Money, Uncertainty and Time

Presentation prepared for the “Keynes Seminar”, Robinson College, University of Cambridge, 24th November 2009

ByGiuseppe Fontana

Contents1 Introduction: Money, Uncertainty and Time

Part I: Keynes, the 'Classics' and the Modern Keynesian Dissent2 The Historical Development of Dissent in Keynesian Economics3 Methodology and Economic Theory in Keynes's General Theory

Part II: From Rationality to Unemployment and the Monetary Circuit4 A Two-Dimensional Theory of Probability and Knowledge 5 Uncertainty and Money

Part III: Understanding Endogenous Money6 Hicks as An Early Precursor of Endogenous Money Theory7 Horizontalist and Structuralist Analyses of Endogenous Money8 A General Theory of Endogenous Money

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Introduction

• Keynes and Keynesian Economics– Proposition 1: the Possibility of Involuntary

Unemployment– Proposition 2: the Principle of Effective Demand– Proposition 3: the Principle of Policy Effectiveness

• The Changing Nature of the Keynesian Dissent– First Principles: Money, Uncertainty and Time– Theory plus Methodology

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Keynes, the 'Classics' and the Modern Keynesian Dissent

• Chapter 2: The Historical Development of Dissent in Keynesian Economics– The Origins of Post Keynesian Economics– The Romantic Age: The Search for a Grand

Theoretical System– The Age of Uncertainty: The Search for an

Alternative Methodology

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Keynes, the 'Classics' and the Modern Keynesian Dissent

• Chapter 3: Methodology and Economic Theory in Keynes's General Theory– Keynes’s Method: Chapter 18 of the

General Theory– Keynes versus the ‘Classics’: Scope and

Method of Economics– Mr Keynes and the ‘Classics’ in Prospect

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From Rationality to Unemployment and the Monetary

Circuit• Chapter 4: A Two-Dimensional Theory of

Probability and Knowledge– Probability Theory and Forms of

Knowledge– On the Nature of Uncertainty– Paul Davidson and Non-ergodic / Monetary

Post Keynesians on Uncertainty

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From Rationality to Unemployment and the Monetary

Circuit• Chapter 5: Uncertainty and Money– Uncertainty2, Money, and Involuntary

Unemployment– Uncertainty1, Money, and the

Production Process

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Understanding Endogenous Money

• Chapter 6: Hicks as an Early Precursor of Endogenous Money Theory– “Monetary theory is in ‘history’ ”: An

Analytical and Historical Question– Single Period Theory vs. Continuation

Theory– Time and Method in Endogenous Money

Theory11

Understanding Endogenous Money

• Chapter 7: Horizontalist and Structuralist Analyses of Endogenous Money– The Horizontalist Analysis of Endogenous

Money:• Loans Create Deposits > Deposits Make Reserves

– The Structuralist Analysis of Endogenous Money• Liquidity preference of the household sector• Liquidity preference of the business sector• Liquidity preference of the commercial bank sector

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Understanding Endogenous Money• Chapter 8: A General Theory of

Endogenous Money– Controversial Issues• The market for monetary reserves• The credit market• The financial markets

– A Single Period-Continuation Interpretation of the Controversial Issues

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