Introduction to Economics: Part 6

What causes business cycles? Keynesians say the cycles happen because the free market economy does not spend enough. Thus, pump spending in. Additionally, Keynesians say that animal spirits cause these cycles. Government must fix things. Nobody could understand Keynes’ General Theory. What was simply obscure was wrongly considered deep.

Keynes linked national income with employment, by assuming wage rates are fixed downward. Although Keynes wrote of balanced budgets, there were only deficits.

Part six of seven from Introduction to Economics: A Private Seminar with Murray N. Rothbard.