Keynesian Economics

An outline of the basic ideas of Keynes's economics as contained in his book, the General Theory of Employment, Interest and Money.

[ghostlord]

You sir are a gentlemen and a Scholar! I'm watching this to help with A-level economics very well explained.

[David-fmgo]

The biggest reason why the interwar period (especially after 1929) was different in terms of equilibrium level of employment was that the economy had grown substantially (at least in the United States) on the back of a particular level of credit being available to facilitate industrial expansion and consumption. While the collapse of this is often emphasized when discussing the stock market crash and far more importantly the bank failures from late 1930-1932. What is often neglected is that the nature of this as a bank sector originated crash and the impact of the collapse of the banking sector would have on the reduction of credit, the reduction of the velocity of money and the reduction of the money supply. This was made worse because the US Federal Reserve actually moved to shrink the money supply (Operating of the same mindset as you described guiding the German Central bank in your video on hyperinflation, but in the opposite direction: less demand for money - reduce the money supply) in 1930 and 1931. This left banks further under capitalized and worsened the bank runs and bank failures.

Banking centered crashes feature long recovery times, with prolonged and lingering economic dislocation and unemployment. After the Global Financial Crisis (another bank centered economic crash), unemployment did not reach pre-recession levels until 2014. This is a good reason why the banking sector needs more regulation and oversight than other sectors (even if one is predisposed towards less regulation), because the consequences are greater and the time frame for self-correcting is of such a great length as to render waiting it out politically impossible.

[ritumyagya]

Your approach to subjects are tasteful. Love your content ✌🏻