De kleinkinderen van Keynes

Het einde van de geschiedenis is nabij. In een lezing uit 1928 die hij zijn hele leven hergebruikte, gaf Maynard Keynes het nog honderd jaar voor de absolute noden van de mensheid gelenigd werden. Tegen die tijd zou er voldoende kapitaal opgebouwd moeten zijn om de materiële levensstandaard op een permanent hoog plateau te brengen. Daarmee was het economische probleem opgelost – gesteld dat er geen al te verwoestende oorlogen gevoerd moesten worden, de bevolkingsgroei beperkt bleef, en wetenschap en techniek hun gang konden gaan. Maar de vierde voorwaarde trof de mens in ’t diepst van zijn gedachten. → Read More


Paul De Grauwe heeft Keynes niet goed gelezen. Herman Van Rompuy evenmin. De OESO al helemaal niet. Animal spirits zijn géén golven van irrationeel optimisme en pessimisme. De term verwijst naar een spontane drang om te handelen eerder dan om niets te doen. Het is een ode aan ondernemerschap, die goedaardige anomalie. → Read More

The general theory of employment, interest and money

It is not too much of an exaggeration to argue that Keynes’ own 1937 review of The general theory of employment, interest and money is the actual masterpiece. In it, he explains quite lucidly the “comparatively simple fundamental ideas which underlie my theory” and in so doing, why, at least, the Book is titled the way it is. → Read More

Master of debt

De Italiaanse opflakkering is géén remake van de bankencrisis. Een remake veronderstelt dat het origineel al ingeblikt is, de oorspronkelijke versie weggedeemsterd. Hier wordt nog altijd dezelfde hete aardappel doorgegeven, van de Amerikaanse huizenmarkt in 2006 naar verstrekkers van consumentenkrediet, van de banken die voor hen kredietlijnen openden naar de Europese banken die in de onderliggende hypotheken belegden, en van die banken naar onze potverterende landen. De lynchpin op dit ogenblik is de ECB zelf; we redden nu geeneens meer “de” banken, maar de Europese centrale bank. → Read More


I cannot leave this subject as though its just treatment wholly depended either on our own pledges or on economic facts. The policy of reducing Germany Greece to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable,— abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe. Some preach it in the name of Justice. In the great events of man’s history, in the unwinding of the complex fates of nations Justice is not so simple. And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.

[John Maynard Keynes, The economic consequences of the peace (1920), epilogue to Chapter 5. Reparation]

War and the financial system

On 4 August 1914 England declared war on Germany. Financial markets on the continent were already severely disrupted by the Austrian ultimatum to Serbia of 24 July. Now the City of London was threatened by the short-term funding and foreign exchange markets effectively dissolving.

The acceptance houses became virtually insolvent as foreign debtors were unable to remit funds to London; the brokers who had discounted their bills followed suit. The ultimate debtholders, the joint stock banks, additionally faced losses on their margin loans to the stock exchange; forced liquidations by their clients set in motion a vicious circle of fire sales. → Read More

The business of the modern politician

It is the method of modern statesmen to talk as much folly as the public demand and to practise no more of it than is compatible with what they have said, trusting that such folly in action as must wait on folly in word will soon disclose itself as such, and furnish an opportunity for slipping back into wisdom, — the Montessori system for the child, the Public. → Read More

Chapter 12

John Maynard Keynes’ The general theory of employment, interest and money (1936) is a controversial monument. But one chapter has become justly famous among friend and foe alike. Chapter 12, The state of long-term expectation, touches upon the heart and soul of  when to invest, what return to expect, why financial markets fluctuate and where the government’s role lies. → Read More

The way out of the crisis. Three questions to Guy Verhofstadt

The central social question is the trade-off between public good and private happiness, between society and morals. For centuries religion offered a solution. But now religion turns out to be relative, what will fill the void? Economics?

Well-being presupposes a continual increase of wealth in the form of capital goods. A balance must be found between investing and consuming: we must save to keep investment healthy, and invest to keep saving healthy. The social order in a secular age furthermore rests on the “bluff and deception” that capitalists save too. → Read More

Keynes: reasoning with probability

What is probability?

Probability is the study of the grounds which lead us to entertain a rational preference for one belief over another. That part of our knowledge which we obtain directly supplies the premisses of that part which we obtain by argument. All propositions are true or they are false. Probability refers to a relationship with a corpus of personal knowledge, actual or hypothetical, and not to a characteristic of the propositions themselves. As our hypotheses change, our conclusions will have new probabilities, but relatively to these new premisses. It is the degree with which it is rational to entertain a belief that a particular proposition is true based on our – subjective – knowledge, our intuition: we know that proposition so-and-so bears a relation with a degree of probability such-and-such to the corpus. Such a probability is determined through the objective application of logical rules of inference, upon which arguments can be based and which can be perceived, between the propositions of our direct knowledge and our indirect knowledge. → Read More