The Right Remedy For The Trade Cycle

When The Accumulation Of Wealth Is No Longer Of High Social Importance, There Will Be Great Changes In The Code Of Morals. We Shall Be Able To Rid Ourselves Of Many Of The Pseudo-moral Principles Which Have Hag-ridden Us For Two Hundred Years, By Which We Have Exulted Some Of The Most Distasteful Of Human Qualities Into The Highest Virtues.

The Destruction Of The Inducement To Invest By An Excessive Liquidity-preference Was The Outstanding Evil, The Prime Impediment To The Growth Of Wealth, In The Ancient And Medieval Worlds.

I Do Not Mean To Impugn The Social Justice And Social Expediency Of The Redistribution Of Incomes Aimed At By N.i.r.a. And By The Various Schemes For Agricultural Restriction. The Latter, In Particular, I Should Strongly Support In Principle. But Too Much Emphasis On The Remedial Value Of A Higher Price-level As An Object In Itself May Lead To Serious Misapprehension As To The Part Which Prices Can Play In The Technique Of Recovery. The Stimulation Of Output By Increasing Aggregate Purchasing Power Is The Right Way To Get Prices Up; And Not The Other Way Round.

If The Treasury Were To Fill Old Bottles With Bank-notes, Bury Them At Suitable Depths In Disused Coal-mines Which Are Then Filled Up To The Surface With Town Rubbish, And Leave It To Private Enterprise On Well-tried Principles Of Laissez-faire To Dig The Notes Up Again (the Right To Do So Being Obtained, Of Course, By Tendering For Leases Of The Note-bearing Territory), There Need Be No More Unemployment And, With The Help Of Repercussions, The Real Income Of The Community, And Its Capital Wealth, Would Probably Become A Good Deal Greater Than It Actually Is.

There Is Nothing So Disastrous As A Rational Investment Policy In An Irrational World.