John Maynard Keynes

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John Maynard Keynes

• An Economist to Remember

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Who Was JM Keynes?

• Born in Cambridge to an economics professor and
  an accomplished author
• Married russian ballerina Lydia Lopokova in
  October 1925
• Attended Eton and Kings College, earned his B.A.
  in 1905 and his M.A. in 1909
• Described by acquaintances as highly intelligent
  and very articulate

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Who/ What Influenced JM Keynes?

• His father, John Neville Keynes, an economics
  lecturer at Cambridge
• Arthur Pigou, Alfred Marshall, Adam Smith, Karl
  Marx, and Thomas Malthus
• The unfair treatment of the Germans in the Treaty
  of Versailles
• The Great Depression of the 1930s in America

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Becoming Known to the Public

• Accepted lectureship at Cambridge
• Later appointed to the Royal Commission on Indian
  Currency and Finance
• Worked as advisor during WWI designing terms of
  credit between allies and acquiring rare
  currencies. Robert Lekachmen said at this point
  Keynes nerve and mastery became legendary.

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Becoming Known to the Public

• Wrote The Economic Consequences of the Peace,
  voicing disapproval with the treaty of Versailles
• Keynes wrote General Theory of Employment,
  Interest and Money. His revolutionary ideas
  reshaped economic theory, creating Keynesian
  Economics.

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Keynesian Economics How It Is Different From
Classical Economics

• GDP the sum of consumption, investment,
  government spending, and net export
• Enhance employment by first increasing
  expenditures

• Total Savings of Society is determined by the
  total income
• Government necessity to stimulate demand in times
  of high unemployment

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Gross Domestic Product

• The sum of consumption, investment, net exports,
  and government spending.
• Government could and should take an active role
  in stabilizing the economy by increasing
  government spending (stimulus) in times of high
  unemployment and decreasing spending in times of
  economic security.

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Increasing Expenditures to Enhance Employment

• Stimulating economic growth via government
  spending (i.e. public works projects, defense
  spending, entitlement programs) increases demand
  for workers.
• The government has two levers on the economy
  government spending and taxation. Using these
  two tools the government can keep the economy
  more balanced.

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Total Savings

• Savings was considered bad for the economy
  because it reduced spending.
• Keynes proved that (because of banks) savings
  become money that is actively spent through loans
  etc so having that surplus actually helps
  stimulate the economy.
• The total savings of a society GDP because saved
  money is loaned and spent.

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Keynes Legacy

• Died on April 21, 1946
• Raised to the House of Lords as Baron Keynes in
  1942
• A subfield of macroeconomics (Keynesian
  economics) was created from his work and
  revolutionary ideas
• Countless economists have since redefined their
  understanding of economics because of Keynes
  theories

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Bibliography

• John Maynard Keynes. www.wikipedia.org, last
  modified January 15, 2007.
• The biography of John Maynard Keynes.
  www.econlib.org, David R. Henderson
• Google image vault. www.google.com
• Image source The Print Shop 12