Keynes

Keynes

Born in Cambridge, England, in 1883, John Maynard Keynes has frequently been described as the Twentieth Century’s most important Economist. Keynes was largely responsible  for the widespread acceptance of the role of macro-economics in providing both a theoretical explanation of economic activity, and a practical framework for policy makers. Although he made an early impression with his The Economic Consequences of Peace (1919), it was not until the publication of the General Theory of Employment, Interest Rates and Money, in 1936,  (The General Theory) that Keynes became a household name. The General Theory provided a compelling critique of the prevailing Neo-Classical consensus which shaped thinking in the late 19th and early 20th Century. Keynesian economics, with its inherent distrust of uncontrolled market forces, and belief in the importance of government, was to dominate the post-war period – the so-called Keynesian Era. Although Keynesian economics, with its preference for  fiscal regulation of aggregate demand, fell out of favour during the 1980s and 1990s, interest has returned in the wake of the financial crisis.  There is much in the work of Keynes that is relevant in explaining the liquidity crisis that rocked the global economy during 2009, notably his explanation of the liquidity trap.