John Maynard Keynes

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  • 1. John Maynard Keynes By: Maddie Work
  • 2. Background  Born June 5, 1883, in Cambridge, England  His father was a professor at Cambridge, and his mother one of the first women to attend Cambridge.  He attended College at Eton, and then went on to study at Cambridge University
  • 3. Economic Theories  Government Intervention necessary to a thriving economy  Multiplier Effect
  • 4. Governmental Intervention  If the economy goes through a recession, the government should…  Increase the level of government expenditure on public works  More people are employed  Government must buy products from private manufactures, which further stimulates the economy  Cut Taxes  If people are making more money, they will want to buy more things, which would help the economy.  Decrease interest rates  If it is more economically beneficial for consumers to spend, rather than save, the economy will be further boosted because the more money that goes through the economy, the better off the economy is.
  • 5. If there is an economic boom, the government should..  Increase interest rates to encourage saving, and discourage spending  Decrease the level of government expenditure  Increase taxes to both discourage spending, and enable the government to pay back debts accumulated during economic crises.
  • 6. Multiplier Effect  Contrary to the economic theories of his day, Keynes believed that the key to a healthy economy was by spending, not saving.
  • 7. Increase in Demand Increase in manufacturing output. Increased Manufacturing firms employ incomes more people This process continues until the “leakages” (taxes, savings, and imports) eventually bring the economy back to equilibrium.
  • 8. Influences to our Society…  Very popular during and after World War II  Inspires ours current economic reforms.
  • 9. Great Depression  During World War I, federal spending increases immensely.  In the 1920s, the government cuts back on spending in order to repay debts accumulated during the war.  The economy goes into a major recession.  Organized Labor declines. For example, employment of The United Mine Workers Union, falls from 500,000 workers in 1920 to 75,000 in 1928.  As many as 200,000 workers/year are replaced by machinery  Money remains stationary in the upper classes.  1,489 people report half-million dollar incomes in 1929, compared with 156 in 1920.
  • 10. Deficit Spending?  Sweden becomes the first nation to fully recover from The Depression, having applied Keynes’s policy of deficit spending  Germany becomes the second, followed by Great Britain two years later; both countries having increased deficit spending in preparation for war  President Roosevelt; however, rejected this Keynesian economic policy, and didn’t recover from the Depression until we, too, began preparing for war.
  • 11. Impact on our Current Society  Overall, Keynesian Economics does not greatly influence our current economic system.  However, because of our economic crisis, a number of these theories are being pulled out to help create reform plans; such as, out bailout and stimulus packages.  The military also uses Keynesian theory to support continued spending for national defense, claiming that otherwise we would fall into an economic recession.
  • 12. Works Citied o Gill, Richard T. "Keynes, John Maynard." Grolier Multimedia Encyclopedia. 2009. Grolier Online. 6 Oct. 2009 <http://gme.grolier.com/cgi-bin/article?assetid=0159540-0 o Higgs, Robert. “World War II and the Triumph of Keynesianism” The Future of Freedom Foundation. (March 1995) <www.fff.org/freedom> o Kanga, Steve. “Timelines of the Great Depression.” The Great Depression. Las Vegas, NV