Note: This paper does not have any new findings and viewpoints, but only seeks to clarify some concepts and their relationships in Keynes's General Theory. For example, Keynes clearly pointed out that money affects expectations through interest rates, but when discussing the determinants of expectations, assuming that interest rates remain unchanged, the focus is on psychological factors that affect expectations, and the mechanism by which interest rates affect expectations is unknown. Therefore, it is helpful to understand this book to straighten out the ideas in some messy chapter arrangements. In my opinion, although this book is called General Theory of Employment, Interest and Money, money is the central concept of this book, because money is the key to Keynes's explanation of unemployment. The theory that money is used to explain unemployment and the economic fluctuation caused by money is called the non-neutral theory of money, which is different from the classical school's view on the role of money, which holds that the role of money is neutral. I will further illustrate the neutral and non-neutral theory of money by distinguishing the concepts of "barter economy" and "monetary economy". In the view of the classical school, the participation of money did not make substantial changes in the barter economy. The function of money is only to facilitate both parties to the transaction and improve the transaction efficiency. In the economy, supply and demand are always equal, and transactions can always be realized without big fluctuations. Say's law is the most natural conclusion and expression about this understanding. In short, money is neutral in the barter economy. It does not affect the nature of transactions, nor does it participate in or promote the motives and decisions that can affect output. When Keynes defined monetary economy, he said: "Money is playing its own role, affecting various motives and decisions. In short, it is one of the effective factors of the situation. Therefore, if you don't know anything about currency dynamics from beginning to end, you can't grasp the process of facts, whether it is long-term or short-term. " (Quoting Keynesian Economics, Commercial Press, 1964) Money has its unique task in economy. It is not neutral, nor is it just a convenient means of exchange. Here, I actually understand the non-neutrality of money as the result of the real economy, that is, money actually affects investment, thus affecting national income and total employment. Let me retell the influence of money on employment in flashback. According to Keynes's hypothesis, national income is roughly equivalent to the total employment, so it is enough to describe it only from money to national income. According to Keynes's definition, national income is determined by consumption and investment, consumption is determined by income and marginal propensity to consume, and marginal propensity to consume is determined by people's psychological laws. This is a roughly determined curve about income. In the case of fixed income, consumption remains unchanged. Therefore, money mainly affects national income through investment. What determines investment is the following quantitative relations, namely, the marginal efficiency of capital and interest rate. The marginal efficiency of capital is the discounted value of the expected return of capital investment in assets in a certain period, which is determined by two quantities: the expected return and the current market value of capital. How do the marginal efficiency of capital and interest rate determine investment? If the marginal efficiency of capital is higher than interest rate, investment is profitable. Therefore, the actual investment will increase to such a level that the marginal efficiency of any kind of capital will be greater than the current interest rate. In other words, the investment will increase to a point on the investment curve, at which the general marginal efficiency of capital is higher than the current market interest rate. So far, Keynes believes that the expectation that determines the marginal efficiency of capital is mainly expected income. In the following content, the author actually talks about more expectations, such as the change of expected purchasing power of money and the change of expected interest rate, and says that both of them will have an impact on the marginal efficiency of capital, but it is very difficult to incorporate these two expectations into the formula that determines the marginal efficiency of capital by expected income and asset supply price. Keynes only discussed their functions in his book, and seemed to have no intention of including them in the formula he had just established. (See page 147 of General Theory) According to my understanding, when discussing the decision of marginal efficiency of capital, it is a weak link in Keynes's discussion from money (through interest rate) to expectation. In the following content (chapter 12), although the author admits that the change of interest rate can easily affect the confidence state and thus change the expectation, Keynes assumes that the interest rate is constant in order to talk about the decision of the long-term expectation state, thus undermining my attempt to establish a smooth channel from money (interest rate) to expectation. Although there is no particularly smooth passage, it can barely pass. Among the expected determinants, the only thing the author mentioned was the change of monetary wages. When discussing other decisive factors, Keynes seems to have no hope for the so-called rationality, and most people are blindly optimistic and attempt to speculate; At this time, the brain with rational decision-making and analytical ability has to "go with the flow" in order to protect its best interests. This part has little to do with the theme of this article. In the above analysis, the influence of money on expectation and then on the marginal efficiency of capital is mainly realized through the intermediate link of interest rate. Therefore, our next task is to investigate the relationship between money and interest rate. Keynes described his theory of money and interest in three chapters, namely, Chapter 13 "General Theory of Interest Rate", Chapter 15 "Psychological Motivation and Commercial Motivation of Liquidity Preference" and Chapter 17 "The Main Nature of Interest and Money". From the content point of view, the discussion in chapter 17 has reached the same result as the previous two chapters, which seems to be somewhat repetitive, which may be regarded as Keynes's improvisation in his creation. In chapter 13, the author first gives an interest theory different from the classical school. The classical school thinks that interest is the return of saving or waiting, and Keynes easily overthrew the classical school's definition of interest by taking advantage of the fact that people's savings include a lot of cash (holding wealth in cash), because saving wealth in cash will not get any interest. Keynes pointed out that interest is the reward for giving up liquidity in a specific period, and the interest rate in any period can measure the degree to which currency holders are unwilling to give up liquidity. In other words, the interest rate is the price that can balance the desire to hold wealth in cash with the existing cash. Mobility is a psychological preference of people, which is determined by psychological motivation and business motivation. The specific discussion on liquidity preference decision-making is the content of Chapter 15. Due to the influence of liquidity preference, the interest rate has a lower limit, and the interest rate cannot be lower than this lower limit. The marginal efficiency of capital has great uncertainty and may be lower than the interest rate for a long time, thus affecting investment and causing unemployment. Chapters 13 and 15 discuss how money causes unemployment by discussing interest rates and comparing them with the marginal efficiency of capital. Chapter 17 discusses the same problem, but with different ideas or different levels of abstraction. This chapter draws the same conclusion by discussing the interest rates of money and other commodities. On the whole, the discussion of monetary liquidity in Chapter 17 is largely an abstract repetition of the previous contents, while the discussion of interest rates of other assets (marginal efficiency of capital) constitutes a supplement to the previous contents. The previous discussion mainly used psychological factors to discuss the change of marginal efficiency of capital, and there are things other than psychological factors here. Keynes believed that, like money, any commodity has its own interest rate, which consists of three parts, namely, income, safekeeping fee and liquidity appreciation. Among the interest rates of all commodities, due to the characteristics of money itself, that is, strong liquidity, output elasticity and substitution elasticity are zero or negligible, when the interest rate of money exceeds a certain low value, it is difficult to decrease with the increase of its own quantity, and even if it reacts, its degree is far less than that of other types of assets to achieve similar increases. Because of this nature, the interest rate of money is often higher than that of other commodities, which affects the amount of investment and makes full employment difficult. This topic has reached the end of logic, that is, all the roots are due to the nature of money and the characteristics of interest rates caused by it. Let's repeat the above logical process in chronological order with a picture. Currency Substitution Elasticity Liquidity Output Elasticity Speculation Motivation Precautionary Motivation Interest Rate Stability Keynesian Trap Finally, there are some explanations. First, although this article takes money to unemployment as a clue in the General Theory, this clue is not obvious in the book. Keynes expressed his views by criticizing the classical school, so some expressions were not very clear. Therefore, the content of this article is inevitably speculation. Second, one of the most important differences between Keynes's economic research method and the classical school is that he paid more attention to psychological analysis. Economics is a science that studies people's behavior, so it is very important to examine people's psychological laws. The hypothesis of economic man in classical research is too simple. So I think Keynes is a great progress in this respect. However, it is very difficult to apply psychoanalysis to economic analysis, because psychological factors are very difficult to quantify, and variables based on psychological factors always have great errors with reality, which is contradictory to the pursuit of modeling and accurate economics. Thirdly, although Keynes thought that he had found the root of unemployment, the policy proposition to solve the unemployment problem was not directly related to this discovery. This shows that Keynes did not value the role of monetary policy, but tried his best to adopt a proactive fiscal policy to solve the unemployment problem. The specific way is to socialize investment, make up for the shortage of private investment with public investment, and thus stimulate the increase of national income. Obviously, Keynes's policy is only an expedient measure within the framework of his theory.