After the economic crisis broke out in 1929, he felt that the traditional economic theory was not in line with the reality and had to be broken through, so 1933' s General Theory of Employment, Interest and Money (hereinafter referred to as the General Theory) made a major breakthrough in economic theory.
First of all, it broke through the traditional employment equilibrium theory and established an economic equilibrium theory characterized by unemployment.
Traditional neoclassical economics put forward the hypothesis of full employment with Say's law as the core. It is believed that the full utilization of resources can be realized through price adjustment, thus excluding the macroeconomic problems of resource utilization from the scope of economic research. The General Theory criticizes Say's Law, acknowledges the existence of involuntary unemployment in capitalist society, and formally puts the macroeconomic issue of resource utilization on the agenda.
Second, regard national income as the central issue of macroeconomic research.
The center of Keynes's general theory is to study the decision of total employment, and then to study the reasons for unemployment. It is considered that total employment is closely related to total output, which are the characteristics of modern macroeconomics.
Third, analyze the decision of national income with the balance of total supply and total demand.
In Keynes's general theory, effective demand determines total output and total employment, and total supply and aggregate demand function are used to illustrate the decision of effective demand. On this basis, he explained how to use a set of equations to represent the equilibrium of the whole economy, and how to explain the static results by investigating the influence of the change of equation parameters on solving the equation. That is, he always uses the balanced relationship between total demand and total supply to explain the decision of national income and other macroeconomic problems.
Fourth, establish a macroeconomic system with total demand as the core.
Keynes adopted short-term analysis, that is, assuming production equipment, capital, technology, etc. Nothing changes, so the total supply remains the same. On this basis, it analyzes how the total demand determines the national income. The cause of unemployment is attributed to insufficient aggregate demand.
Fifth, analyze the monetary theory of real economy and money.
Traditional economists divide economy into two parts: real economy and monetary economy. Among them, economic theory analyzes the decision of actual variables, and monetary theory analyzes the decision of price. There is not much relationship between them. This is called dichotomy. Keynes combined economic theory with monetary theory by the method of gross analysis, and established a set of production currency theory. In this way, the relationship between money and interest rate and its influence on the whole macro-economy are analyzed, so that the two theories are combined to form a complete set of economic theories.
Sixth, he criticized Say's Law, opposed the laissez-faire economic policy, and clearly put forward the idea of direct state intervention in the economy.
Classical economists and neoclassical economists agree with laissez-faire economic policies, while Keynes opposes these and advocates direct state intervention in the economy. He demonstrated the necessity of direct state intervention in the economy and put forward more specific goals. His thought of paying attention to fiscal policy and monetary policy later became the core of macroeconomics, and even later macroeconomics was based on Keynes's general theory.
There is no doubt that Keynes was a great economist. He dared to break the shackles of old ideas, acknowledged the existence of involuntary unemployment, and put forward the idea of state intervention in the economy for the first time, which made great contributions to the whole macroeconomics.
Keynes was not only a genius in economic theory, but also a bold practitioner. Although it is easier said than done, he still made money despite the risks. After all, he is better than others, and he really has both fame and fortune.
One morning in London, a man woke up, but he was still lying in bed, disheveled. He is on the phone with his agent, making a decision about his huge speculative business, a university and a consortium.
This man is Baron john maynard keynes, a famous economist. He not only opened up the research position of macroeconomics (his two major works brought him great and lasting reputation), but also served as university treasurer, academic director of Cambridge University, government official and consultant. Baron Keynes was also a wealthy investor. Keynes's economic theory has influenced several generations, and still plays a decisive role in the current economic policy formulation, and will continue to influence economic thought in the next few years.
Economists always introduce Keynes in this way: he was smart since childhood and was a famous economist. He married a beautiful Russian ballet dancer and served as an adviser to the king and president. In his spare time, he made money for himself and for Cambridge University, speculating in commodities and achieved great success. But in fact, many of these contents are purely fabricated, which is far from the actual situation.
Keynes's ancestors were English aristocrats, and his parents taught at Cambridge University. Keynes was their first child. They paid a lot for him and had high expectations for little Keynes. Keynes lived up to his expectations. After graduating from Eton College, he won a scholarship for mathematics and classic works at King's College. He graduated from Cambridge University in England in 1905 with a bachelor's degree in mathematics. 1906, Keynes passed the civil service examination and entered the Indian office of the Ministry of Foreign Affairs. Two years later, I applied for the position of mathematics researcher at King's College, but I didn't succeed.
Soon, Cambridge University offered him a researcher position to teach general economics, which remained until his death. Among many courses taught by Professor Keynes, one is a weekly course on Indian money and finance. Before long, Keynes specialized in money, credit and value. During this period, he also wrote some books, mainly probability theory. His first book on economics was Money and Finance in India.
19 14 years, the first world war broke out, and people were generally worried about the financial crisis. As an expert on monetary issues, Keynes went to the Ministry of Finance. His first effort was to persuade the Prime Minister Lloyd George to keep the gold reserve. By the end of the war, Keynes had established a solid position in the Ministry of Finance and was sent abroad to deal with a series of financial problems. When the Paris Peace Conference was held, Keynes participated in the peace talks on behalf of the British Treasury.
After the peace talks, Keynes resigned from the Ministry of Finance and wrote the book Economic Consequences of Peace. This book describes some famous figures at that time, including Lloyd George and other figures, and analyzes the society at that time.
Walter Leapman compiled Keynes's works into a series, which Keynes paid for and published by Macmillan Company. The book was printed in Edinburgh and then shipped to London. On the way, the ship was unfortunately wrecked, and 2000 copies of Economic Consequences of Peace were washed to Danish beaches by seawater. According to Danish law, books are auctioned locally. This book was finally translated into many languages and sold about140,000 copies.
Keynes was the best person who could put theory into practice. While writing books, Keynes also engaged in currency trading. Based on his experience in the Ministry of Finance and his post-war inspection in Germany, he began to be optimistic about the US dollar and bearish on European currencies, and traded at a range of 10%, establishing a series of currency positions. Soon he made a lot of money, and he thought he could see the market trend better than ordinary people.
1920 In April, Keynes predicted that there would be credit inflation in Germany and used it as a reason to short the mark. Mark has been falling before, but now he is starting to rebound. In April and May, Keynes himself lost 13 125, and his syndicate as a consultant also lost 8498. The brokerage company asked him to pay a deposit of 7,000 pounds, so he borrowed 5,000 pounds from an admirer and paid 1500 pounds with his own advance to pay it off. He admitted that he was bankrupt.
192 1 year, through writing, Keynes's economic situation improved, and he began to speculate and trade commodities and stocks.
They are all traded with margin.
1924, Keynes invested 57,797 pounds, 1937, and his value increased by 506,450 pounds, thus establishing his reputation in the securities industry. During this period, the average compound interest rate of Keynesian investment was 17%. Although the profit is high, it is still not as good as the performance of conservative investor Warren Buffett.
Keynes's official biographer said that Keynes gave up speculation in 1937 because of poor health. In fact, he was already well and in good health, so he can continue to influence economic and political development in the next nine years. However, biographies published in recent years point out that 1937 Keynes suffered heavy losses in the American stock market. Considering that the second bankruptcy may damage his reputation as the most famous economist in the world, he withdrew from speculation in time.
In the book General Theory of Employment, Interest and Money, Keynes talked about his investment philosophy, which we can appropriately call "beauty pageant theory". There are 65,438+000 photos of beautiful candidates, and four of them are selected by the public. However, people don't vote for the person he thinks is the most beautiful, but choose the person he thinks most people think is the most beautiful.
Like many great financiers, Keynes was very bold in major events and dared to use a lot of money to support an argument. But in small matters, he is very conservative.
Once, Keynes and a friend were on vacation in Algiers, Algeria. They let a group of local children shine their shoes. Keynes paid so little that the children were so angry that they threw stones at them. His friend advised him to give more money, and Keynes, the greatest economist in the world, replied, "I won't let the currency depreciate."