Edited by Steven Kates
Chapter 11: What’s wrong with Keynesian economics?
The failure of Keynesian economics is part of a broader picture of the failure of fiscal and monetary policymaking as a whole. Central banks and treasuries have been unable to deliver that improvement in the stability of output and price levels that had been hoped for. It is simply the problem of the distribution of knowledge. Centralized fiscal and monetary organs of government lack the information required to manipulate successfully aggregate demand in a market economy. Accordingly, we shall have to look again at arrangements consistent with the dispersed nature of economic information:for money, a consideration of commodity reserve systems, or perhaps competing currencies;for fiscal policies, a return to the principle of balanced budgets.
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