could picture the graphs of steady state markets as they applied to the British economy of the time. However, as Keynes starts delving into the issues of losses by producers of consumable goods and explains (actually doesn't explain and simply says "as a little thought will show") how greater portions of consumer income devoted to such goods will actually cause producers to lose money and greater savings by said consumers will cause gains. Sounds to me as if he is saying that if people buy less of a good then the producer of the good actually is better off. I assume I am just missing something here but as I see it the logic doesn't hold and I am really looking forward to trying to map this out in graphs in class on Thursday. Any insight into this would be greatly appreciated.

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