Wed., April 9

Discussed in class on Wednesday, April 9 was the Great Depression.  The class discussion focused mostly on the economic theories at the time.  Hoover's goals for his administration, economic wise was to balance the budget, raise taxes for the wealthy, keep the gold standard, and integrate the Hawley-Smoot tariff for over-seas trade.

John Maynard Keynes was a British economist whose ideas fundamentally affected the theory and practice of modern macroeconomics, and formed the economic policies of many governments in the world.  Keynes was instrumental in forming his Keynesian economic theory which is a theory of, "total spending in the economy (called aggregate demand) and its effects on output and  inflation. Although the term has been used (and abused) to describe many things over the years, six principal tenets seem central to Keynesianism." http://www.econlib.org/library/Enc/bios/Keynes.html 

Keynes' A Treatise on Money was published in 1930 the theory of this work being that if the amount of money being saved exceeds the the amount being invested unemployment will rise.  In other words if money earned is not spent and stimulating the economy but is instead being saved people will lose their jobs.  The problem during the Great Depression was that people were spending money they did not have as credit and credit cards were introduced into the economy and there was a consumer limit, for example what do companies do if everyone in America has a dishwasher or washing machine?

In 1933, Keynes published The Means to Prosperity, "which contained specific policy recommendations for tackling unemployment in a global recession, chiefly counter public spending. A copy was sent to the newly elected President Roosevelt and other world leaders. The work was taken seriously by both the American and British governments, and helped pave the way for the later acceptance of Keynesian ideas, though it had little immediate practical influence during the Great Depression that affected the world. In the 1933 London Economic Conference opinions remained too diverse for a unified course of action to be agreed upon." Skidelsky, Robert (2003). John Maynard Keynes: 1883–1946: Economist, Philosopher, Statesman. Pan MacMillan Ltd. pp. 494–500, 504, 509–510. 

Overall the theories that Keynes wrote about were beneficial to understanding how the economy can function and how unemployment can be avoided but whether they were relevant to the time when he wrote remains debatable.