tag:blogger.com,1999:blog-3621026.post4378354449137456807..comments2024-03-28T10:25:22.825+01:00Comments on Robert's Stochastic thoughts: A Perplexing Passage in Keynes IIRoberthttp://www.blogger.com/profile/14455788499385673507noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3621026.post-52701628344945387892013-08-11T12:38:34.645+02:002013-08-11T12:38:34.645+02:00"My main impression is that Keynes is quibbli..."My main impression is that Keynes is quibbling with Fisher, because he was not pleased that Fisher thought of the Fisher effect before he did."<br /><br />But Keynes insisted that Marshall thought of the Fisher effect before Fisher did (See Essays in Biography). He cites Marshall's Principles, referring (I think) to this passage:<br /><br />"When we come to discuss the causes of alternating periods of inflation and depression of commercial activity, we shall find that they are intimately connected with those variations in the real rate of interest which are caused by changes in the purchasing power of money. For when prices are likely to rise, people rush to borrow money and buy goods, and thus help prices to rise; business is inflated, and is managed recklessly and wastefully; those working on borrowed capital pay back less real value than they borrowed, and enrich themselves at the expense of the community. When afterwards credit is shaken and prices begin to fall, everyone wants to get rid of commodities and get hold of money which is rapidly rising in value; this makes prices fall all the faster, and the further fall makes credit shrink even more, and thus for a long time prices fall because prices have fallen."Kevin Donoghuehttps://www.blogger.com/profile/07534540865029864916noreply@blogger.com