The original poster asked this question very well and it is quite in-depth.

1. Based on logical reasoning according to economic theory, Friedman’s “Permanent Income Hypothesis” can negate Keynes’ theory. Because the core of the permanent income hypothesis is that the marginal propensity to consume only depends on permanent income, temporary income changes cannot affect the marginal propensity to consume; and Keynesianism is a short-term demand management theory, and the impact of its policy adjustments can only be short-term, as income increases If it is only temporary, consumption and investment will not increase, and the goal of stimulating the economy through policies cannot be achieved. The establishment of such logical reasoning must have a premise, that is, rational expectations. Rational expectations are very important. If people can conduct rational expectations, they will realize that the impact of Keynesian policies to regulate the economy is short-term and cannot change permanent income. Consumption and investment will not increase as a result, and the policy is ineffective. . If people fail to realize that the increased income is temporary, then the policy will still be effective.

2. It is very difficult to fully achieve rational expectations, so this assumption is very harsh. The actual situation happens to be between the two. On the one hand, people are quite rational and can identify income that is obviously temporary, such as a one-time or temporary tax cut or a lottery win promised by the government. Rather than significantly increasing spending levels as a result, the majority of it will be stored and only a small portion consumed based on precautionary motives. On the other hand, people are blind. When the government cuts taxes and increases fiscal spending, people think that this can boost aggregate demand, stimulate the economy, and increase permanent income. People's optimistic expectations about the economy further strengthen this stimulating effect. As a result, the economy really prospered, with incomes rising and consumption and investment spending rising. In a word, the government's policy objectives have been achieved and the policy is effective.

3. In theory, the permanent income hypothesis denies Keynesianism. In fact, Keynesianism is still one of the most important theories in macroeconomics, and a large number of Keynesianism can be found in the policies of countries around the world. shadow.

4. The reason why the poster’s question is very profound is because when I saw this question, I was reminded of the two schools of modern macroeconomics: New Keynesianism and neoclassical macroeconomics. New Keynesianism and Keynesianism are of the same origin; Friedman is a representative of monetaristism, and the neoclassical macroeconomics school (rational expectations school) was developed on the basis of monetaristism. They both believe in economic freedom and oppose Government intervention is in the same vein as Adam Smith's classical economics, so it is called neoclassical macroeconomics. The two of them are the mainstream of modern macroeconomics, and their views and policy propositions are often opposite and opposite. It can be said that the progress of macroeconomics in recent years has been achieved through the mutual criticism and self-argument of the two schools of thought. Therefore, if the assertion in the question is correct, it means that New Keynesianism is wrong; if the assertion is wrong, it means that neoclassical macroeconomics is wrong. Obviously, this is unrealistic. At present, the two theories have their own merits and are evenly matched. No one can judge who is right and who is wrong. Therefore, the assertion in the question is difficult to answer. It is right or wrong, but it does not matter. The important thing is that we have understood the ins and outs of this sentence, and understanding the essence is the most important.