Tyler Cowen: belief

Transcript context

…We definitely have cases of cryptocurrency-disappearing frauds and the like. Among cryptocurrency users, there is a common agreement that discounts for some things. Can that be sustained as a social phenomenon outside some niche users? Particularly, I think it really does matter that so much of the use of the currency, as currency, is happening outside the political system. A lot of the stuff that’s happening there is illegal. We’re talking about nongovernmental activity. To me, the experience with cryptocurrency points in the other direction, that you need some political management of this stuff for it to have real meaning. Otherwise, it’s a fleeting and not particularly useful medium. Keynes works for, I think, seven years on Treatise on Money. It’s two volumes. At the end, what he comes up with is a tabular standard, which I’m fine with, by the way. Is it even a good book at all? Hansen, Hayek — they didn’t like the model. They more or less trash it. Hayek claims Keynes repudiated his own book. What’s in Treatise on Money? I think he does repudiate his own book. There’d be no need for The General Theory if the Treatise on Money was right. The Treatise on Money is a big mess. It’s like 800 pages, two volumes. Keynes himself says aesthetically, it’s a disaster, but he feels like he’s come to a great answer. By the end of the book, he’s got this weird justification for public works. He’s come to the conclusion, by the time he’s done with it, that the public works spending and budget deficits are necessary for getting out of the depression. He’s just tying himself in knots to come up with an economic theory that will justify that policy preference. These people may exist, but I don’t think there are many people who think the justification for public works in the Treatise on Money is more persuasive than that in The General Theory. He basically says, “This is a one-time thing that we have to do because of the way trade relationships have worked out at this particular moment in time.” It’s very ad hoc. The thing that’s important about the Treatise on Money is how much fun Keynes has talking about the rise of capitalism in the 16th and 17th century and Knapp’s theory, chartalism, the theory in State Theory of Money. I think that is really essential to the ideas that he develops further in The General Theory. If you take money to be a creature of the state rather than of markets, as we were talking about, then you’re just allowed to do a lot. The idea of the market as something that can function independently of the government becomes much blurrier, and the idea of the state as the thing that creates and guides markets, I think, opens up a broader realm for government intervention. But god, it’s a mess of a book. There’s the international system where he talks about the bancor and the international super bank. That’s his blueprint for what he’s going to bring to Bretton Woods later, which he loses on all of those important fights. So that’s in there, but the whole thing is just a mess. He himself is changing his mind so many times over the course of this book in response to political circumstances. Look, even General Theory is a bit of a mess, too, so it’s not like he has one definitive statement that is Keynesianism. I reject the school of thought that it’s all in The General Theory, but I think of it as a step along the road. It shows that he’s willing to change his mind, but he hasn’t figured it out yet.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.