When I re-read Skidelsky's Keynes: Return of the Master, I just thought wow! Or, more like, gasp...
Here's why (note, the statistics, data drawn from econometric series, IMF reports etc are inside):
*The UK and US economies were geared toward fixed-assets such as property beyond any figure imaginable historically
*The GFC, post-Lehman, saw a devastating run on money-markets globally
*Banks were up to their eyeballs in securitised, mortgage-backed ''subprime'' security debt
*Banks, in their Universal guise, were holding this debt as Tier 1 equivalent capital
*Economists - at least the ones markets listened to - said that business cycles were largely a thing of the past
*Under the Rational Expectations Hypothesis, subject to exogenous ''shocks'', markets supposedly cleared now and inter-temporally
*Given wage and price adjustments, commodity prices would apparently remain stable
*Despite the above, none of this was true!
*The global economy almost experienced a complete meltdown of commodity, property and financial market assets in a period of days
Rereading this book, the asset destruction throughout the GFC was 'eye-watering', as Skidelsky put it.
According to Skidelsky, we assume - that is, policymakers, many economists etc - that recovery will follow slowly - perhaps agonisingly so.
Keynes, however, might suggest that we are about to suffer a long-term demand slump without productive investment in the real economy.
What's the answer????
I hope a ''relapse in confidence'' lol!!!
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