Where Keynes Went Wrong

If you are looking for a basic, easy to read, and approachable book that outlines where the economic policies of our day come from, and why both the policies and theories behind them are flawed, you can do no better than starting with Hunter Lewis' fantastic book, Where Keynes Went Wrong: And Why World Governments Keep Creating Inflation, Bubbles, and Busts.

This book was specifically written for the introductory student, or just the curious layman, whom is interested in understanding the economic policy decisions made all around us, every day, that ultimately end up directly affecting us all. Hunter Lewis is a graduate of Harvard University, co-founded the global investment fund Cambridge Associates, LLC, and has served on The World Bank. 

The book is broken down into several sections where first Keynes himself is quoted, an explanation of Keynes' position on certain matters is given, and then the sensible approach to these economic matters is given quite succinctly by Mr. Lewis. To learn more, check out the link above for a detailed summary as well as several excerpts from the book. Here is one of my favorite passages:

"The greatest obstacle to sound banking is government. The US Federal Reserve was established in 1913, in part, to reduce bank reserves. [Bank reserves are what dictates how much or little the bank can inflate the money supply. A detailed explanation of this process is found in the preceding chapters. - Robert Fellner] Over the years, it has lowered reserve requirements repeatedly, always seeking in this and other ways to create more money and pour it into the economy through the banking system. In the eyes of politicians, more money is almost always better. It will help the economy look better in the short run, and that will help incumbents get reelected. The idea that the government (in the form of the Federal Reserve) guards us from inflation makes no sense. The record tells us otherwise. The Fed is the source, not the cure, for inflation." - Hunter Lewis, Where Keynes Went Wrong, 195-196.

I meet with many people whom generally agree that things are bad, traditional government-administered solutions are not working, and in many cases are making things worse, yet tend to fall into apathy and indifference as they lack any clear understanding of specifically what is wrong, not to mention what we should do about it. If you are one of those people and are interested in getting solid footing to stand on when you criticize the way things are, as well as to be able to propose workable and economically sound solutions, I highly recommend this book. No previous education in economics is necessary.

Furthermore, the book is broken down into self-contained sections such that if you are only interested in certain areas, it is easy to navigate to them and digest the material directly without having to read hundreds of pages of unrelated material first. If you need even more convincing, a glowing review by the Mises Institute is given here!

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