A Tract on Monetary Reform (Great Minds Series)

Book Description

This treatise, written in 1923, by the renowned proponent of deficit spending, is devoted to the need for stable currency as the essential foundation of a healthy world economy. Describing the various effects of unstable currency on investors, business people, and wage earners, Keynes (1883-1946) recommends the implementation of policies that aim at achieving stability of the commodity value of the dollar rather than the gold value. Keynes's brilliant, clear analysis of the world monetary situation at the beginning of the twentieth century, with his many suggestions and his masterful elucidation of economic principles, stands as a vital primer for anyone interested in developing a better understanding of basic economics and its sociopolitical implications.

Customer Reviews:

Lacks a clearcut "uncertainty(ambiguity) vs.risk" distinction.......2005-09-15

Keynes's Tract on Monetary Reform allows the reader to conclude that,while Keynes did distinguish between uncertainty(Ellsberg's ambiguity,measured by his rho index and/or Keynes's weight of the evidence of the A Treatise on Probability,measured by his w index)and risk on p.105,he had not yet formally integrated the role that uncertainty plays in the demand for money(liquidity preference).Keynes talks about risk in international product markets, trading,currency exchange,backward-forward markets,etc.,but it is clear that he is talking about the various spreads that incorporate risk premiums.Considerations of risk alone lead to the transactions demand for money as being the only explanation for holding money balances in the quantity theory of money as understood by classical and neoclassical economists from Hume to M.Friedman and R.Lucas.The standard quantity theory of the demand for money is operationalized by assuming the applicability of a normal probability distribution.Interestingly,not a single neoclassical,moneterist,or rational expectationist economist has ever done a goodness of fit test first to see if the normal distribution is applicable.Keynes,in 1924,implicitly goes along with this approach.The most important portion of Keynes's book is contained on pages 61-69.He presents the standard approach,given by the following formula: n=p(k+rk'),where n equals cash in circulation,p equals the price level(cost of living index),k equals the public's holding of a cash equivalent,k' equals the public's holding of the cash equivalent in the form of bank deposits,r equals the bank deposit's reserve ratio,and rk' equals the amount of bank reserves.The standard classical and neoclassical short run and long run neutrality of money assertion is obtained if,and only if, n increases while(r+rk') remains invariant.The price level variable p will increase by the same amount as n.In the General Theory(1936),Keynes demonstates in chapter 21 that this result,which he accepted in 1923-24, is only a special case that holds under the existence of risk(the normal probability distribution used by Friedman,Lucas,Tobin,etc.)or certainty.Under conditions of Ellsbergian ambiguity or Keynesian uncertainty(or ignorance),the correct,generalized equation of exchange requires that either the rho index or the w index be integrated into the equation of exchange.The generalized Keynesian-Ellsbergian equation of exchange is then written as n=p[(k/w)+r(k'/w')],where w and w' represent the weight of the evidence available to the general public(w) and the weight of the evidence available to the banking industry(w'),respectively.Both w and w' are normalized on the unit interval between 0 and 1,i.e.,w,w'are elements of the set[0,1].Only if both w and w' are equal to 1 does one obtain the results claimed by Friedman and Lucas.This is why Lucas asserts that macroeconomics must be based on a concept of risk represented by the normal probability distribution,as does Friedman,who also asserts that there is no such thing as liquidity preference(only a transactions demand for money).Friedman thus asserts that there is no such thing as ambiguity.Friedman must make such an assertion because he is a lifelong advocate of the Ramsey-De Finetti-Savage subjective probability approach that asserts that it is not possible to incorporate uncertainty(Savage's vagueness)in a decision rule. Friedman's claim that the GT is based on excessive liquidity preference follows from his acceptance of the LJ Savage approach to probability.Unfortunately for Friedman,there is vast empirical evidence to support the existence of decision making under conditions of uncertainty or ambiguity.One can see the progress Keynes made by comparing the Tract with chapter 21 of the GT.Friedman works with the standard equation of exchange,MV=PO.This is misspecified.The correct generalized equation is M(Vw)=PO,where w is the weight of the evidence.Friedman has a special theory based on the assertion that w=1.Only risk considerations determine the demand for money.

Some great old ideas, including the famous long run.......2004-01-27

The Preface of Monetary Reform by John Maynard Keynes is dated October 1923, in a time when there were few economists. As the Preface of this book states this dire aspect of the situation:

"Nowhere do conservative notions consider themselves more in place than in currency ; yet nowhere is the need of innovation more urgent. One is often warned that a scientific treatment of currency questions is impossible because the banking world is intellectually incapable of understanding its own problems. If this is true, the order of Society, which they stand for, will decay. But I do not believe it. What we have lacked is a clear analysis of the real facts, . . ." (p. vi).

There are charts in this book to provide the facts which Keynes was concerned about. Index Numbers of Wholesale Prices Expressed as a Percentage of 1913 on page 5 covers the years 1913 to 1923 (First half-year) for nine nations, looking most outstandingly bad for Germany, which has a final number of 765,000 for half of 1923, far larger than the maximum number of any other country. Italy was at 624 in 1920 and declined to 577 in 1921, still higher than the 510 monthly average that France had in 1920.

A chart at the top of page 18 with dates from 1815 to 1922 is supposed to illustrate "what a splendid investment gilt-edged stocks had been through the century from Waterloo to Mons, even if we omit altogether the abnormal values of 1896-97. Our table shows how the epoch of Diamond Jubilee was the culminating moment in the prosperity of the British middle class." (p. 18). But for people who were concerned about the tumble taken after 1914, things were not so great. "The whole of the improvement of the nineteenth century had been obliterated," (I'm looking at an old edition, so my page numbers might be way off from whatever book you might be able to buy today).

The basic information that is most important to Society as a whole is contained in Chapter I, The Consequences To Society of Changes in the Value of Money, considering separately the interests of the Investing Class, the Business Class, and the Earner. The power of any government which can produce money merely by printing it is considered in Chapter II, Public Finance and Changes in the Value of Money, particularly with respect to Inflation as a Method of Taxation. In order to show that a government might have some choice in such matters, Keynes also considers "Currency Depreciation versus Capital Levy." If this seems like an odd topic now, Keynes is reassuring that such a move might only be considered "when the State's contractual liabilities, fixed in terms of money, have reached an excessive proportion of the national income." This might happen (sooner or later) to any country which stops producing anything except educational opportunities, medical bills, entertainment and banking, in years when a high national debt must be refinanced at high interest rates.

Chapter III gives us The Theory of Money and of the Foreign Exchanges. Recently INFECTIOUS GREED by Frank Partnoy provided an example, early in his book, of how bankers still don't have any yardstick for figuring out how much they are making when Bankers Trust was trying to figure out how much profit it could declare on trading in the foreign-exchange markets by Andy Krieger in 1987. Being able to bet the assets of a large bank on the direction that a currency would go in 1987 allowed Andy Krieger to get a job with George Soros in April, 1988, where turnabout became his main play. "Krieger reversed the position, and bet against the pound. A single trade with Chemical Bank was for more than $1.8 billion." (Portnoy, p. 33). Really and truly, I think Partnoy blames Krieger for taking stable currencies and earning large bonuses by making them worth much less than they had been worth before he had the option to sell it at a given price. Part IV. The Forward Market in Exchanges in Chapter III of Keynes's MONETARY REFORM attempts to state three practical conclusions. First, hedging a risk won't work when the situation is so bad that there is "a fear of a sudden implosion of exchange regulations or of a moratorium." Partnoy seemed to think that the private trading in derivative contracts was where the big money was made, and public positions in an exchange could be fake positions hedging a bet in the opposite direction, but that there was no law against this kind of manipulation of the market for money. Keynes was more interested in stability. "With free forward markets thus established no merchant need run an exchange risk unless he wishes to, and business might find a stable footing even in a fluctuating world."

Second, there must be money from speculators in such a market for the market to function. "The wide fluctuations . . . have been due, not to the presence of speculation, but to the absence of a sufficient volume of it relatively to the volume of trade."

Third, high interest rates don't matter as much "unless the change in relative money-rates is comparable in magnitude (as it used to be but no longer is) with the possible range of exchange fluctuations.)" Possibly things have changed so much in the last 80 years that Keynes would phrase that differently today.

Book Description

This book provides fresh insights into the constantly changing technology and organizations domain. The book draws upon several perspectives such as social construction, the shaping of technology, technology as text and metaphor, communities of practice, regional studies and political processes in its theoretically informed and empirically detailed analyses of a variety of technological, organizational and work developments occurring in organizations across a range of countries.

Book Description

For the past twenty-five years John Moore has taught biology instructors how to teach biology--by emphasizing the questions people have asked about life through the ages and the ways natural philosophers and scientists have sought the answers. This book makes Moore's uncommon wisdom available to students in a lively and richly illustrated account of the history and workings of life. Employing a breadth of rhetoric strategies--including vividly written case histories, hypotheses and deductions, and chronological narrative--Science as a Way of Knowing provides not only a cultural history of biology but also a splendid introduction to the procedures and values of science.

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Interesting description of the scientific process.......1998-01-12

This is a great book for non-scientists who want to know how the scientific thought process works. Moore takes us through the history of biological thought, from the first cavemen to the geneticists of this century. Non-biologists may get bogged down in the last few technical chapters on genetics and development, but the sections on the history of biology are a great read for anyone.

Science as a Way of Knowing: The Foundations of Modern Biology.: An article from: American Scientist

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Science as a Way of Knowing: The Foundations of Modern Biology.: An article from: American Scientist
Garland E. Allen
Manufacturer: Sigma Xi, The Scientific Research Society
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Binding: Digital

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Beautiful and informative book.......2005-01-29

This is a beautiful book,which covers the topics of Sheep Handling, wool Science and Shearing with Blades in great detail.
This book is well thought out and well written. Even if you don't own or have any knowledge of sheep, it is still an enjoyable book to read. This book is a good educational research tool also.

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a must read for anyone interested in gliding.......2000-03-29

exellent reading for experienced and unexperienced as well

Understanding gliding: The principles of soaring flight

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Understanding gliding: The principles of soaring flight
Derek Piggott
Manufacturer: Barnes & Noble Books
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Binding: Paperback
ASIN: B000OEXB7G

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VW Cabriolet

Volkswagen Cabriolet, Scirocco Service Manual 1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993 Including Scirocco 16V (Volkswagen)
Robert Bentley
Manufacturer: Bentley Publishers
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Binding: Paperback

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Book Description

Over the past 50 years Hermann and Gudrun Zapf have designed some of the modern world's most unique and innovative typefaces.

In fact, so ubiquitous is Hermann Zapf's Palatino that it has become a common default font on millions of laser printers around the globe. In honor of the Zapfs, an exhibition which traces the calligraphic evolution of several contemporary Zapf typefaces is being held in San Francisco in Fall, 2001.

Calligraphic Type Design in the Digital Age is the catalog to the exhibition which also features the work of 14 other calligrapher/type designers who have been influenced by the Zapf's work including: Robert Slimbach, Alan Blackman, Rick Cusick, Jean Evans, Jacqueline Sakwa, Phill Grimshaw, Akira Kobayashi, Jovica Veljovic, Viktor Solt, Julian Waters and Richard Lipton.

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