The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes

These notes are old and were written while reading — they don’t necessarily reflect my current views.

This is a biography of John Meynard Keynes.

It starts out with Keynes being summoned to London in order to handle parts of the war finance (WWI). He advocated for repaying Englands debts, even if all other countries default. This was aimed to raise confidence in the UK as a banking hub. He took a similar position after the war regarding the debt England got from the US and JPM. He was frustrated at the Versailles peace treaty, because politicians (especially France) pushed for reparations that were impossible.

The book talks about Keynes’ double life as an intellectual in the bloomsburry group and a public official at the war office.

After the war there were talks of reestablishing the gold standard. Keynes saw that there was a problem with deflation, as people don’t like their income to fall. So he proposed that countries should be able to change their exchange rate to gold constantly (which defeats the purpose of the gold standard) while maintaining price stability inside an economy, which prevents deflationary forces like seen with the gold standard.

He inspired Joan Robinson who coined the concept of imperfect competition and continued Keynes’ ideas at Cambridge. He further inspired Richard Kahn to formalise the multiplier. Kahn was his right hand man.

Keynes admires the classical economists and says that they provided a rather acurate picture of the economy at their time, but argues that since the circumstances changed so that scarcity is no longer the chief problem but allocation.

The Author criticises the Keynesian tradition (which is in large parts US economics) as untrue to the principles and insights of Keynes.

Burke and Moore as influences

Haller, Golbrigh

ISLM