Keynes/Depressions etc

["Yazad Jal" <yazad@usa.net>]

Replying to Vinay Chandekar
 
> I read Keynes defferently. He believed in State spending during
> depressions/downturns. This puts money in the hands of people which
> reduces social tension. So his economic ideas were guided by needed
> social objectives.

A few comments on the above:

1. 	States are not 'money trees' to put money in the hands of people during
 depressions to reduce social tensions. They can create money, but only in
the physical sense of printing paper. The actual value of money is
determined by various other factors. It is the free flow of these factors
(ie a free market system) that creates value. After all it is not the money
you have in your hand that matters - its what that money can buy. 

2.	What is really important is to realize why the depression occurred in
the first place and to make sure it doesn't repeat itself. Depressions are
not 'natural phenomena' like floods and drought. They are by-and-large the
fruits of bad policy. Symptomatic relief is important, but a cure is the
best bet.

3.	The fulfillment of social objectives is best left to society ie by
individuals and voluntary organizations within that society. Anybody else
will simply end up by being some kind of "big brother". 

Finally, the road to hell is paved with good intentions - Keynes meant
well, but inadvertently helped create monoliths which served themselves
more that the recepients they were supposed to. Certain government
institutions (in India and elsewhere) today have become something similar
to Frankenstein's monster.
 
Yazad Jal
Bombay, India

<yazad@usa.net>

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