The Phaserl


Ivanka Channels Keynes On National Television

by Economic Policy Journal:

Ivanka Trump appeared on “Fox & Friends” this morning to promote the Trump Administration’s plunge into workforce central planning.

During her appearance, she managed to bring out the ghost of John Maynard Keynes and didn’t  seem aware she was doing so.

In a brief mention of a boom in small business that she stated was occurring in the economy, she also mentioned that a friend had told her that is as though “the animal spirits have been released.”

Of course, the term, animal spirits, was first introduced into economics by John Maynard Keynes in his book
into economics by John Maynard Keynes in his book The General Theory of Employment, Interest, and Money.

Murray Rothbard explained it was part of Keynes’ view on the business cycle:

Keynes then came to the third economic class, to whom he was somewhat better disposed: the investors. In contrast to the passive and robotic consumers, investors are not determined by an external mathematical function. On the contrary, they are brimful of free will and active dynamism. They are also not an evil drag on the economic machinery, as are the savers. They are important contributors to everyone’s welfare.

But, alas, there is a hitch. Even though dynamic and full of free will, investors are erratic creatures of their own moods and whims. They are, in short, productive but irrational. They are driven by psychological moods and “animal spirits.” When investors are feeling their oats and their animal spirits are high, they invest heavily, but too much; overly optimistic, they spend too much and bring about inflation. But Keynes, especially in The General Theory, was not really interested in inflation; he was concerned about unemployment and recession, caused, in his starkly superficial view, by pessimistic moods, loss of animal spirits, and hence underinvestment.

The capitalist system is, accordingly, in a state of inherent macroinstability. Perhaps the market economy does well enough on the micro-, supply-and-demand level. But in the macro world, it is afloat with no rudder; there is no internal mechanism to keep its aggregate spending from being either too low or too high, hence causing recession and unemployment or inflation.

Or as Keynes put it:

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