Zach Carter: belief

Transcript context

…If we think of Bertil Ohlin’s critique in 1929, he’s actually saying Keynes is oddly non-Keynesian. Ohlin is saying if you transfer the money abroad, the German mark will weaken. This will boost German exports. In what later became known as Keynesian open economy macro models, Germany gets back a lot of what it sent abroad. Probably not all of it, but quite a bit. Paul Samuelson thought Ohlin was correct. Was Keynes wrong about the transfer problem in the late ’20s? Oh, I’m much more sympathetic to this sort of broader critique that Keynes in 1919 is not Keynesian. He’s looking at these transfers as a very zero-sum game. What Germany ships abroad, it doesn’t get back. There is a time problem here, though. Even he accepts this critique. It takes time for the money to come back to Germany. The money has to be lent back into the German economy by somebody. During the 1920s — I think later on, Keynes is pretty clear about this — the United States is lending money, not only to Germany but to Europe, and so long as that game keeps going, the cycle of funds is sustainable. Of course, by the late 1920s, the United States stops lending money for various reasons. But right up into 1922, 1923, when you have the French government occupying the Rhine, there are political instabilities there that make the flow of funds pretty difficult. Those political tensions are occurring. They don’t just spring up in 1923. They’re there from the moment the treaty is signed. Early in his career, why was Keynes so keen to work in the India Office? He chose that.…

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